Real Estate (Regulation and Development) Act, 2016

1. Real Estate (Regulation and Development) Act, 2016 S R L & Co. Chartered Accountants Vadodara CA.Lalit Raithatha CA. Rachit SomaniCA. Sakshi SomaniAddress: A/14, 4th Floor, Earth Artica, Vasna Bhayli Road, Vadodara Phone:07487888555

2. Purpose of Act Sale in transparent and efficient manner Regulate and develop the real estate sector Investor Confidence Dispute Resolution Protect the interest of Consumers

3. Role of PROFESSIONAL Compliance Advisory Policy formation Appear before Authority Documentation Dispute Resolution Landowners and Development agreement Advisory on Housing Society Redevelopment Empanelment by authority • Registration • Quarterly Return • Form 5 • Formation of Housing Society

4. Total Project as on 23/04/2019

5. Complains as on 23/04/2019

6. Project Life Cycle

7. Other Applicable Act • Transfer of Property act, • Code of Criminal Procedure,1973 • Indian Penal Code,1973 • Gujarat Land Revenue Code,1879 • Indian Contract act • Registration Act,1908 • Indian Evidence Act,1872 • Comprehensive General Development Control Regulations,2017 • Limitation Act • The Banning of Unregulated Deposit Schemes ordinance,2019 • Knowledge of other STATE RERAL to understand the Trend

8. Other Areas of practice by Professional – Post RERA • Housing Society – Formation, Audit and Consultancy • Not much professional involved in Work –Can be taken up as specialized area • The Building and Other Construction Workers welfare Cess Rules,1988 • Compliance level is very low – can be taken up as incidental area to RERA. • Availability of professional people is very less. • Can be taken up as incidental to RERA • Insurance Sector • Home Loan Business • Construction Funding • Cash flow management and manpower supply to builder

9. APPLCABILITY OF ACT • Section 3 Registration • In case of ongoing project, Which has not received the Project Completion Certificate before 01/05/2017, Registration is required if 1. Land area to be develop exceed 500 Sq Mtrs. or 2. the number of apartments proposed to be developed exceed eight • In case of new project – Registration is required before launch of the project if any one condition is satisfied • Applicable to all the project which are falling under planning area. • Planning area has been defined by Town Planning Authority.

10. Registration • Existing projects to get registration before 31 July 2017. • Not to Advertise and accept the booking amount before registration of project. • Application to be made in Form A as per Rule 3 declared by Gujarat Government. • All details as per rule 3 to be submitted with application. • Authority to grant registration with in 30 Days. • Ministry speech on ongoing projects: Regarding the consequences of including the ongoing project under the bill, I discussed the issue with my officials. This shall have a bearing on the projects and consumers. In fact the select committee of Rajya Sabha too in its wisdom supported and retained the need for regulating existing projects. But at the same time, projects which are almost at the fag end of completion and all, what they require is they need to give only information.

11. Registration We are not going to harass them. Because there is so much concern among the industries circle ass to what will happen to the ongoing projects, on going projects whatever agreement your have entered earlier stands. You have to fulfil the obligations which you yourself have agreed upon through an agreement. And whatever conditions that were stipulated in your agreement, they have to be implemented in toto. • Point to discuss • Whether Project received BU before 01 may 2017 – Can complain be made with RERA? • In few building, Possession is given with all facilities and builder has not received the BU –can complaint be made with RERA authority? • In case of Bungalows project, can promoter sale plot?

12. Complain • Case of Sajel Gandhi Versu Jayant Narendra Mehta – Complain No CC006000000000615 – MAHA RERA – OC was not received – Entire Building was occupied by all the Buyer – As project is Completed. All the Buyer has occupied the Building and even current Buyer is staying – Case was dismissed as Project does not fall under RERA. Big Relief to all the Building in Mumbai not having Completion certificate. • Case of Shyamsundar Karahan versus Hiren Patel – Complain No:000115 Guj RERA -BU received on 27/09/2016 –Possession was not given due to some issue. Even though project was completed before 01/05/2017- Decision was given. GUJ RERA has taken the reference of Writ Petition filed in Bombay High Court. -2737/2017 Neel Kamal Realtors • Silver City Residents Welfare Association (Regd) Vs. Silver City Housing & Infrastructure Limited, Zirakpur – Punjab RERA - The present complaint was dismissed by the authority stating the reason that the project has not been registered under RERA and the complaints against the unregistered projects are not maintainable. • Punjab RERA – Complaint No:GC1066 0f 2018 – Non Registered project complain is dismissed. • Punjab RERA-Complaint No:GC/1002/2018 –Appellate Tribunal – Kamla Rajput Versus Trishla Developers – Unregistered Projects not covered.

