INTRODUCTION:
The real estate market has been developing over the years and attracting investors from all over the globe. However, Homebuyers and landowners face an abundance of problems with builders/promoters like illegal constructions, fraudulent developments of property and huge delays in completion of projects. Therefore, the introduction of RERA had become a must to come to the aid of the homebuyers and landowners. The real estate sector has had its ups and downs like any other sector. However, this sector has developed drastically in recent years where builders have been making large amounts of money and a large portion of landowners and homebuyers have been cheated. However, aggrieved parties always had the remedy to approach the consumer forum, but that remedy is only curative and is not enough to address all the concerns of the promoters and buyers in that sector. The introduction of RERA Act, 2016 has come to the rescue of these aggrieved parties by giving quick remedies to them. “to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.” This Act provides for establishment of Real Estate Regulatory Authority for promotion and regulation of the real estate sector to ensure sale of apartment, building or plots or sale of real estate project in a transparent and efficient mode. It also ensures protection of interest of consumers in the real estate sector. Further, it also provides for establishment of an adjudicating method for speedy dispute redressal and also to set up the Appellate Tribunal to hear appeals from the directions, orders or decisions of the Real Estate Regulatory Authority. This Act regulates dealings among promoters and buyers of residential real estate projects. It provides for establishment of State Level regulatory authorities called Real Estate Regulatory Authorities (hereinafter to be called as RERA). This Act mandates for housing real estate projects, with some exceptions to be enrolled with RERAs. A Promoter cannot offer or book these projects for sale without registering them with RERA’s. The real estate agents who deal in these projects also need to be registered with RERAs. The promoter has to upload details of the project on the website of RERA’s websites after registration. Such details include schedule for completion of the real estate project and the site and layout plan. The sum raised from buyers for a project has to be kept in a separate bank account and shall be utilised for building of that project.
JURISDICTION, PROCEDURE, POWERS AND FUNCTIONS OF THE APPELLATE TRIBUNAL
Any person aggrieved by an order, direction or decision made by an adjudicating officer or the Authority may file an appeal before the Appellate Tribunal. An appeal may also be filed by an appropriate government or the competent authority before the Appellate Tribunal.55 The appellate Tribunal can make its own procedure and it will not be bound by the procedure laid down by the Code of Civil Procedure, 1908. However, the Appellate Tribunal will be guided by the principles of natural justice. The Appellate Tribunal also need not to adhere to the rules of evidence contained in the Indian Evidence Act, 1872. The Appellate tribunal will have the authority of civil court for the purpose of discharging its functions under the Act. The proceedings before the Appellate Tribunal are to be considered as judicial proceedings. The appellant or applicant will have legal right to represent his case either in person or by a legal representative or company secretary or chartered accountant or cost accountant. Each order made by the Appellate Tribunal can be executed as a decree of civil court. An appeal can be made by any person aggrieved from any order or decision of the Appellate Tribunal to the High Court within a period of sixty days.
OFFENCES, PENALTIES AND ADJUDICATION:
Chapter VIII of the Act provides the provisions relating to punishment for non-compliance of the provisions of this Act. The promoter will be liable for 3 years imprisonment and fine up to ten percent of the real estate project if he does not register the project with RERA under section 3 of the Act. The promoter can be imposed fine up to five percent of the project if he gives false information and violates section 4. A penalty up to five percent of the project shall be imposed if the promoter infringes any other provisions of the Act except sections 3 and 4. The real estate agent shall be liable for a penalty of rupees ten thousand per day and a maximum up to five percent of the plot, apartment or building of the real estate project if he does not register himself with RERA. The promoter shall be liable for a fine up to five percent of the project for each day default if he contravenes or fails to comply with the directions or orders of RERA under the Act. Further, the promoter shall be punished for a term up to three years and with fine up to ten percent of the project for each day default if he contravenes or fails to comply with the directions or orders of Appellate Authority under the Act. The real estate agent shall be liable for a penalty for each day default and up to five percent of the plot, apartment or building of the real estate project if he does not comply with orders of the Authority. He shall be punished for a term up to one year and with fine up to ten percent of the project for each day default if he contravenes or fails to comply with the directions or orders of Appellate Authority. The allottee shall be liable for a fine up to five percent of the project for each day default if he contravenes or fails to comply with the directions or orders of RERA under the Act. He shall be punished for a term up to one year and with fine up to ten percent of the project for each day default if he contravenes or fails to comply with the directions or orders of Appellate Authority. Whenever an offence is committed be a company, the persons who are in charge or responsible for conduct of the business of a company can be punished if they are found to be guilty under the provisions of this Act. The Authority while adjudging compensation under sections 12, 14, 18 and 19, will have to appoint a judicial officer who is or has been a district judge to be an adjudicating officer for making an enquiry under the provisions of this Act. An application for compensation is to be determined by the adjudicating officer within a period of sixty days.
