28 April 2017
The Real Estate (Regulation and Development) Act, 2016 (Act) was enacted on 25 March 2016. A total of 59 sections were notified by the Central Government on 27 April 2016, which came into force on 1 May 2016. The remainder sections of the Act were notified on 19 April 2017 and will come into force from 1 May 2017. Additionally, the Government of Maharashtra has notified and published the Maharashtra Real Estate (Regulation and Development) (Registration of real estate projects, Registration of real estate agents, rates of interest and disclosures on website) Rules, 2017 and the Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, 2017 under Section 84 of the Act on 20 April 2017 (Rules).
The Act and Rules are only applicable to new and ongoing residential and commercial projects. Ongoing projects are those projects which have not received an occupation certificate or a completion certificate on the date of commencement of the entire Act (i.e. on 1 May 2017) (Date of Commencement). The Act prescribes the establishment of a Real Estate Regulatory Authority (Regulatory Authority) and Real Estate Appellate Authority (Appellate Authority) for a fast track adjudication of consumer grievances.
This Newsflash sets out the salient features of the Rules in relation to - the registration of new and ongoing projects, promoter’s disclosure requirements as to projects on the website of the Regulatory Authority, consequences of revocation of registration of projects and penal provisions.
Registration of Projects (New and Ongoing)
Additional Requirements with Respect to the Time Period for the Completion of Construction of the Project
along with expected period of completion of on-going project, which has to be commensurate with the extent of development already completed.
Additional Information to be Furnished at the Time of Registration
The promoter is also required to furnish the following additional information and documents at the time of registration of the project with the Regulatory Authority:
Information and Certificates to be Submitted by the Promoter in case of Ongoing Projects
In case of ongoing projects, the promoter is required to submit the following information and certificates with the Regulatory Authority:
Withdrawal of 70% of Realisation to be Deposited in a Separate Account
Restriction on Addition and Alteration of Sanctioned Plan
Revocation or Lapse of Registration
in case the promoter, (a) defaults as to his duties the Act or the rules or regulations made thereunder; (b) violates any terms of the approvals granted for the project; and (c) is involved in any kind of unfair trade practice.
The fee for registering a project is set at INR 10 (ten) per square meter subject to a minimum of INR 50,000 and maximum of INR 1000,000.
The Rules provide for additional important definitions such as ‘Phase of a Real Estate project’ and ‘Covered parking space’ in the follow:
Rate of Interest Stipulated
The rate of interest payable by the promoter to the allottee or vice versa, shall be State Bank of India’s highest marginal cost of lending rate plus 2%.
Application for Formation and Registration of Association of Allottees by Promoter
The promoter is required to observe the following timelines for filing an application for registration of the Association (being a society, company or any other legal entity) or an apex body in the form of a federation or holding entity (Apex Body):
If the promoter fails to comply with the aforesaid timelines, then the Regulatory Authority can order the promoter to apply for registration or authorise the allottees to apply for registration.
Conveyance of Title
The promoter is required to observe the following timelines for conveyance of land and building in favour of an Association (being a society, company or any other legal entity) or an Apex Body when no time period has been agreed upon:
In case of failure by promoter to comply with the aforesaid time lines the Regulatory Authority shall by an order direct the promoter to convey the title to the Association or the Apex Body, as the case may be. The Association shall also be entitled to have a unilateral deemed conveyance in its favour under the provisions of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963.
Compounding of Offence
The Rules also prescribe for compounding of offences committed by the promoter, real estate agent or allottee which are as follows:
Starting 1 May 2017, the Act and the Rules will effectively come into force thus heralding a new era in Maharashtra’s real estate and construction sector. The Act and the Rules prescribe stricter timelines with regard delivery and completion of projects, increased onus on promoters to make disclosures as well as provide for a speedy redressal mechanism for consumer grievances.
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