13. Few important definitions in RERA • Promoter • A person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; • A person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; • Any development authority or any other public body in respect of allottees of— • buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or • plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots;

14. Few important definitions in RERA • An apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; • Any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; • Such other person who constructs any building or apartment for sale to the general public. • Where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder; • Can Promoter include Land Owners ? • Whether all promoter need to be included in Registration Procedure ?

15. Few Example of Promoters

16. Understanding of Definition

17. Registration • Registration fees as per below table:

18. Registration • Section 4 Application of Registration Read With Rule 3 • Section 5 Grant of Registration • Section 6 Extension of Registration – Allowed in reasonable cases for one year. • Section 7 Revocation of Registration • Section 8 Obligation of authority consequent upon lapse of or on revocation of registration • Section 9 and Section 10 – Real Estate Agent

19. Section 8:Obligation of Authority Consequent upon lapse of or on revocation of Registration • Upon lapse of the registration or on revocation of the registration under this act, the authority, may consult the appropriate government to take such action as it may deem fit including the carrying out of the remaining development work by competent authority or by the association of allottees or in any other manner, as may be determined by the authority: • Provided that no direction, decision or order of the authority under this section shall take effect until the expiry of the period of appeal provided under the previsions of this act: • Provided further that in case of revocation of registration of a project under this act, the association of allottees shall have the first right of refusal for carrying out the remaining development works. • Section 40(1) – Recovery of Interest or penalty or compensation and enforcement order, etc. • If a promoter or an allotee or a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, by the adjudicating authority or the appellate authority, as the case may be, under this act or the rules and regulations made thereunder, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed as an arrears of land revenue.

20. Few important definition in RERA Occupancy certificate: • Occupancy certificate means the occupancy certificate, or such other certificate by whatever name called issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity. Completion certificate: • Completion certificate means the completion certificate or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been completed according to the sanctioned plan, layout plan and specifications as approved by the competent authority under the local laws. Common GDCR: • Page 43 para 2.9 – it is mandatory to obtain a building used permission from the competent authority prior to occupancy or use being made of any building. • Refer case of Maharashtra regulatory authority – Avinash Saraf /Neha saraf and Runwal Homes Limited – Writ Petition No.829 of 2013- held that occupying building without completion certificate cannot be permitted in law. • Refer Case Law of Nimesh Rameshchandra Parmar/Shivalik Enterprise – Extra Construction – Penalty paid by builder and Certificate of Regularization given by Surat nagarpalika - No action taken by authority-sale deed was done in 2007- There is occupancy.

21. Few important definitions in RERA • 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 land in to plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto. • Allotee • Allottee in relation to a real estate project, means the person to whom a plot, apartment, or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer, or others but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.

22. Few important definition in RERA • Few important aspects of Completion Certificate • Use of building without Completion certificate is not legal • Construction is subject to demolition by Local Authority • Both Builder and buyer are responsible • Local Authority can force buyer to vacate the building • It is advisable to take the possession only after Completion certificate • Right now on humanity ground all facilities like Electricity, Water and drainage are given but it may stop in future • Baroda, Surat and Ahmedabad and Rajkot having highest number of building without OC/BU. • Expecting Scheme of Amnesty to regularise the illegal construction.

23. Few important definitions in RERA • Sanctioned Plans: means the site plan, building plan, service plan, parking plan and circulation plan, landscape plan, layout plan, zoning plan and such other plan and includes structural designs, if applicable,permessions, such as environment permission and such other permissions, which are approved by the competent authority prior to start of a real estate project. • Section 14 require Adherence to sanctioned plans and project specifications by the promoter • As per Section 14 minor additions or alternations is allowed. • Additions and alternations should not lead to change in structure of project. • Promoter need to declare the FSI available and used in Scheme. • Order passed by Guj RERA – CMP/170817/0021753 – Surat –Kishorchandra Jagnasha versus Tasvira Patel – Order is passed to carry out the construction as per approved plan.

24. Major duties/responsibilities of builderSection 11,12,13,14,15 and 16 • To get the registration as per the requirement of Act. • Not to advertise the project before registration. • To open separate bank accounts to deposit 70% of amount received from customer for utilisation towards land and construction cost. • To submit the quarterly details to RERA Authority. • To follow the format of Sale agreement specified in Act/Rules. • Not to accept more than 10% Advance from customers without entering in to agreement to sale with customer. • To take necessary insurance of Project. • To adhere to original plan of project. • To pay interest on delay as agreed in sales agreement. • No escalation is possible during the tenure of project

25. Major duties/responsibilities of builder • To take approval of 2/3 of Customers in case of change in Plan/Layout. • To get the completion certificate of Certificate. • To form society/Association of members. • To handover all project documents to Society/Association. • To rectify all defects within period 5 years from the date of handover of the possession to customer.( Warranty Period) • To appoint registered Real Estate Agent • To submit the Audited Accounts with RERA authority with six months from the end of financial year with special mention that funds of project is utilised towards payment of Land and Construction cost of site • Sales to be done based on carpet area. New definition of carpet area.