CRITICAL ANALYSIS OF THE PROVISIONS OF THE ACT
The act ensures that homebuyers and landowners investments are safeguarded from any hardships caused at the hands of promoters and builders. The introduction of the RERA Act has brought more transparency in the real estate sector by stipulating the obligations of the parties, compensation to aggrieved parties and various aspects of law which were yet to be settled in the past. It also provides redressal mechanism to the buyers in the form of Real Estate Regulatory Authority and Appellate Tribunal in a case if any promoter, developer or agent infringes their rights under the Act. Further, the provision for penalty either fine or punishment or both also ensures fair play in action in real estate sector.
CONCLUSION
The value of properties and land, the investments made by homebuyers and landowners with their hard-earned money enhances the economic growth of our beautiful country. Therefore, to protect the interest of these hardworking landowners and homebuyers the RERA act has clearly laid down a mechanism with a simple yet clear vision to aid various transactions in the real estate sector. Hence, I conclude that this act has provided extraordinary relief to all individuals by protecting their hard-earned investments in the real estate sector have been well protected.
A Beginner’s Guide To RERA
What is RERA & What is the Objective of RERA?
RERA was formed to aid aggrieved purchasers and landowners at the hands of builders/promoters.
The objective of RERA is simple and as follows:
- To protect the interest of allottees/purchasers/landowners.
- To reduce fraud and misrepresentation.
- To ensure that all the relevant information is provided to parties.
- To ensure that contracts are enforceable.
- To provide a quick remedy to aggrieved parties. within a stipulated period of time.
- To create confidence amongst people whilst purchasing properties or entering into joint venture agreements.
What are the powers of RERA?
RERA was formed to aid aggrieved purchasers and landowners at the hands of builders/promoters.
RERA has many powers as stipulated under the Act. However, an eye opener to many buyers/purchasers is the fact that RERA has the powers to demand the Promoters/Landowners/Builders to pay Compensation to the Purchasers. Moreover, RERA has the powers to order refunds to the purchasers. Furthermore, compensation is usually ordered with a rate of interest (Annual) which is the discretion of the RERA tribunal. RERA has also the inherit power to grant an injunction towards stopping the sale of a scheduled property. RERA also has the powers to decide petty issues with regard to the parking slot allotted to the purchasers by the builders/promoters/landowners.
Who should approach RERA?
Every Consumer/Purchaser who has been aggrieved by the promoter for various reasons as stipulated under should approach RERA for appropriate remedy:
- Delay in possession of Flats/Apartments.
- Joint Venture Agreements gone wrong.
- Issues with regard to Common Area/ Allotment of Parking
- Purchase of Vacant land leading to refusal to return the advance amount paid towards booking.
- Fraud committed by Promoters/Builders Eg: Pledging the Property, Executing Sale deeds without consent of the landowner, Subcontracting word to third party builders without permission of the landowner, etc.
When should you approach RERA/ Timeline for the case to come to an end?
It would be wise to consult with an Advocate/Lawyer/Attorney who specializes in RERA disputes. The age old saying “The Sooner the Better” is always advisable to all aggrieved parties. RERA – 120 DAYS RERA APPELLATE TRIBUNAL – 60 DAYS
RERA TRIBUNAL COURT PROCEDURE:
Why should you appoint an Advocate to represent on your behalf in cases under RERA?
