Rera legal module - sandeep jhunjhunwala fca llb

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Module 4: Legal aspects under Real Estate (Regulation and
Development) Act 2016 & Karnataka Real Estate (Regulation and
Development) Rules 2017
Presented By: Sandeep Jhunjhunwala, FCA, LLB

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Presentation Overview
Summary
RERA – Challenged before courts
Judicial Mechanism under RERA
Handling customer complaints
Projects under investigation
Structural Defect Liability
Agreement for sale
Association of Allottees
Workshop on RERA
Sandeep Jhunjhunwala
FCA, ACS, LLB, B. Com (H)

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RERA – Challenged!
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Workshop on RERA

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How Rules have diluted overall essence of RERA!
Content Various states have digressed to an extent that their tinkered
watered-down rules violate the parent Act. State Rules littered with gaps
which will make it smoother for builders to circumvent the law.
The Ministry of Housing and Urban Poverty Alleviation (MHUPA) had
notified its rules under the Act in October 2016. Such central rules are
applicable to all Union territories without their own legislature and were
meant to serve as template for rules in other states
Rules (draft/ final) effectively issued by some states favour RE developers/
construction industry over home-buyers
Press articles suggest that:
– PMO has sought a report from the Housing Ministry with respect to
violation of central provisions
– Amid reports that key provisions of the Act have been diluted by some
states, the Central Government had forwarded the rules notified by
the states to a parliamentary committee (Committee on subordinate
legislation) for examination
– Parliamentary committee has suggested MHUPA to instruct
States to amend diluted rules or re-notify them (August 11, 2017)
Statistics reveal that home-buyers in 65 percent of ongoing projects across
8 cities - including Ahmedabad, Mumbai and NCR-Delhi are staring at a
delay ranging between a few months and over 5 yearsWorkshop on RERA

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How Rules have diluted overall essence of RERA!
Content Few noted deviations:
– Cancellation by promoter on a week’s notice
– Registration fee at Re 1 per square metre (Central rules prescribed Rs
10/ Rs 50 per square meter depending on area of development)
– Increase in appeal filing fee (Rs 1,000 to Rs 10,000)
– Exclusion of disclosures (including pending court cases!)
– Payment of 30 percent of the total cost while signing the agreement
and 45 percent on reaching plinth level
– Deletion of anti-discriminatory clauses (given under UT model Rules)
Questions unanswered:
– Clarity on how homebuyers who have not agreed to a change in
building plans will be affected in the case of ongoing projects
– Provision on compounding rule for penalties carries the phrase "no
proceeding shall be instituted or continued" once fine has been paid -
Whether this provides lifetime immunity to the developer? – Rule 47(2)
of AP RERA Rules
Madhya Pradesh and Kerala have appointed a housing regulatory authority
as mandated under the law
Others such as Haryana, Maharashtra, Punjab and Delhi have appointed
an interim Regulatory Authority (All states have to appoint the authority by
end of April 2017 as per the Act). AP and Telangana too have interim
regulatory authorities.
Workshop on RERA

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From the Courts
Content Builders take Centre to court, say RERA illegal on grounds such as retrospective application on ongoing
projects/ Infringement of right to privacy/ land being state subject
– Builders and Developers Welfare Association - PIL before Jabalpur Bench of Madhya Pradesh
High Court (Writ Petition No 7456/ 7348 of 2017)
– Swapnil Promoters and Developers - Nagpur bench of Bombay High Court (Writ Petition No 4419
of 2017)
– MIG (Bandra) Realtors and Builders Pvt Ltd
The Housing and Urban Development Ministry has decided to move the Supreme Court for clubbing of
all cases relating RERA which have been filed in different high courts, so that these can be decided by
one court
Plot owner in Maharashtra move HC on RERA making them co-promoters
– Petition says the Authority by notifying the definition of "co-promoter" foists a liability on the owner
which was never contemplated either under the Maharashtra Ownership Flats Act or RERA and
only "promoter" is defined under both acts.
– Even Parliament chose not to add the definition of co-promoter in RERA, it adds
Buyers across India, in parallel, have challenged safe harbor to ongoing home projects, legal validity &
composition of interim regulatory authority and several other diluted provisions under RERA
The Bombay High Court in its 330 page judgement (December 2017) has upheld theconstitutional
validity of various provisions, which were challenged by the developers
The Central Advisory Committee is set to examine all violations in RERA rules done by various
states and request states to align the same with RERA Act (Source: Minutes of the meeting of the
Central Advisory Council)Workshop on RERA

