RERA Series-II
Legal Aspects with respect to Promoter and Allottees under RERA
Advocate Amarpal Singh Dua
Introduction
In the previous post the introduction as well as the other important concepts were discussed which are quintessential to understand the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”) . This article aims to provide an overview of the Obligations and Responsibilities of the Promoter; Rights & Obligations of allottees.
Functions and Duties of Promoter:
Chapter 3 of the RERA Act relate to the functions as well as obligation of the Promoter. Section 11 to 18 provides for various obligations/responsibilities and functions of the Promoter. The functions of Promoter in this regards are specified under Section 11 of the RERA Act and specifies as follows:
- The Promoter after receiving login Id and password under section 5 of the RERA Act may create his web page on the website of the Real Estate Regulatory Authority (“Authority”) and enter all the details of the project for the public view’.
- The following has to be updated by Promoters of the project on the webpage:
- List of number and type of apartment or plots booked;
- List of number of garages booked;
- List of approval taken and pending after commencement certificate;
- Status of the project.
- The advertisement or prospectus issued by the Promoter shall mention the RERA registration number and the website address of the RERA Authority;
- At the time of the booking or issuance of allotment letter the Promoter shall provide sanction plan; layout plan; specification and stage wise time schedule of the project;
- The Promoter shall be responsible for all the obligations, responsibilities and functions specified under the RERA Act and the agreement for sale or as per the conveyance deed;
- In addition to the above, the Promoter shall also be responsible for the following:
- To obtain completion certificate and make it available to the allottee or association of allottees;
- To obtain lease certificate, in case the project is on leasehold land, and make it available to the allottee or association of allottees. The lease certificate shall specify the lease period and certification that no payment is due;
- Providing and maintaining of essential services, on reasonable charges, till taking over of the maintenance by the association of allottees;
- Enable the formation of an association or society or cooperative society of the allottees under the laws applicable. In the absence of local laws, the association of allottees shall be formed within a period of 3 months of majority of the allottees who have booked their apartment or building;
- Execute a registered conveyance deed of the apartment in favour of the allottee;
- Execute a conveyance deed of undivided proportionate title in the common areas to the association of allottees;
- Pay all outgoings until transfers the physical possession of the project to the allottee or association of allottees;
- Shall not mortgage or create any charge after the execution of agreement of sale;
- Shall prepare and maintain all such other details as may specified by issuing regulations under this Act from time to time.
- The Promoter can cancel the terms the allotment only as per the terms specified in the agreement to sale. However, the allottee can approach the Authority in case the allottee is aggrieved and the cancellation is not as per the terms or unilateral and without any sufficient cause.
Obligations of the Promoter
As discussed above, that Chapter 3 of RERA Act also provides the obligations of the Promoter which are stated as follows :
- Obligation regarding to veracity of the advertisement or prospectus:
Section 12 of the RERA Act states that where a person makes an advance or deposit for an apartments on the basis information provided in the advertisement or model of the apartment which turns out to be false and the allottee subsequently suffers a loss or damage due to such false information shall be compensated by the promoter for such loss or damage.
Further, this section also provides discretion to allottee to withdraw from the project if the allottee is affected by the false information. In case, the allottee wishes to withdraw from the project, the promoter shall compensate him the entire investment along with interest.
- Obligations with respect to acceptance of deposit and agreement to sale
According to section 13 of RERA Act the Promoter is duty bound not to accept deposit of money in excess of 10 % of the cost price of the plot or apartment unless an agreement to sale has been executed. Furthermore, this section also imposes an obligation on the promoters that the agreement to sale shall be in the format as specified in the Rules and contain the following particulars :
- Development of Building;
- Specification;
- Internal Development Work;
- External Development Work;
- Date of Possession;
- Rate of Interest.
Generally, the format of agreement to sale is provided in the rules framed by the State. For example, Form Q of Punjab State Real Estate (Regulation and Development) Rules, 2017 is the format of agreement to sale which is also available on the website of the Authority which is different for each State.
