News: Are on-going realty projects being covered under RERA in your state?-22.04.2017

Are on-going realty projects being covered under RERA in your state?

Sunil Dhawan  |  ECONOMICTIMES.COM  |  April 13, 2017, 17:15 IST

The real estate panorama is set to change soon. May 1, 2017, is the date when the Real Estate (Regulation and Development) Act, 2016 (RERA) becomes effective in the entire country.

So far, Gujarat, Uttar Pradesh, Madhya Pradesh and Odisha have finalised their rules, while Rajasthan, Karnataka, West Bengal, Maharashtra and Tamil Nadu have framed their draft rules.

"Non-implementation of RERA would create a vacuum in states that don't implement it before May 1, 2017", says Ramesh Nair, CEO and Country Head, JLL India. Each State and Union Territory will have its own Regulatory Authority, whose responsibility amongst other ones will be to maintain a website, with records of all projects registered with the authority.

Will ongoing projects be covered?
The RERA Act holds promises for the existing buyers of real estate properties, both residential and commercial, who have still not got possession of their properties. "According to the RERA Act passed by Parliament last year, which was supposed to be implemented in its entirety in all states, every ongoing and under-construction project is supposed come under the regulator's ambit", says Nair.

Completion certificate is the key: Effectively, all those projects which have not received the completion certificate prior to the commencement of the Act need to come under the purview of the Act. To operationally cover the ongoing project, the developer has to get the project registered with the regulatory authority of the state.

The developers have been given a time frame of 3 months from the date of commencement of this Act for the under-construction projects to be registered. For projects where the completion certificate has already been issued, the developers need not go for its registration.

Project in phases: It's a common practice that a specific society or project is developed in phases by the developer. As has been seen in the recent past, the buyers of phases or towers/apartments which are typically offered for sale at the later stages get entrapped.

The Act is clear on this front and says - "Where the real estate project is to be developed in phases, every such phase shall be considered a standalone real estate project, and the promoter shall obtain registration under this Act for each phase separately.

In practice: The coverage to existing projects may not be uniform across states. Nair says, "UP and Gujarat excluded ongoing projects, and homebuyers are pressing the Central government to bring such projects under RERA in these states. Whether or not all ongoing and under-construction projects get covered under the Act will depend entirely on the respective State Governments passing it for their respective regions."

Even the fine print of the rules may leave several existing buyers stranded.

For example, as per the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 notification dated October 27, 2016, it covers ongoing projects what have not been issued completion certificate but specially excludes such projects which fulfil any of the following criteria on the date of the notification of these rules:

* Where all development works have been completed and the application has been filed with the competed authority for issue of completion certificate.
* Where services have been handed over to the local authority for maintenance.
* Where common areas and facilities have been handed over to the association or the RWA for maintenance.
* Where all development work have been completed and sale/lease deeds of 60% of the apartments/houses/plots have been executed.

Conclusion
Similarly, buyers in each state have to dig deep into the rules to establish the extent of coverage of the Act, which practically a common home buyer will not be in a position to undergo this exercise. The states need to frame its rules in accordance with the Act in letter and spirit and not try to keep the buyers at a disadvantage.

The purpose of establishing a resale state Act will serve only if it is followed in its entirety by all the stakeholders. Nair says, "The Centre has shown the way to states by implementing RERA in its entirety in the UTs. States must ensure that they do not dilute RERA and implement it in letter and spirit by May 1, 2017."