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Judicial Mechanism
under RERA
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Workshop on RERA

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Judicial Mechanism
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RERA
Adjudicating Officer
[District Judge]
RE Appellate
Tribunal
High Court
Adjudicating Officer to be appointed by
RERA in consultation with the State
Section 12 - Veracity of information in
advertisement, notice, prospectus or model
apartment
Section 14 - Adherence to sanctioned
plans, layout plans and project
specifications by the Promoter
Section 18 - Return of amount of
compensation
Section 19 - Rights and duties of allottees
Other matters
Any dispute resolution relating to
matters on any violation or
contravention of provisions is through
RERA or the Adjudicating Officer
No recourse to civil courts on
matters covered under the RE Act –
Declaration that case is not pending
needs to be given.
Consumer forums (National, State
or District) not been barred from
the ambit of the Act
In respect of matters pending before
Consumer Courts, the Appellants
have the option to withdraw such
complaint and file an application
before the Adjudicating Officer
Pre-deposit at REAT level: 30
percent of penalty for Promoters or
100 percent of interest/
compensation for allottees
REAT to be headed by a sitting or
retired Judge of the High Court, with
one judicial and one administrative/
technical member
Consumer court case versus
RERA - Which one to choose?
Foradjudgingthe
compensationtobepaid
byPromoters
Required to adjudicate cases
within 60 working days from
the date of receipt of appeal/
application
* Section 31 of RERA – As per the definition of “aggrieved person”, even an outsider (who is not the customer or the association of allottees) could file a
complaint with the Adjudicating Authority or the officer. However, Section 2(i) of AP RERA Rules restricts the complainant to be an aggrieved person
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Workshop on RERA

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National Consumer Commission vs RERA – Which
one to choose?
Annexures For making a complaint to a consumer court, the home buyer will have to
determine the pecuniary jurisdiction and file the case depending upon the
subject matter and compensation claimed. Under RERA, a home buyer canfile
the complaint with the Authority of the State where the property is situated
After the verdict from the highest consumer court, appeal lies before the
Supreme Court of India. Under RERA, complaint could be filed beforethe
Adjudicating Authority/ RERA, followed by appeal before the AppellateTribunal
and the High Court of the state concerned
A consumer can approach consumer court in cases where the unit/ flat/apartment
has been delivered by the Builder. A consumer can retort to judicial appellatepath
under RERA only if it is a RERA registered project (projects with completion or
occupancy certificates - partial or complete, cannot be challenged under RERA
In case a person has Consumer Court for relief, there is no bar to approaching
appropriate authority or initiating criminal proceedings against the Builder.
The RERA Rules for most states, specifically take an undertaking fromthe
complainant at the time of making a complaint to the Authority that thehome
buyer has not made any other complaintWorkshop on RERA

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Handling Homebuyers
complaints
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Workshop on RERA

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Complaints by homebuyers
Construction
not started
Delay in
Possession
Enhanced
demand by
Builder at the
time of
handing over
of possession
like charging
for increase in
super area etc
Major change in
the layout plan
or building plan
by the Builder
Quality of
construction
or land title
issues
Subvention
Scheme -
Builder
defaulting in
paying of EMIs
to Bank
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Workshop on RERA

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Karnataka RERA – Dispute Resolution (1/3)
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Workshop on RERA
0%
10%
20%
30%
40%
50%
60%
70%
Delay in handover Refund of booking
amount
Rectification of mistake
while registration
Delay in execution of
sale deed

