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The Real Estate (Regulation & Development) Act, 2016

Presentation @ RAJKOT BRANCH OF WIRC OF ICAI

By

CA. D. K. Patel

7

th

May, 2016

What does the Act aims for:

To protect the rights and interests of consumers To promote uniformity and standardization of business practices and transactions in the real estate sector To attempt balancing interests of consumers and promoters by imposing certain responsibilities on both.Contd...

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

What does the Act aims for:

To establish symmetry of information between the promoter and purchaser To promote transparency of contractual conditions between both the parties To set minimum standards of accountability To establish a fast-track dispute resolution mechanism

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Arrangement of sections of rerda-2016

Chap-terHeadingSectionsNotified w.e.f. 1st May, 2016IPreliminary1 & 22IIRegistration of Real Estate project and registration of Real Estate Agents3 to 10IIIFunctions and duties of Promoter11 to 18IVRights and duties of Allottees19VThe Real Estate Regulatory Authority20 to 4020 to 39VICentral Advisory Council41 & 4241 to 58VIIThe Real Estate Appellate Tribunal43 to 58VIIIOffences, Penalties and Adjudication59 to 7271 & 72IXFinance, Accounts, Audits and Reports73 to 7873 to 78XMiscellaneous79 to 92 81 to 92

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

SEC. 2 : Important definitions

Advertisement in any medium/ formInforming persons about a Real Estate ProjectOffering plot, building, apartment for SaleInviting persons to purchase the above & mode of payment thereof.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

SEC. 2 : Important definitions

ApartmentCalled by any name- Tenement, Flat, Block, Dwelling unit, Show room, Office, Chamber, Godown, Premises, Suit, unit or any other name.Separate and self- contained part of any immovable propertyLocated on one or more floors or any part thereof in a building or on a plot of landUsed or intended to be used for any residential or commercial use.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Sec. 2 : Important definitions

BuildingAny structure, erection or part of a structure intended to be used for residential, commercial or for business, occupation, profession, trade or for related purposes.Carpet AreaThe Net usable floor area of an apartment excluding external walls, exclusive balcony/open terrace areaIncludes Internal partition walls in the apartment

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Sec. 2 : Important definitions

Real Estate ProjectDevelopment of a building consisting of apartmentsConversion of Existing building into apartmentsDevelopment of land into plots or apartmentsFor the purpose of SaleProject includes common areas, improvements & structures thereon, easement, rights etc thereto

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Sec. 2 : Important definitions

Sanctioned planThe site plan, Building plan, Service plan, Parking and circulation plan, Landscape plan, Layout plan, Zoning plan, Structural designs.Environmental & other applicable permissions

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Registration of real estate projects

Promoters to Register every project exceptLand area of the project is 500 sq. mtrs or less. No. of apartments in the project not exceeding 8Received completion certificate prior to commencement of this ActProject is for renovation, repair or re-development for existing occupants only.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Registration of real estate projects

Registration at what point?Before advertisement Before invitation to persons to purchase (launch of project)Registration of ongoing projects:On the date of commencement of this ActCompletion certificate has not been issuedApplication for registration within 3 months from the date of commencement of this Act.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Procedure for Registration

Documents to be enclosed with application

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Details – Name, address, type (proprietary, partnership, company…), registration details

Promoters’ details – Name, address, photos

Details of Projects launched in last 5 years including current status thereof – delay in completion, cases pending, payments pending

Approved Sanctioned plan, commencement certificate, layout plan & location of plan

Plan of common area development work

Proposed facilities to provided

Procedure for Registration

Proforma of the allotment letter, agreement for sale, and the conveyance deed

Number, type and Carpet area of apartment offeredDetails of Contractors, Architect, Structural Engineer of the projectDeclaration supported by affidavit stating : i) Ownership & legal title, encumbrances on the land Ii) Time period within which promoter undertake to complete the project iii) 70% of booking realization to be kept in a separate bank account with a scheduled bank to cover the cost of project

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Functions and Duties of Promoters