To begin with, you should always consult with an advocate for a legal scrutiny report/legal opinion before entering into the following:
- Entering into a Joint Venture Agreement
- Granting a General Power of Attorney to a Promoter/Builder.
- Purchase of a Vacant plot of Land
- Purchase of a Apartment/Flat as advertised by a builder.
However, in circumstances where you refuse or forget to consult with an Attorney; it is always best to hire professional legal services. There are only a handful of Advocates who have an Active Practice before the RERA tribunal. Here are the following reasons you should always hire an attorney to represent your case:
- They are well versed with the sections of law stipulated under the RERA act and can interpret the legal jargons far better than the common man.
- They have a wealth of experience arguing before various courts & tribunals and hence they are more accustomed to this area of practice than the common man.
- They have in-depth knowledge to a catena of judgements passed by the Hon’ble Supreme Court of India, High Courts & RERA Tribunals.
ADVANTAGES OF RERA:
- RERA clearly defines the functions and duties of a promoter
- RERA clearly stipulates that no promoter/building can commence construction without registering under RERA.
- RERA clearly stipulates that no deposit or advance is to be taken by the builder without entering into a sale agreement.
- RERA returns any amount which has been paid to the promoter and also awards compensation for any mental agony or damages caused to the complainant.
- RERA levies various penalties on builders and promoters.
Joint Venture Agreements between Landowners and Builders/Promoters:
Clauses to be stipulated in a Joint Venture Agreement:
- Joint Venture Agreement should clearly stipulate the time period for competition of Project by the builder and when the possession of the premises is to be handed over.
- Joint Venture Agreement should clearly stipulate the premises/ number of flats/apartments to be handed over to the landowner and the absolute inherit right of the landowner.
- Joint Venture Agreement should clearly stipulate that the project is to be registered under RERA.
- Joint Venture Agreement should clearly stipulate that all approvals, sanctions, etc are to be obtained by the builder.
- Joint Venture Agreement should clearly stipulate that the builder will be held liable to all penal and legal consequences for any unauthorized or illegal construction.
- Joint Venture Agreement should clearly stipulate that in case of any dispute between the parties; the party who is at fault is to pay all the legal costs borne by the aggrieved party.
- Joint Venture Agreement should clearly stipulate that the builder is not to pledge/mortgage the property towards funding the project.
- Joint Venture Agreement should clearly stipulate the property to be developed along with the schedule of the property.
- Joint Venture Agreement should clearly stipulate the “Sharing of Plinth AREA”
- Joint Venture Agreement should clearly stipulate “MEETING OF OBLIGATIONS” of both the builder & the landowner.
- Joint Venture Agreement should clearly stipulate that “Rectification of Defects”
- Joint Venture Agreement should clearly stipulate the “OWNERS INDEMNITY”.
- Joint Venture Agreement should clearly stipulate the “DEVELOPERS INDEMNITY”
- Joint Venture Agreement should clearly stipulate the payment to the owner by the developer as advance WHICH SHOULD ALWAYS BE NON- REFUNDABLE.
- Joint Venture Agreement should clearly stipulate “General Clauses” with regard to the name of the project, specifications of proposed constructions, etc.
- Joint Venture Agreement should clearly stipulate the “TECHNICAL SPECIFICATIONS” such as foundation, structure of the building, Floor, Wall Tiling, Kitchen Fittings, Grill, Plumbing and Water Supply,etc.
What to Avoid:
- A General Power of Attorney is mandatory when entering into a Joint Venture Agreement with a builder/promoter. However, clauses with regard to mortgage of property & sale of the landowners share are to be avoided to avoid further legal litigation.
- An arbitration clause is to be avoided at all costs in the JV agreement due to the legal complications and the introduction of RERA to provide appropriate remedies to aggrieved parties.
- Third party builders should not be able to take over the construction from the builder without the permission of the landowner and without making an application to RERA for permission.
- Joint Venture Agreement should not stipulate the compensation to be owed to the parties in case of delay of possession, etc. the RERA tribunal & court of law should decide the compensation to be given to the aggrieved parties.