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Workshop on RERA
Orders passed by the Karnataka RERA Authorities in ~250 complaints have been made public
Almost all the orders passed by the Karnataka RERA Authorities are in favour of buyers
Perusal of these orders depicts that of in most of the complaints, issues have been settled through compromise
petition between buyer and the builder, whereas few complaints have been withdrawn after the builder
refunded the advance amount paid by the buyer, and in some cases complaints have been annulled/ withdrawn
on ground of lack of a dispute which needs adjudication
Most of the orders based on compromise petitions have failed to record details of such compromise, leaving a
blind spot on bargaining equations between the parties

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Workshop on RERA

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Workshop on RERA

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ContentContent Karnataka RERA Authorities have been identifying and publishing details of projects which are not registered
- Public is cautioned to invest in such projects
- List is updated (addition & deletion) on every Friday at 1PM based on replies received from the promoters in
response to notices issued by RERA authorities
- Source seems to be advertisements (through digital means, newspapers and hoardings), official records of
urban local authorities (BBMP/ BDA/ Sub-registrar’s office etc), customer complaints, promoters' websites
etc
- Authorities are in the process of roping in a private agency to support them in identifying unregistered
projects (both ongoing and new) –Tender Notification issued on March 5, 2018
- Revised approach*is to embark on a physical survey (total station survey, in technical terms, which is a
survey on a land parcel on the basis of its latitude and longitude using advanced GIS technology)
- Authorities estimate that there are close to 1500 unregistered projects in Karnataka, out of which ~800 are
in and around Bengaluru
Representation may be required in case of notice received from the Authorities
- Approach should be to test if such project falls in the exclusion of ongoing projects as defined in Explanation
to Rule 4 of the Karnataka RERA Rules
- Exclusion covers projects where developmental work is completed and certified/ 60 percent sale deeds
registered/ application made for issue of occupation certificate etc (all conditions to be met as on July 11,
2017)
- If yes, detailed submissions along with requisite supportings could be provided
- Basis such submissions and representation, the details of the said project could be removed from the list on
a provisional basis. However, it could be included again in case documents are found to be deficient/
inappropriate
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Workshop on RERA

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Structural Defect Liability
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Workshop on RERA

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Structural Defect Liability – An overview
Content Meaning of the term "structural defect" has been a matter of contention for a number of years and in
particular, in the assessment of home warranty insurance and statutory warranty claims
Construction cut across a wide spectrum of activities. Most engineering contracts contain an initial express
obligation of the contractor to carry out and complete the works in accordance with the contract
Contractor's basic obligation, so far as the standard of work is concerned, is to comply with the terms of the
contract (including plans and specifications)
In general, defects or defective works is where the standard and quality of workmanship and materials as
specified in the contract is deficient
Defects can be classified into two main categories
- Patent Defects – Could be discovered by normal examination or testing (roof leak, foundation crack)
- Latent Defects – Not discoverable by normal examination or testing, which could manifest itself after a
period of time
Construction defects could be the result of design error by the architect, a construction flaw, defective
materials, improper use or installation of materials, lack of adherence to the blueprint by the contractor, or
any combination thereof
Defects can take place in any part of a construction project and at any stage of construction
Construction defects are inevitable in construction projects delivery and are usually contentious between the
end customer, developer and the contractor/ subcontractors
Workshop on RERA

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Content Defective construction works could be considered as works which fell short of complying with the express
descriptions or requirements of the contract, especially any drawings or specifications, together with any
implied terms and conditions as to its quality, workmanship, durability, aesthetic, performance or design
Defects in construction projects are attributable either to poor quality of materials or poor workmanship or
combination of both
International Experience
Defect liability has been a
subject of intense discussion
all over the world.
International experience
suggest that countries where
the liability period is upto 10
years are witness to more
organized real estate
ecosystem with less
consumer cases.
United Kingdom
National House Building
Council (NHBC) provides 10
year long home warranties to
first and subsequent
purchasers against damages
caused by structural defects
or poor construction. Builders
registered with NHBC can
offer this warranty and
construction is audited at key
stages by NHBC
United States
Home warranty is loosely
used in the US and is more
like a home service contract
offered by builders and
insurers. Such warranty
covers repairs and
replacement of home
appliances, heating systems,
Mechanical, Electrical and
Plumbing (MEP) among
others
Workshop on RERA

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Structural Defect Liability – International perspective
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Workshop on RERA