- Obligation in case of transfer to third party of a real estate project & Insurance
The Promoter is under an obligation as per section 15 of RERA Act to not transfer any right or liability with respect to a real estate project without obtaining written consent of 2/3rd allottees and approval of the authority.
In addition to the above as per section 16 of RERA Act, the Promoter is also required to ensure insurance of the project as notified by the Central Government including but not limited to the following :
- title of the land and building as part of the real estate project;
- construction of the real estate project.
- Adherence to the sanctioned plan and project specifications
Section 14 of RERA Act provides for responsibility of the Promoter with respect to adherence to the sanctioned layout plans and specification and the nature of the fixtures, fittings, amenities and common areas, of the apartment or plot which is approved by the competent authority. This section further creates a bar on the promoters :
- To carry out any alteration or additions in the sanctioned plan, layout plan and specification and the nature of the fixtures, fittings, amenities described therein without the prior consent of the person.
- To carry out any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the written consent of the allottees.
Liability of the Promoter in case of Structural Defects
Apart from the obligations of the Promoter regarding adherence to the sanctioned plan, RERA Act also specifies liability of the Promoter in case the allottee discovers any structural or any other defect in the workmanship quality or provision or services or any other obligation of the Promoter according to the terms of the agreement within 5 years from the date of possession. The Promoter has to rectify that defect within 30 days. In case the Promoter is unable to rectify the defect, the allottee is entitled to receive appropriate compensation.
The term “structural defects” has not been defined in RERA . However, Haryana Real Estate (Regulation and Development) Rules, 2017 define the term as “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:-
- Defects due to design attributes of reinforced cement concrete (RCC) or structural mild steel (MS) elements of an engineered (structurally designed) building structure;
- Defects due to faulty or bad workmanship of RCC or MS work;
- Defects due to materials used in such RCC or MS work;
- Major cracks in masonry work that are induced as result of failures of RCC or MS work;
- 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”.
Refund of amount and compensation
In addition to liability specified under the RERA Act, section 18 of the RERA Act provides for situations in which the promoter is liable to pay interest to the allottees :
- In case of failure to provide possession of the flat in accordance with the terms of agreement to sale;
- Where the possession has been not been given due to discontinuance of the business after the revocation and suspension of registration granted under RERA Act ;
Furthermore, this section also provides for compensation to the allottee in case any loss is suffered by the allottee due to defective in title of the land.
Rights and Duties of Allottees
Lastly, Chapter IV of the RERA Act provides for rights and duties of the allottees which are enumerated under Section 19 of the RERA Act which are stated as follows :
i. Rights of the Allottees
- To know information relating to sanction and layout plan;
- To know stage wise time schedule for completion of the project;
- To take possession of the plot/building or apartment according to the declaration given under section 4(2)(c);
- To claim refund of payment along with interest and compensation as provided under RERA Act;
- To get necessary documents and plans;
ii. Duties of the Allottees
- Participation towards formation of association or society;
- Taking physical possession of the property within two months of issuance of occupancy certificate;
- Participation towards registration of conveyance deed of the apartment, building or plot as the case may be.
(Amarpal Singh Dua is an Advocate enrolled with Bar Council of Punjab and Haryana and may be reached out at a.sdua1334@gmail.com)
Disclaimer: The Opinions expressed in this article are that of the author(s). The facts and opinions expressed here do not reflect the views of IBC Laws (http://www.ibclaw.in). The entire contents of this document have been prepared on the basis of the information existing at the time of the preparation. The author(s) and IBC Laws (http://www.ibclaw.in) do not take responsibility of the same. Postings on this blog are for informational purposes only. Nothing herein shall be deemed or construed to constitute legal or investment advice. Discussions on, or arising out of this, blog between contributors and other persons shall not create any attorney-client relationship.
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