MBA IN REAL ESTATE MANAGEMENT WHY RERA BY PROFESSOR DR. C.S. RAMANIGOPAL VINAYAKA MISSIONS UNIVERSITY

M2K17 MAY 26
REAL ESTATE [REGULATION AND
DEVELOPMENT] ACT 2016
RERA – AWARENESS PROGRAM-I/1©DR.C.S. RAMANIGOPAL

M2K17 MAY 26
Real Estate (Regulation and Development)
Act (RERA), 2016?
Ans:
An initiative by Indian government
To enhance transparency in the real estate
related transactions by creating a
systematic and a uniform regulatory
environment,
Thereby protecting consumers’ interest and
Making real estate developers liable for
timely completion of projects.

M2K17 MAY 26
When was the bill proposed?
The RERA bill was
Drafted in the year 2013
Was passed by the Rajya Sabha
on 10th March 2016 and
by the Lok Sabha on 15th March
2016. It received the Presidential
nod on March 25th 2016 and
Came into force on 1st May 2016
with 69 of 92 sections notified.
Effective from 1st May 2017 – 26
days old

M2K17 MAY 26
RERA – AWARENESS PROGRAM-I/4

M2K17 MAY 26
OBJECTIVES of RERA, 2016?
Five Major Objectives of RERA, 2016 areFive Major Objectives of RERA, 2016 are
To Establish the (RERA)
To Promote Transparency And Efficiency
In The Sale of Real Estate Projects or
To Protect the interest of Consumers in
the real estate sector
To Establish An Adjudging Mechanism
for speedy dispute settlement
To Set-up an Appellate Tribunal to hear
appeals from the decisions, directions or
orders of the RERA and adjudicating
officers

M2K17 MAY 26
When is this Act expected to commence? Is there any specific
date?
The RERA Act was assented by the president of India on 25th
March, 2016 and was notified in Gazette of India for public
information on 26th March, 2016.
However, commencement of specific sections of the ACT will be
done in step by step manner. The entire process will take around
12 to 18 months.
Effective from 1st May 2017 it is in enforcement. 26 days old

M2K17 MAY 26
Is RERA act, 2016 applicable to
all Indian States?
• Yes, applicable to all Indian
states Excluding Jammu &
Kashmir.
When does the Act notified in e-
Gazette?
• The Act was notified in e-
Gazette on 26th March 2016.

M2K17 MAY 26
What are the key terms that have been defined in
the RERA Act?
A number of key terms have been defined. Some of
them are:
Advertisement, Agreement for Sale,
Allottee, Apartment, Architect, Building,
Carpet Area, Commencement Certificate,
Common Areas, Completion Certificate,
Development, Development Works,
Engineer, Estimated Cost of Real Estate
Project, External Development Works,
Family, Garage, Immovable Property,
Interest, Internal Development Works,
Local Authority, Occupancy Certificate,
Person, planning area, Project, Promoter,
Prospectus, Real Estate Agent, Real Estate
Project, Sanctioned Plan

M2K17 MAY 26
Is the Act applicable to both residential and commercial projects?
• Initially, the bill was supposed to cover only residential projects. On
further amendments, commercial projects including shops, offices
and buildings were also included.

M2K17 MAY 26
Are there any supporting
Government bodies set up to
assist the RERA?
• Yes, A Central Advisory council
will be set up to advice the Central
Government on the implications of
the Act to recommend policies in
order to protect consumers’ interest
and to supervise the growth &
development of the real estate
sector. In addition, there will be a
dedicated Appellate Tribunal set up
for RERAs to hear appeals from
orders of the RERAs and the
adjudicating officer.

M2K17 MAY 26
Is Prior Registration of Real Estate
Project with Real Estate Regulatory
Authority mandatory?
Yes, Mandatory –
No developer or builder shall advertise,
market, book, sell or offer for sale, or
invite persons to purchase any plot,
apartment or building, in any real estate
project or part of it, in any planning area,
without registering Real Estate Project
(REP) with Real Estate Regulatory
Authority (RERA).

M2K17 MAY 26
What are all situations in which Registration
of Real Estate Project is not required?
There are three situations:
Where area of land proposed to be developed does
not exceed 500 sq m or number of apartments
proposed to be developed does not exceed 8
inclusive of all phases
Where promoter has received completion certificate
for Real Estate Project prior to commencement of
Act
For purpose of renovation or repair or re-
development which does not involve marketing,
advertising, selling or new allotment of any
apartment, plot or building, under real estate project

M2K17 MAY 26
How does a promoter make an application – manual or electronic
form?
It is stated that RERA shall operationalise
a web based online system for submitting applications for
registration of projects within a period of 1 year from date of its
establishment.
RERA is yet to be established. Until a web based online system
is established, all applications shall be made in paper format.