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Content
Defect
Design
Deficiencies
Construction
Deficiencies
Subsurface/
Geotechnical
Problems
Material
Deficiencies
Workshop on RERA

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Possession “under protest”
Content Possession "under protest" is a legal protection that allowed buyers in the pre RERA regime to take
possession under protest and initiate defect liability period clause in the agreement
In simple terms, this means that the buyer has taken possession with the knowledge that there are defects
and the developer would be liable to get them repaired
Once the possession under protest agreement is initiated, an acknowledgement for a possession “under
protest” letter is to be received from the developer
In case, the developer/ builder does not get the identified defects corrected, the buyer has an option to
approach the consumer court for compensation and execution of repairs
Workshop on RERA

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Liability of a Contractor
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During Construction
• Contractor has a contractual
obligation to remedy any patent
or latent defect, at anytime up to
the date of handing over of the
works to the developer
• Contractor is expected to be
informed of any defective works
by the developer’s
representative
• Should he fail to rectify such
defects either on his own or
upon instruction of the contract
administrator, he is culpable of
breach of contract
During Defects Liability
Period
• Standard form of contract
should give the contractor a
licence to return to the site for
the purpose of remedying
defects
• In effect, such condition of
contract should confer upon the
contractor, an obligation to
repair or make good its
defective works, which can
(usually) be carried out more
cheaply and (possibly) more
efficiently than by some outside
contractor bought in by the
developer
Post Defects Liability
Period
• Contractor’s obligation to make
good any damages, lapses
• However, in circumstances
where defective work or
workmanship had been
knowingly covered up or
concealed so as to constitute
fraud, the commencement of the
limitation period may be delayed
until discovery actually occurs
(fact specific)
Workshop on RERA

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Liability of Architects and Engineers for deficiency of
service*
Content
Architect
Liability may arise out of contract or tort of
negligence and breach of duty
Duties generally include examining the site,
preparing designs/ drawings/ plans and
supervising/ certifying constructions
Whatever may be the express terms, there is
always an implied term that an architect shall
exercise reasonable care and skill in
discharging his obligations
Liability could be excluded or limited by
inserting exclusion clauses in the contract or if
results from factors beyond control
Engineer
Similar to Architects, Engineers also render
technical services beset with certain risks
which is difficult for a layman to perceive
Can a deficiency of service also include
unjustifiable delay in construction leading to
delayed possession?
Liability could be avoided in cases of trivial
errors. Professional indemnity insurance is also
taken to cover claim related costs
In India, suits for deficiency in housing services
are covered under the Consumer Protection
Act as well. Consumer forae are empowered to
render appropriate relief including removal of
defects and payment for damages for
deficiency in services, plus economic losses
* Depending on the facts and circumstances of each case
Workshop on RERA

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Structural Defect Liability – RERA Angle
Content
Structural
Defect
Liability
[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
Workshop on RERA

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Structural Defect Liability – RERA Angle
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Open issues
Definition/ Meaning of the terms – "Structural defect", "defect in workmanship, quality or
provision of services“
Definition/ Meaning of the term – “any other obligations of the promoter as per the
agreement for sale relating such development”
5 years to be considered from - (a) Date of possession of the respective unit or (b) date of
possession of all units in the apartment or (c) date of handing over common area to the
association of allottees?
What if there are unsold units or units sold subsequently in later years. Whether liability for
structural defect would be considered from the date of last unit sold?
If an ongoing project is registered under RERA, would the provisions related to structural
defect liability be applicable for the entire project or only to the units sold post registration of
the project?
Are 30 days enough for rectification? Identifying the contractor, deploying labour and
completion of rectification within 30 days seems far fetched
Who will decide whether a "defect" is due to structural design fault or poor construction -
Contentious issue among Structural Engineer, Architect and the Developer
Is defect defined as a "visible" defect only? What happens if a subsequent enquiry
demonstrates non-compliance to codes even though there is no visible defect?
What kind of Insurance should structural engineers be taking for this? Is the Insurance
industry in India geared for providing such insurances?
Workshop on RERA