26. Advertisement by builder Newspaper, Broachers ,Leaflets,Outdoor publicity – Big Hoardings RERA No and Authority Website - • Advertisement is governed by Circular No.13 Abridged RERA number and Authority Website in Audible manner Outdoor Publicity – Small Hoardings and Audio Visual Media

27. Case laws for Advertisement • Order passed for Advertisement without RERA Registration number • Order Passed for Advertisement of Project without writing RERA number and Authority Website • Order Passed for Advertisement of Project without writing Authority Website • Penalty Range 50000/- to 150000/- • Highest penalty to Primal Group by MAHA RERA of INR 50 Lakhs

28. Defect Liability Period of 5 Years • Section 14(3) - • In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter's failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act. • As per Haryana RERA Authority • Structural defects means actual physical damage/ defects to the designated load-bearing elements of the building, apartment or unit like faults, breakage or cracks, appearing over time in elements such as load bearing columns, walls, slabs, beams etc. which can affect the strength and stability of the apartment or the building and shall include any of the following, namely:- (i) defects due to design attributes of reinforced cement concrete (RCC) or structural mild steel (MS) elements of an engineered (structurally designed) building structure; (ii) defects due to faulty or bad workmanship of RCC or MS work; (iii) defects due to materials used in such RCC or MS work; (iv) major cracks in masonry work that are induced as result of failures of RCC or MS work; (v) any defect which is established to have occurred on account of negligence, use of inferior materials or non-adherence to the regulatory codes of practice by the promoter.

29. Defect Liability Period of 5 Years • Explanation:- The promoter shall not be liable for any such 3 structural/ architectural defect induced by the allottee, by means of carrying out structural or architectural changes from the original specifications/ design. • Refer Tamil Nadu RERA Authority Agreement to Sale • Third Party Product Warranty define in ATS. • Plaster crack not included • Whether it is logical to have 5 year period? • How to define? • How to safeguard builder? • How to handover society? • What points to include in handover documents?

30. Insurance • Builder to take insurance of Land title and Construction • Period not mention in Act or Rules • Once the sale deed is done, owner also takes insurance in case if home loan is availed, Insurance to be taken for which period ? Not clear from Act. • Recommended period 5 Years as Warranty period is 5 Years as per Act. • Other Insurance recommended for Builder: • Third Party Liability Insurance • Term Plan • Insurance with MWP Act • Workman Compensation Plan

31. Order issued by GUJRERA for Bank Account opening and operation

32. Order issued by GUJRERA for Bank Account opening and operation

33. Transfer of title As per Section 17 of the Act, • The Promoter Shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority as the case may be, and handover the physical possession of the plot, apartment or building, as the case may be, to the allottees and the common area to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws. • Provided that, in the absence of any local law, conveyance deed in favour of the allottee or the association of the allottes or the competent authority, as the case may be, under this section shall be carried out by the promoter within three months from the date of issue of occupancy certificate. • After obtaining the occupancy certificate and handing over physical possession to the allottes in terms of sub-section (1), it shall be the responsibility of the promoter to hand over the necessary documents and plans, including common areas, to the association of the allottees or the competent authority, as the case may be, as per the local laws.

34. Transfer of title • Sale deed is not valid if it is done prior to receipt of Completion certificate. • Possession is given and sale deed is also done. Builder is liable to give compensation if completion is not received prior to end date of project. • Need to understand the current practice of Promoter. • Amount of compensation if Completion is not received prior to end date of Project? • Refer complaint No:CC006000000000032 of MAHA REA and Bombay High Court Writ Petition 829 of 2013 dated 15/10/2013 • Refer case law of Ananta Lifestyle Vadodara for – Construction Without Permission – Sale deed is done – Possession is given

35. Return of Amount and Compensation by Builder to Allottee Section 18 of Act • In case of delay in project handover by builder, Customer can • Ask for refund of full amount with interest as agreed in sale agreement or • Ask for interest for delay period till the time actual possession is given as per rate agreed at the time of sale agreement • Builder liable to compensate customers for any loss incurred due to defective land title. • Extension is allowed only due to force majeure. Force majeure means a case of war,flood,drought,fire,cyclone,earthquakeor any other calamity caused by nature affecting the regular development of the real estate project. • Force majeure definition as per ATS: War, Civil Commotion or act of god, any notice,order,rule,notification of the government and/0r other public or competent authority – Definition of Act will prevail not Rule • Project End date in ongoing project where booking is done prior to RERA Registration is received and compensation amount ? How to consider delay ? • Compensation if booking is cancelled prior to completion date ? • Amount of compensation?