M2K17 MAY 26
FAQs by Real Estate Developers

M2K17 MAY 26
What are the roles and responsibilities of a
real estate developer as stated in the Act?
In order to escalate the responsibility and
accountability of real estate developers
towards consumers, made compulsory or
Mandatory for the real estate developer
To register the project with the RERA and
obtain a valid registration number before
proceeding
Any kind of marketing, advertising or selling
of units is strictly prohibited before the
registration of the project
To submit all documents related to the project
which is considered necessary by the RERA

M2K17 MAY 26
Roles And Responsibilities of a Real Estate
Developer as stated in the Act?- Continued.,
The real estate developer must deposit 70% of the
payment received from the consumers in an escrow
account and ensure that the amount is solely used for
the development of the project for which it was taken
Must adhere to the project plan at all times
Refund the money taken from the consumers with an
applicable interest in case the project cannot be
completed.
Compensate the consumer for the time delay if any
To repair any structural defects in the construction
even after 5 years of handover of the project

M2K17 MAY 26
Why has the Act mandated the real
estate developers to specify the
‘carpet area’ rather than the ‘super
built-up area’?
Carpet area is the net usable area
which excludes common areas,
balconies, verandas, terraces etc.,
whereas the super built-up area could
be the addition of both. Therefore, to let
the consumer know what he/she is
paying for, it is mandatory for the real
estate developer to specify the carpet
area thus enacting a straight forward
definition to be adopted across the
country.

M2K17 MAY 26
What actions will be taken by the RERA
after an application has been submitted
for project registration?
Action to be taken as per RARA are
The RERA is required to either grant
registration
or reject the application within 30 days of its
submission
On acceptance of application, the real
estate developer will be provided with a
login id and password to access the RERA
portal for the submission of documents and
details
If the application is not in conformation with
the guidelines then the RERA may reject it
after hearing the applicant’s plea

M2K17 MAY 26
What percentage of amounts for real
estate project from allottees should
be deposited in a separate account?
The developer shall deposit
70% of amounts realised for
real estate project from allottees, in
a separate account to be
maintained in a scheduled bank to
cover cost of construction
and land cost and shall be used
only for that purpose.

M2K17 MAY 26
What are the rules for Withdrawal
by Developer from such
account?
The developer shall Withdraw
amounts from Separate account,
to Cover Cost Of Project, in
Proportion to percentage of
completion of project

M2K17 MAY 26
What is the time limit for grant of registration
by RERA?
Registration by RERA shall be granted
within 30 days from date of application.
RERA shall also provide registration
number, Login ID and password to
applicant for accessing website of
Authority and to create his/her web page
and to fill details of proposed project.
What is the time limit for rejection of
application by RERA?
RERA shall communicate in writing the
reasons for rejection of application within
30 days from date of application.

M2K17 MAY 26
What if RERA fails to grant Registration or Reject
Application?
If RERA fails to grant registration or reject
application, project shall be deemed to have been
registered.
RERA shall also within 7 days (from expiry of 30
days) provide registration number, Login ID and
password to applicant for accessing website of
Authority and to create his web page and to fill
details of proposed project.
What is the validity of the Registration Granted by
RERA?
Registration shall be valid for a period declared
by promoter for completion of project or phase.

M2K17 MAY 26
Is there any validity period for a particular project
registration?
The real estate developer has to specify the
project completion time in the RERA application
form. Hence, the real estate developer is
accountable to follow the timelines otherwise,
he will suffer losses/ penalties.
What counts in the penalties when a real estate
developer violates the order of the Appellate
Tribunal of the RERA?
The real estate developer who will violate the
order of the appellate Tribunal of the RERA may
face imprisonment up to three years with a fine
of up to 10% of the total estimated cost of the
project in question.

M2K17 MAY 26
What is force majeure?
Force majeure means a case of war, flood,
drought, fire, cyclone, earthquake or any
other calamity caused by nature affecting
the regular development of the real estate
project.
Can RERA extend the validity of the
registration?
The RERA, under given force majeure events,
may extend the validity of the registration:
In the event of a natural calamity like flood,
cyclone, drought, fire etc.
In the case of war
However, the developer is still required to make a
presentation to the RERA by paying the
applicable fee and such extension will be valid
for a period of one year in aggregate.

M2K17 MAY 26
Will the on-going projects have to be registered as well?
Yes, if the project in question meets the criterion for registration then
the application for the same has to be submitted within 3 months of
commencement of the Act.
Is the Real Estate Act applicable to Ongoing/Existing Real Estate
projects?
Yes, as per section 3(1) of the Act, ongoing / existing projects, which
have not received completion certificate are covered under the Act.
The said section is reproduced below:
“……Provided that projects that are ongoing on the date of
commencement of this Act and for which the completion certificate
has not been issued, the promoter shall make an application to the
Authority for registration of the said project within a period of three
months from the date of commencement of this Act……” (RERA
ACT & LAW)

M2K17 MAY 26
As a real estate developer and
my project will be developed
in phases? Should a
developer get a single
registration or multiple
registrations?
In such cases, every phase will
be considered a standalone real
estate project and the developer
have to obtain registration under
this Act for each phase
separately.
Do all projects fall under the
radar of RERA? Are there any
exceptions?
Every project measuring more
than 500 square meters or more
than eight apartments will have
to be registered with the RERA.