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Structural Defect Liability – RERA Rules perspective
Content Haryana Real Estate (Regulation and Development) Rules 2017
Rule 2(u) – "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
Explanation: The promoter shall not be liable for any such structural/ architectural defect induced by the
allottee, by means of carrying out structural or architectural changes from the original specifications/ design
Points to ponder: Practise of customization for few customer - Whether discriminatory practice vis-à-vis others,
approval of two-third buyer (as this may be beyond approved plans) and subsequent claim of structural damage,
if any (say cracks etc due to shifting of columns, beams etc)
Workshop on RERA

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Content FAQs issued by the regulators in Maharashtra
55. What should the promoter do in case the particular brand of fixtures and fittings as mentioned in the
specifications are not available in the market since the production of that type is stopped by the
supplier? Will the promoter still be liable in such case? And what in case fixture/ fittings do not give
guarantee for more than five years?
Ans: In accordance with Section 14 of the Act, the promoter should take previous consent of the concerned
allottee.
Points to ponder: Would the structural damage also cover fittings (plumbing, electrical etc) and include issues
such as leaking taps, faulty electrical lines, defective wall switches, cracked tiles, blistered paints etc for 5 years?
Agreement for sale (AFS) notified by the regulators in Tamil Nadu [Karnataka final draft of AFS released
in April 2018 has a similar language]
Clause 9. Defects Liability: The Promoter shall rectify any structural defects with respect to the Apartment
(normal wear and tear is exempted), which shall not be as the result of any commission or omission of the
Allottee, any damages caused due to the acts of god or natural calamities or fire accidents, any willful or
accidental damages caused, any damages caused due to tampering by the Allottee, any product that has
been installed by the Promoter brought to the notice of the Promoter within 5 years from the date of intimating the
readiness to handover of the Apartment and thereafter no claim shall be entertained against the Promoter in
respect of any alleged defective work in the Apartment and/ or Project under any circumstances. The above
liability of the Promoter shall be restricted only to rectify/ repair the above defects and any consequential
damages will not be covered under this Agreement. Structural defects shall not include plastering hairline
crack. Third party warranty on products shall be governed by the terms and conditions provided by the
manufacturer of the respective products.
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Content Agreement for sale notified by the regulators in Telangana
Clause 12. Defect Liability:
1. It is agreed that 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 5 (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 30 (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
the Act.
2. Notwithstanding anything contained in the above clause the following exclusions are made:
a) Equipment (lifts, generator, motors, STP, transformers, gym equipment etc) which carry
manufacturer’s guarantees for a limited period. Thereafter the welfare association/ society shall
take annual maintenance contract with the suppliers. The Promoter shall transfer manufacturers
guarantees/warrantees to the allottee or association of allottees as the case may be
b) Fittings related to plumbing, sanitary, electrical, hardware, etc. having natural wear and tear
c) Allowable structural and other deformations including expansion quotient
d) The terms of work like painting etc which are subject to wear and tear
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Content Agreement for sale notified by the regulators in Goa
Clause 7.4
If within a period of five years from the date of handing over the Apartment to the Allottee, the Allottee brings to
the notice of the Promoter any structural defect in the Apartment or the building in which the Apartment are
situated or any defects on account of workmanship, quality or provision of service, then, wherever possible such
defects shall be rectified by the Promoter at his own cost and in case it is not possible to rectify such defects,
then the Allottee shall be entitled to receive from the Promoter, compensation for such defect in the manner as
provided under the Act. In case the allotees carry out any work within the apartments after taking
possession, resulting in cracks and dampness or any other defect within or to the adjoining
apartments/s, then in such an event the promoter shall not be liable to rectify or pay compensation. But
the promoter may offer services to rectify such defects with nominal charges. Hairline cracks and
dampness caused due to settlement, humidity, variations in temperature, electrical conduits, etc cannot
be considered as defective work.
Workshop on RERA

