This document outlines several issues with the Real Estate (Regulation and Development) Act (RERA) and provides suggestions. It identifies 7 key issues: 1) the definition of promoter and joint liability, 2) registration requirements for new and existing projects, 3) details required in registration applications, 4) separate account requirements, 5) certification requirements for withdrawing funds, 6) revocation of registration, and 7) cancellation of allotments. Suggestions are provided for each issue to clarify definitions, requirements, timelines, and liabilities in order to make the act more practical and address contractual obligations.

1. Issues in RERA presented to CREDAI Pune Metro
CA Vinit Vyankatesh Deo
Posiview Consulting Partners
3rd April 2016, Pune
Issues in RERA
Sr.
No.
Section Number Section Description Issue Suggestion
1 Explanation to Sec
2(zk) – Definition of
Promoter
In case person who constructs
Apartment for sale and person
who sells are two different
persons….both of them deemed
to be promoters….shall be jointly
liable under the Act
In case of Joint Venture /
Development Agreement where
apartments are given to landowners
as consideration for land, the
landowner will also become the
Promoter since he will the person
selling his share of the apartments.
Landowner and Promoter will
become responsible for the
commitments for sale,
advertisement etc. made by the
other party when they have no
control over each other.
The liability of the person
constructing and person
selling should not be ‘Joint
Liability’ but “Sole Liability”.

2. 2 Sec 3 – Registration New Projects: Registration before
advertisement, booking etc.
Existing Projects: Register within
3 months on date of
commencement of the Act
Establishment of Authority and
creation of website for registration
is within purview of State
Government.
What would be the status of projects
till Authority and Website are
established?
There should be a clarification
stating that Section will come
into force after State
Government sets up Authority,
Appellate Tribunal, frames
Rules and Regulations and sets
up Website.
3 Sec 4(2)(b) – Details
to be submitted with
Application
Names of photographs of the
Promoter
Promoter can be Firm, Company etc. Clarification required that in
case the promoter is other
than individual, then define
the persons whose
photographs are to be given in
the Rules.
Partnership Firm: Names and
photos of only Working
Partner should be given
Limited Liability
Partnership: Names and
photos of only ‘General
Partners’ should be given (as
the ‘Limited Partners’ are

3. generally Investors)
Private / Public Limited
Company: Names and Photos
of only Whole Time Directors
should be given.
4 Sec 4(2)(l)(D) –
Opening of Separate
Account
Separate Account in case of
existing Investor / Loan
Arrangements
Developers who have availed
finance against existing Projects
would have escrow accounts with
first lien by the Lender / Investor on
all cash flows.
They will not be able to open
Separate Accounts without consent
of the Investor / Lender.
Provision of Separate Account
for existing Projects should not
apply as they will be barred
from doing so by existing
contractual arrangements.
ii) Separate Account with
“Scheduled Bank”
Several Promoters especially in
semi-urban and rural areas have
Bank Accounts in non-scheduled
Banks (eg. Co-operative Banks,
Credit Societies etc). They have also
taken loans against the projects that
require them to deposit the
collection in an escrow account with
Provision of Separate Account
for existing Projects should not
apply as they will be barred
from doing so by existing
contractual arrangements.

4. such lending bank. Such promoters
will not be able to open separate
accounts for ongoing projects in
scheduled bank.
4 Sec 4(2)(l)(D) – 70%
amount –
withdrawal from
Separate Account
i) Withdraw the amount to cover
the “cost of the Project”
The Section does not deal with cases
where the consideration to
Landowner is paid by way of
Revenue Share which is “not a cost”
There should be a clarification
stating that land cost covers
“consideration payable to the
landowners in any form
including share of revenue,
area, profit or any other
manner”
5. Sec 4(2)(l)(D) – 70%
amount –
Certification
Amount can be withdrawn from
Separate Account when
proportion of completion is
certified by “an Engineer,
Architect and Chartered
Accountant in practice”
Are the certifications of ALL
required?
Which certificate is to be taken as
final as percentage completion of all
the three professionals will be
different due to different methods of
computing
The certificate should be taken
from “either of” Engineer,
Architect or Chartered
Accountant
6 Sec 8 – second
proviso – revocation
of registration
i) Authority can pass order to
carry out the development work
by Competent Authority,
Association of Allottees or any
other manner
It seems the developer continues to
have obligation to the allottees even
after revocation of registration.
No time limit prescribed for passing
the order
The liability of the Developer
should be upto the time that
he is control of the Project.

5. The time taken by the
Authority and Appellate
Tribunal, High Court etc
should be excluded for the
purpose determining delay of
the project and of computation
of interest, compensation etc.
ii) Association of Allottees to
have first right of refusal
No time limit prescribed for
exercising the Right.
The Association of Allottees
should be given a time – say 60
days to exercise the right.
It should also be deemed to be
the Developer from date of
exercise of Right of first
Refusal.
7 Sec 11(5) Cancellation of Allotment Section says that Allotment can be
cancelled in terms “Agreement for
Sale”.
Generally Allotments are done by
taking a token amount and issue of
Allotment Letter containing terms
Allotment should be cancelled
in terms of “Allotment Letter”
and not “Agreement for Sale”
The Proforma of Allotment
Letter is anyways to be
submitted at the time of

6. and timeline for Agreement for Sale registration - Sec 4(2)(g)