India is one of the largest countries in the world in terms of area. And the housing sector has remained one of the largest contributors in its GDP. Still, there was no central law or legislation till 2016 to govern the real estate sector and it remained largely unregulated. Even today, the Real Estate sector is mostly a state-regulated subject, which is governed and controlled by different sets of rules and regulations of different states.
But in order to regulate this sector at the central level to some extent the Indian parliament passed The Real Estate (Regulation and Development) Act, 2016. This Act is popularly known as the RERA Act and came into effect on 1st May 2016. The most important objective of bringing this act was to make the real estate sector more efficient and transparent so as to protect the rights and interests of the consumers. And also to address and solve the consumer’s grievances as far as possible.
Concept of Real Estate
According to the Black’s Law Dictionary, real estate is defined as under –
“Real estate includes the land and anything fixed, immovable, or permanently attached to it such as buildings, walls, fixtures, improvements, roads, trees, shrubs, fences, roads, sewers, structures, and utility systems.”
To explain it in simpler terms, real estate can be said to be anything related to the plots, lands, buildings, apartments which are commercial, industrial or residential. It is also related to the sale, purchase, construction or development of or on such lands and of such buildings. Real Estate is a kind of immovable property.
The need for this Act
In the year 2013-2014, a report of the Standing Committee on Urban Development claimed that although there have been several schemes regarding the real estate projects the government is still having difficulties in coping up with the increasing demands of infrastructural development and housing. This report raised several concerns like:
(i) The private players in the market were immensely profited by their arbitrary practices and by exploiting the customers.
(ii) The high EMI and loan rates in the market also caused huge problems for the people because of this sector being unregulated.
(iii) In the absence of any effective and efficient mechanism, there was a lack of accountability and transparency.
Objectives of this Act
To meet these needs the RERA Act was passed. There were certain objectives behind enacting this Act, which are:
(i) Curb malpractices, abuses and impediments.
(ii) Regulation and promotion of real estate sector.
(iii) Protection of interests of the consumer.
(iv) Bringing transparency in the real estate sector between the promoter and the purchaser.
(v) Ensuring efficient and transparent sale of plots, lands, apartments, buildings etc.
(vi) Bringing accountability between the parties.
(vii) To establish a fast track dispute resolution mechanism.
Features of RERA Act
The Act is applicable to all the real estate projects which are beyond the area of 500 sq. metres por where the number of apartments exceeds 8. This includes any kind of real estate project be it commercial or residential or industrial.
Establishment of several bodies
The RERA Act proposed to establish three major agencies or bodies for the proper functioning and working of this act. These bodies are:
(i) Real Estate Regulatory Authority.
(ii) Real Estate Appellate Tribunal.
(iii) Central Advisory Council.
To bring about a certain kind of uniformity, professionalism and standardization in the real estate sector, one of the most important features that is introduced by the RERA Act is the registration with RERA of the following becoming mandatory:
(i) Real Estate Projects
(ii) Real Estate Agents
Section 3 of the RERA Act 2016
The RERA Act, 2016 provides for a regulation of prior registration of a real estate project with the real estate regulatory authority (RERA) for the purpose of securing the interests of both the promoter and the purchaser. Under Section 3 of the Act, rules relating to prior registration with RERA of any project is given to maintain a level of transparency and accountability and to regulate the sale and purchase of the real estate projects in a proper and efficient manner.
Prior registration of the real estate project – Section 3
Section 3 of the Real Estate (Regulation and Development) Act, 2016 talks about the prior registration of the Real Estate project with the Real Estate Regulatory Authority (RERA). Section 3 says that:
“(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act:
Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act:
Provided further that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration.
(2) Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required—
(a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases:
Provided that, if the appropriate Government considers it necessary, it may reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;
(b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;
(c) for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
Explanation.—For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.”
The gist of Section 3 says that any promoter shall not advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority (RERA) established . The projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act. Authority in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such a project to do a registration with RERA, and the provisions of this Act or the rules and regulations made there under, shall apply to such projects from that stage of registration where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under this Act for each phase separately
Why is prior registration required?
A lot of sellers, promoters and developers with the aim of greater profits indulge in a common practice of pre-launching a project without securing the required approval from the appropriate local authorities. This action is also called the “soft launch”, “pre-launch”. This is an act of advertising the projects before getting an appropriate approval from the authorities. Even the consumers bag this opportunity with the purpose of getting a discount during such pre-launch period. But in certain cases where the promoter vanishes overnight after indulging into such pre-launch practice or gets into any kind of unscrupulous practice it becomes a greater risk for the customer. Thus, a prior registration with RERA of such plot, land, building, apartment or any kind of real estate project becomes even more necessary. And this is the reason the registration with RERA has been made mandatory under the Real Estate (Regulation and Development) Act, 2016 before such any such project is started off or launched for sale. And for such registration the basic requirement for the promoter is that he has all the requisite approvals before selling off such projects. Thus, prior registration with RERA makes sure that the buyers interests are secured and guarded. As the project is safeguarded from any issues of the non-approval and delays at a later stage.
Registration Requirements and Process
There are certain registration requirements that are given under the RERA Act that needs to be fulfilled by any promoter before indulging into any kind of selling process. These requirements are that every promoter must make an application for the real estate project in such a form or manner as specified by the RERA within the given time period and accompanied by such fee as may be specified. The basic registration procedure includes:
(i) An application by a promoter for registration with RERA for any real estate project in prescribed form and format along with the prescribed fees and required documents.
(ii) Such application must either be approved or rejected within a period of 30 days from the date of application by RERA.
(iii) On successful completion of the registration of the project, the promoter of the project is provided with a registration number, a login ID and a password for the applicant.
RERA Acts of different states
The RERA Act under section 84, contemplated that within 6 months of it being enforced, the state governments shall make rules for carrying out such provisions of the Act. Such rules were to be notified by the state governments. The central government in 2016, released the Real Estate (Regulation and Development) (General) Rules via Ministry of Housing &Urban Poverty Alleviation.
Although a lot of states did notify their particular RERA rules but there still remain certain ones which haven’t done so. And as far as the rules relating to prior registration of the real estate projects with RERA is concerned, none of the state specific rules gives it a specific mention in their gazettes. All the state specific RERA Acts directly focus on the procedure and requirements of registration and doesn’t contain any specific provision relating to the prior registration of real estate projects.
Aparajita is a compendious and eloquent writer. She is a student of a prestigious National Law University and Judicial Academy, Assam. She loves reading books and writing on various legal issues. For any clarifications, feedback, and advice, you can reach her at [email protected]