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MOFA vs RERA
Content In certain states like in Maharashtra, erstwhile law ie Maharashtra Ownership Flats (Regulation of the
Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA), provided remedy for
structural defects.
RERA has made the provisions far more stringent for the developers and beneficial to the flat buyers
Under MOFA, if any defect in the building or material used was brought to the notice of the developer
within a period of 3 years from the date of handing over the possession of the flat by the developer to the
customer, the developer had to:
- rectify the same, if rectification of such a defect is possible, without any further charge being levied on
the customer; or
- if it was not possible to rectify the defect, then the developer was required to pay a reasonable
compensation as determined by the competent authority
However, the challenge under MOFA was that the competent authority was non-functional and, in case any
customer desired to take recourse to the defect liability provision of MOFA to ascertain compensation,
appeal to civil court was the only recourse
MOFA covered only structural defects in a building or any defective material used. Under RERA, the cause
of action arises in case of structural defect or defect in workmanship, quality, provision of services or any
other obligation as per Agreement for Sale
Limitation period changed from 3 years under MOFA to 5 years under RERA. Further, under MOFA, there
was no time period within which the Promoter had to rectify or cure the defect.Workshop on RERA

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KOFA vs RERA
Content The Karnataka Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and
Transfer) Act, 1972 (KOFA) and related Rules and the Karnataka Apartment Ownership Act, 1972 (KAOA)
are the two laws governing the apartments sector in Karnataka
Section 7(3) of KOFA - If any defect in the building or material used, or if any unauthorised change in
the construction is brought to the notice of the promoter within a period of one year from the date of
handing over possession, it shall wherever possible, be rectified by the promoter without further charge to
the persons who have agreed to take the flats, and in other cases such persons shall be entitled to receive
reasonable compensation for such defect or change
Similar to MOFA, the competent authority was non-functional* and, in case any customer desired to take
recourse to the defect liability provision of MOFA to ascertain compensation, appeal to civil court was the
only recourse
Section 88 and 89 of the RERA mention the provisions of the Act would be in addition to and not in
derogation to any other law that is presently applicable. Therefore, RERA is not in contravention of the
Karnataka Apartment Owners Act, but an addition to these acts
* The State Government had failed to appoint a competent officer under these laws to look into certain grievances till March 2012. The Deputy
Registrar of Cooperative Societies was designated as a competent officer under Section 5 of KOFA later, when owners of apartments in Diamond
District on HAL Airport Road had approached the Hon’ble Karnataka High Court for resolution of their disputes over khata and title of the property
with the builder and the Bruhat Bangalore Mahanagara Palike (BBMP)
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Impact on pricing - More premium?
Content A question arises whether customers are ready for a time when they would be willing to pay a premium on
properties that come with stronger warranties
Fact is that buyers expect quality regardless of premium
Buyers seem to be hard-pressed with direct and indirect premia for brand, specifications, floor-rise,
magnificent views (overlooking gardens, swimming pool etc), amenities etc
Market does not seem to be prepared to pay any further premium, especially on construction quality and
specifications, which could become a qualifier
Tier-1/ reputed developers may start setting the price in their respective micro markets, where quality
construction, decent specifications and time bound handovers would be a given
Over a period of time, defect liability coverage would become an industry practice (more than just being a
regulation)
In the short run, structural defect liability coverage could make real estate pricing dearer
Dilution by some of the state regulators with respect to structural damages likely to go with the proposals
made by the Central Advisory Committee of the Ministry of Housing and Urban Development, Government of
India
Such warranties would institutionalise accountability and boost transparency in the realty sector in a longer
run
Workshop on RERA