36. Scenario of Refund

37. Complain • Section 31: Any aggrieved person may file a complaint with the authority or the adjudicating officer as the case may be, for any violation or contravention of the provisions of this act or the rules and regulations made thereunder against any promoter, allotte or real estate agent as the case may be. • Section 71 – Power to adjudicate • Provided that any person whose complaint in respect of matters covered under section 12,14,18 and section 19 is pending before any consumer forum on or before the commencement of this act, he may with the permission of such forum, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this act. • Section 12 –Wrong advertisement • Section 14 – Adherence to the sanctioned plans and specifications by the promoter • Section 18 –Return of Amount and compensation • Section 19-Rights and duties of allottee

38. Power of Authority Section 35 • Authority to call for any information, books and accounts form Promoter, allottee and Real Estate agent. • Section 35(1) – Appoint one or more persons to make an inquiry in relation to the affairs of any promoter or allottee or the real estate agent ,as the case may be. • UP RERA has directed the forensic audit of few companies. • E tender for Appointment of Forensic audit by UP RERA.

39. Offences, Penalties and Adjudication for Promoter

40. Booking Cancellation • As per The Banning of Unregulated Deposit Schemes ordinance,2019 • Section 2 (4)(l)(iii)- Advance received in connection with consideration of an immovable property under an arrangement or arrangement subject to the condition that such advance is adjusted against such immovable property as specified in terms of the agreement or arrangement. • Provided that if the amounts received under above become refundable, such amounts shall be deemed to be deposited on the expiry of fifteen days from the date on which they become due for refund. • Need to understand the current practice of cancellation/Clause in agreement to sale. Above rule make it mandatory to refund the amount with in 15 days of booking cancellation • Rule 17 of GUJRERA – It is mandatory to refund the amount within 45 days.

41. Financial institutions/Banks Requirements from builder • Need to submit RERA registration certificate before issue of APF for site. • Yearly submission of Audited accounts to make sure that 70% fund of project utilised for Project Cost ( Land and Construction Cost). • Regular check up of Website of RERA Authority by FI/Banks to make sure that registration is active and there are no negative remarks on Project. • Declaration from promoter that all the requirements of RERA Act will be followed throughout the Project tenure and any deviation or any non compliance will be the sole responsibility of builder.

42. Rules of RERA by Gujarat Government • Rule 1- Short title and Commencement • Rule 2-Deffinitions • Rule 3-Information and documents to be furnished by promoter for registration of project • Rule 4-Disclosure by promoters of ongoing projects • Original sanctioned Plans, Layout and specifications • Total Advance collected and balance to be collected • Status of project – Development and period required to complete the project. To be certified by engineer. • Rule 5-Withdrawal of sums deposited in separate accounts

43. Rules of RERA by Gujarat Government • Rule 6 – Grant or rejection of registration of the project. • Rule 7 – Extension of registration of the project. • 50% fees payable New Registration • Government can give waiver if extension is due to force majeure • Rule 8-Revocation of Registration of the project. • After giving opportunity of hearing to Builder, Authority may cancel the registration. • On cancellation authority will give first right of refusal to association of allottee to complete the balance construction. • After refusal by association of allottee, authority will decide how to complete balance work.

44. Rules of RERA by Gujarat Government • Rule 9 -Agreement to Sale • The format is define in Annexure A of Rule -9. Builder and Customers can change the format if they agree provided that it should not violate the provisions of the Act. • Rule 10 to 15 –Real Estate agent • Rule 16- Rate of Interest payable by the promoter and Allottee. • Interest as agreed between both • MCLR of SBI plus 2% - if it is not agreed. • Rule 17-Timelines of Refunds • To refund with in 45 days it becomes due.

45. Rule 9 Agreement for sale in Prescribed format • The format is define in Annexure A of Rule -9. Builder and Customers can change the format provided that the said agreement for sale shall not violate the provisions of the Act or the rules and regulations of the Act. • Important points to be covered in agreement to sale • Break up of Payment to be received at different stage. • Date on which the possession of the building/plot is to be handed over. • Particulars of project to be developed • Total Carpet area of the Building/plot and consideration for same • Price charged for common areas and facilities.

46. Rule 9 Agreement for sale in Prescribed format • Interest payable on default by both the parties. • Mention of FSI available and used. • Mention of Defect Liability period of 5 Years. • Post completion Society/Section 7 Company will be formed and common facilities will be handed over to society • Promoter will not have any right on common facilities.

47. Rules of RERA by Gujarat Government • Rule 18-Manner of giving effect to the recommendation to the central advisory council • Rule 19-Terms and Conditions and the fine payable for compounding offence

48. Hierarchy in RERA for Complain • First Complain to be made RERA Authority or Adjudicating authority. • Any Person aggrieved with the order of RERA Authority will complain to Appellate Tribunal • Any Person aggrieved with the order of Appellate Tribunal will complain to High Court