On getting registration Create Webpage on website of the authority under this act and upload details of projectStatus to be updated every quarter on the website – progress, new bookings, any new development in the projectNot to advertise, book, sale or offer for sale prior to RegistrationTo issue allotment letter on booking, avail sanctioned plan, specifications to the allotteesTo inform about stage wise time schedule of completion including civic infrastructure – water, sanitation & electricity70% of amount realized to be kept in separate bank A/cTo execute registered conveyance deed in favour of allottee

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Functions and Duties of Promoters

To obtain Completion, Occupancy & Lease certificate and make it available for allottees.Maintain essential services till taking over of maintenance by the AOPEnable formation of AOP for building maintenanceNot to mortgage or create a charge on apartment after executing an agreement of saleNot to cancel allotment except as per terms of SatakhatAgreement for sale must be in standard formAdherence to sanctioned plan and specificationsLiability to rectify structural defect within 30 days if brought to notice by allottee within 5 yearsLiability to compensate allottee for failure to discharge obligations as advertised/informed

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Advertisement/ prospectus: obligations of Promoter

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Accepting deposit or advance

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Manner in which advance money to be utilised

Promoter shall withdraw amount from earmarked bank a/c to cover the project cost in proportion to stage of completionWithdrawal permitted after % of completion certified by an Engineer, an Architect and a Chartered AccountantAccounts to be audited within 6 months after the end of financial year by the CAAuditor to certify that amounts collected have been utilized in the project and withdrawal from bank is in proportion to the % of completion

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Construction plan and project specification

Proposed project shall be developed and completed as per sanctioned planIf any alteration or addition to be made, then written consent of at-least 2/3rd of allottees is required.In case of any structural defect, defect in workmanship or quality if brought to the notice of the promoter within 5 years, it should be rectified without further charges within 30 days else to be compensated.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Transfer of project to third party

Promoter shall not transfer his majority stake without prior written consent from 2/3rd allottees except promoterWritten approval of regulatory authority necessarySuch transfer shall not affect the sanctioned planOn the transfer being permitted by the allottees, intending promoter shall comply with provisions of this Act independently.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Insurance of real estate project

Promoter shall obtain insurance including but not limited to:Promoter shall pay premium and charges before transferring it to association

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Return of advance and compensation

If the promoter fails to complete or is unable to give possession, In accordance with the terms, or by the specified date,Due to discontinuance of his business If the allottees wishes to withdraw from project, to return the amount received by him with interest.If the allottees does not intend to withdraw, interest for every month of delay to be paid.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Rights of allottees

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

duties of allottees

Before booking, verify builder’s registrationNot to buy apartment in unregistered projectsNot to pay more than 10% of cost before agreement and payment should be made by banking channels only. To make necessary payments as per Satakhat & interest for delay thereonTo participate in formation of associationTo participate in registration of conveyance deed To take physical possession within a period of 2 months of receiving occupancy certificate

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

The real estate regulatory authority

Appropriate government shall appoint authority within 1 year from commencement of this Act.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Central advisory council

Ministry of the Central Government dealing with Housing shall be the ex officio Chairperson of the Central advisory Council.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

The real estate appellate tribunal

Every bench of the Appellate Tribunal shall consist of at least 1 judicial & 1 Admin to technical Member.Aggrieved person can file appeal within 60 days from receipt of direction, order or decision made by RA.Endeavour shall be made by the tribunal to dispose of the appeal within 60 days.Appellant may either appear in person or can authorize CA, CS, Cost Accountant or Advocate.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Offences and Penalty

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Power of appropriate government

Within 6 months, by 31.10.2016, the appropriate government (State Govt) will make rules and regulations regarding:Forms & manner of application and its enclosuresPeriod & condition of registrationMaintenance & preservation of Books of AccountsRate of interest for delays/defaultsForm & particulars of agreement for saleDetails to be published in websiteAny other matter it may deem fit.

The Real Estate (Regulation & Development) Act, 2016 by CA D. K. Patel

Thank

you