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RERA facts, registration rules you must know

Friday, October 20, 2017

Q.Suppose a builder is developing a SRA building and in consideration of the same he will receive TDR which he will sell in the market. In this condition is builder required to take registration under Real Estate (Regulation and Development) Act, 2016 (RERA) for selling the TDR ?
Ans : Real Estate project as defined under section 2(zn) : ''real estate project'' means the development of a building or a building consisting of apartments,or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof. The word allotee is defined under section 2(d) of the Act as under. ‘Allottee’ in relation to a real estate project, means the person to whom a plot, apartment or buildings, as the case may be, has been allotted, sold or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise, but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent; In SRA the promoter allots Apartment to existing slum dwellers and need to be protected. Further, TDR is also generated as right over the property or plot development, instead of selling the physical plot, the rights (TDR) generated from the developed plots are being sold by providing allotment of apartment to the slum persons. It involves the sale of rights generated from the development of the real estate project. However, there is nothing to be done to TDR once it is developed and it is being certified by the Competent Authority. Therefore, though it is generated out of development of Real Estate Projects, it will not be covered under RERA.

Q.In the event the actual Land and Development/ Construction Cost for the project incurred exceeds the estimated cost of the project as declared at the time of registration of project, is there any provision which allows the promoter to withdraw the excess amount?
Ans : The CA certificate to be issued indicates the percentage of the Estimated cost that can be withdrawn from the project. For e.g estimated cost of the project is Rs. 200 crore and as per books and engineer certificate shows the expenses INCURRED on the project is Rs.250 crore. This means percentage of cost INCURRED to estimated cost is 125% ( I.e 250/200×100= 125%). Now what can be withdrawn is 125% of Estimated cost which means 125% of Rs 200 crore. Thus whatever is spent on the project can be withdrawn from the separate account. Thus the CA certificate is like a drawing power given to separate account and thus amount spent on the project, after incurring the same can be withdrawn as a reimbursement.

Q.Would RERA authority be able to adjudicate matters with disputes arising under MOFA Sale agreements registered prior to 1st May 2017?
Ans :
RERA has come into effect as on 1st May 2017. Therefore, all real estate transactions done for new projects and for ongoing projects where OC has not been obtained will be covered under RERA.Therefore, the authority may not be able to decide on disputes arising from MOFA Sale agreements registered prior to 1st may 2017 where OC is received prior to 1st May 2017. In case of no OC such projects would need to be registered under RERA Act and the Promoter providing could be tried for breaches against the affidavit and commitments provided before RERA authority under RERA provisions. Thus if the MOFA agreements are registered prior to 1st May 2017 and OC is not received, in that case, all provisions of RERA will be applicable and such buyer also can get the interest, damages etc adjudicated as per RERA effective from 1st May 2017.

Q.Is RERA registration as per project or builder? I mean, besides registration for each project, does a builder also have to register separately as a builder?(just as agents are registered)
Ans :
As per section 3 of RERA, 2016, each real estate project needs to be registered separately. As per section 4(2)(l)(D), open a separate designate Account in a scheduled bank and also have to audited within 6 months from a practicing chartered Accountant. Section 4(2) provides for the various information to be provided for registration of real estate projects including the person or company or firm who develops it. Therefore, the online registration of real estate project done in MahaRERA, provides for registration of the profile of promoter and there after each project developed by such promoter is registered as separate project. Thus, indirectly promoter is first registered and then under that promoter whatever projects are developed are registered.

(Ramesh S. Prabhu is Chairman, Maharashtra Societies Welfare Association)

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