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Best Practices to be followed
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Back-to-back warranty agreements with contractors/ suppliers/ service providers to pass on the monetary
risks of defect liability (time span should be 5 years in line with RERA defect liability period)
5 year warranty post possession to the end customer would mean > 5 year warranty coverage from the
suppliers/ service providers (gestation period related to completion construction and handover)
Warranty coverage to be made a mandatory and indispensable consideration for vendor selection
(procurement team to note)
If required, separate Annual Maintenance Contracts (AMCs) to be entered into for mitigating financial risks
Reflection of increased costs (if any) due to structural defect liability coverage on overall project costs
(finance team to note)
Starting from the contract to execution and finally handing over, documentation (clear roles and
responsibilities, check and balances etc to identify the delinquent at a later stage) has to be clearly spelled
out (legal team to note) + include litigation mitigation approach in contracts
Apart from going by the rulebook on construction engineering, a developer may need to keep a check
(supervision) on contractors/ sub-contractors (and related agencies) at all phases prior to handover by them
(operations team to note)
Technical audits could be carried out throughout the construction period and beyond [Schedule regular
defect inspections to become more pro-active rather than re-active]
Contractual Risk Transfer - Insurance coverage (Construction/ Inherent defects) + Written contract of
requirements/ responsibilities/ accountabilities + Indemnification agreements
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Agreement for sale
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ContentContent Karnataka RERA Authorities had issued a draft agreement for sale for public consultation in August 2017
Final format yet to be notified
Section 13 of the Act requires the Promoter to enter into a written agreement for sale and register the same
before accepting a sum of more than 10 percent of the cost of apartment, plot or the building, as the case may
be
Pending final notification from the Authorities, promoters have the flexibility to adopt the draft or modify few
terms. However, in case, the final draft is notified to be implemented with retrospective effect, executed
agreements may get impacted. Current agreement should have right to add addendum at a later stage.
Agreement for Sale (AFS)
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Workshop on RERA
Draft Format of AFS

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ContentContent Section 11(4)(e) - The Promoter shall enable the formation of an association or society or co-operative society,
as the case may be, of allottees, or a federation of the same, under the laws applicable
Section 19(9) – Every allottee of the apartment, plot or building, as the case may be, shall participate towards
the formation of an association or society or co-operative society of allottees, or a federation of the same
Karnataka RERA Rules are silent on this aspect
All RERA registered projects needs to have association within 3 months from majority of booking being made
It is important to bring customer awareness regarding this requirement
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OPEN HOUSE & DISCUSSIONS
THANK YOU
Sandeep Jhunjhunwala, FCA, LLB, ACS, B.Com (H)
E: Mailboxofsandeepj@gmail.com
M: +91 97401 55469
The views in this presentation are personal views of the Presenter. The information contained is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although, the overall endeavor is to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or
that it will continue to be accurate in the future. This presentation is meant for general guidance only and no responsibility for loss arising to any person/ entity acting or refraining from
acting as a result of any material contained in this presentation will be accepted. It is recommended that professional advice be sought based on the specific facts and circumstances. This
presentation does not substitute the need to refer to the original pronouncements.

PROFILE - SANDEEP JHUNJHUNWALA
Sandeep is a Fellow member of the Institute of the Chartered Accountants of India and an Associate Member of
the Institute of Company Secretaries of India. He also holds Bachelor's degrees in Law and Commerce. Sandeep
has more than 11 years of experience in consulting in varied fields of tax and regulatory matters.
He specialises in advising clients with tax optimised business and operational structures. He has worked on a
number of leading multi-national companies in information technology, communication, real estate, entertainment,
pharmaceuticals, e-commerce and automotive sectors and has been extensively involved in tax and regulatory
advisory, compliance support, planning opportunities and litigation support on direct tax and regulatory matters.
He has been a speaker/ panelist on tax and regulatory matters at various forums such as NASSCOM,
ASSOCHAM, CII, BCIC, NAREDCO, CREDAI etc, industrial/ trade bodies such as TiE, Indo-American Chamber of
Commerce, Indo-Italian Chamber of Commerce, Royal Institution of Chartered Surveyors (RICS), various
Government recognised start-up incubators, Bangalore chapters of the ICAI, ICSI & ICMAI and leading Business
Schools & Engineering/ Commerce colleges in Bangalore. He is also a visiting faculty for taxation at the Bangalore
Chapters of the ICAI and ICSI.
Recently, he has been awarded honorary memberships by the National Real Estate Development Council
(NAREDCO) and Builders and Real Estate Developers Association of India (BREDAI) and also nominated for
non-standing committees of the ICAI including its Career Counselling Committee. He is also a mentor for the
Startup India programme of the Government of India. Sandeep also serves as a member in Direct Tax and
Representation committees of Karnataka State Chartered Accountants Association (KSCAA).
E: Mailboxofsandeepj@gmail.com
M: +91 97401 55469

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