What remedy does a homebuyer/allottee in case a builder does not finish the project OR if he wants to pull out of a project?
A homebuyer can file a FORM N complaint under section 31 r/w 71 of the RERA Act,2016 before RERA for refund of the money or compensation which would come before the Adjudicating Office on TNRERA. A homebuyer can pull out of a project and demand refund of the entire amount paid to the builder with an interest rate of 10.05% for the following reasons:
- If there is a unwarranted delay in delivery of possession.
- If the brochure/ advertisement given by the promoter/builder was misleading and false.
- If the quality and structure of the building was not as was promised by the builder.
Moreover, aggrieved homebuyers can also seek compensation for the following reasons
- If there is delay in delivery of possession
- For mental agony and severe stress.
- Litigation Expenses.
It is to be noted that most homebuyers are in a dilemma to approach TNRERA for compensation due to the one sided agreements signed by them. However, TNRERA has recognised that the builders bully the homebuyers into signing the agreements in order to purchase the concerned apartments/villas, etc and have provided clarity on this issue stating that if there are any contraventions to the provisions of the RERA Act 2016, the builders will be liable to pay compensation as prescribed above.
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- Landlord and tenant matters – Dealing with all matters in relation to operational leases, All aspects of dispute resolution, including landlord and tenant disputes
- Development – Development of substantial industrial estates
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Occupiers
Our expertise includes:
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- Estate management – General portfolio and estate management, including dental practice portfolios
- Landlord and tenant matters – Dealing with all matters in relation to operational leases, All aspects of dispute resolution, including landlord and tenant disputes
- Development – Development of substantial industrial estates
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- Purchase vehicles – Dealing with complex corporate and joint venture structures involved in ownership
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Does a builder have to register the project under RERA if the project had begun before the enactment of the RERA ACT,2016?
The simple answer to the question is YES. The RERA act clearly states that any project that is on-going or completed after the commencement of the act has to be compulsorily registered under RERA. However, builders often tend to confuse and cheat their customers/prospective homebuyers into believing that registration is not mandatory. In such cases, to provide clarity to the common man, if the builder is unable to produce a occupancy or completion certificate obtained before the commencement of the act, he is blatantly misguiding his customer as registration is mandatory.
The RERA Act, 2016 was introduced to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.
There are two types of complaints that can be filed namely a FORM M complaint & a FORM N Complaint.
What is a FORM M Complaint?
FORM M complaints are often filed against the promoters seeking directions to the builders for breach of contractual obligations, failure to provide services as assured, to rectify defects in the building & to ensure that the promoter adheres to the rules and regulations framed under the RERA Act, 2016. The scope of a FORM M complaint depends on the grievance of an allottee/litigant as against the promoter.
What is the Procedure of a FORM M Complaint?
The procedure to file a complaint can be simplified in 3 stages:
- Drafting the complaint> Filing of Complaint > Payment of Court Fee.
- Notice to Promoter> Counter of Promoter.
- Arguments > Orders.
Note: All interim applications filed will be disposed prior to the disposal of the main complaint except in circumstances wherein the applications have to be taken up along with the main complaint for disposal.
Complaints Against Promoter – FORM M
What is a FORM N Complaint?
FORM N complaints are often filed against the promoters seeking refund of the consideration paid to the promoter for the following reasons: A. Delay in handing over possession. B. Misrepresentation and misleading advertisements by the promoters. C. Fraud committed by the promoter.
The scope of these complaints are limited to seeking refund, damages and compensation.
The procedure to file a complaint can be simplified in 3 stages:
- Drafting the complaint> Filing of Complaint > Payment of Court Fee.
- Notice to Promoter> Counter of Promoter.
- Arguments > Orders.
What is the Procedure of a FORM N Complaint?
The procedure to file a complaint can be simplified in 3 stages:
- Drafting the complaint> Filing of Complaint > Payment of Court Fee.
- Notice to Promoter> Counter of Promoter.
- Arguments > Orders.
Note: All interim applications filed will be disposed prior to the disposal of the main complaint except in circumstances wherein the applications have to be taken up along with the main complaint for disposal.
Complaints Against Promoter – FORM N