M2K17 MAY 26
Can the registration once granted by RERA be
revoked?
Yes, RERA can revoke registration on
receipt of a complaint or on
recommendation of competent authority.
What acts lead to revocation of registration by
RERA?
The following four acts are lead to revocation of
registration by RERA:
Promoter makes default in doing anything
under Act / Rules / Regulations
Promoter violates any terms or conditions of
approval given by competent authority
Promoter is involved in any kind of unfair
practice or irregularities
Promoter indulges in any fraudulent
practices

M2K17 MAY 26
On what grounds can RERA revoke a
registration?
Upon receiving a complaint against the real
estate developer, the RERA can revoke
registration under certain conditions:
If it is satisfied that the real estate
developer has not complied with the
rules and regulations stated under the
Act or rules & regulations
If he has violated the terms & conditions
of approval given by competent
authority
If he is involved in unfair practices to
sell, market or advertise his project

M2K17 MAY 26
What is the role of RERA after revocation of registration?
Ans: The roles of RERA after revocation of registration are:
RERA will prohibit promoter from accessing its website for that
project, specify his name in list of defaulter, display his photograph
on its website and also inform RERAs in other States & Union
territories about such revocation or registration.
RERA will direct the bank holding the project back account, to
freeze the account, and take necessary actions including
consequent de-freezing of the said account to facilitate remaining
development work in accordance with provisions of section 8.
RERA may issue necessary directions to protect interest of allottees

M2K17 MAY 26
If the registration is revoked, it is the allottees who will suffer?
How does RERA tackle such a situation?
RERA may, instead of revoking registration, Permit
Registration to Remain in Force subject to such further terms
and conditions as it thinks fit to impose in interest of
allottees and any such terms and conditions so imposed
shall be binding upon promoter.
What is the obligation of RERA consequent upon lapse of or on
revocation of registration?
Upon lapse of or on Revocation Of Registration, RERA may
consult Appropriate Government to carry out remaining
development works by competent authority or by association
of allottees or in any other manner, as may be determined by
RERA

M2K17 MAY 26
In case of revocation of registration of a project, who shall have
the first right of refusal for carrying out of remaining
development works?
In case of revocation of registration of a project,
association of allottees shall have first right of
refusal for carrying out of remaining development works
Does the Act impose restriction on period of extension to be
granted by RERA?
Yes, RERA may in reasonable circumstances, without default
on part of promoter, based on facts of each case, extend
registration granted to a project for such time as it considers
necessary, which shall, in aggregate, not exceed a period of 1
year.

M2K17 MAY 26
Does this Act need consent / Ratification
from State Governments to be
applicable in states?
No, as RERA is not a Constitutional
Amendment Act affecting the States,
no consent / ratification, by whatever
name called is required.
States are bound to implement the
Act according to the timelines
provided therein.

M2K17 MAY 26
What if the promoter is unable to complete the project as stipulated in the
affidavit? Does the promoter have to file a fresh application for
registration?
Registration granted may be extended by RERA on an application made
by promoter due to force majeure. Also, RERA may in reasonable
circumstances, without default on part of promoter, based on facts of
each case, extend registration granted to a project for such time as it
considers necessary, which shall, in aggregate, not exceed a
period of 1 year.
Is there a time limit imposed under the Act for getting the accounts of
promoter audited?
Yes, the promoter shall get his accounts audited within 6 months after
end of every financial year by a chartered accountant in practice, and
shall produce a statement of accounts duly certified and signed by such
chartered accountant and it shall be verified during audit that amounts
collected for a particular project have been utilised for project and
withdrawal has been in compliance with proportion to percentage of
completion of project.

M2K17 MAY 26
Does the Joint Venture Agreements where landlord and developer
are two different parties but both are beneficiaries of the sale of
the project are liable to adhere to the RERA act?
Yes, both the developers and the landlord or any such party which
is the beneficiary of a sale of a project & receive payments from
consumers as real estate developers (Promoters) are liable to
adhere to the Act.
How does it affect the real estate developer's arrangements with
the real estate agents, contractors, architect, structural engineers
and similar parties?
As per the government rules, only registered agents are legally
allowed to function in the real estate business. Also, the RERA
makes it mandatory for a developer to make a declaration about
the real estate agents, architects, structural engineers and similar
parties to the appellate Tribunal of the RERA.

M2K17 MAY 26
What are the norms by RERA on
Advertisements or Promotions of Real
Estate Projects?
The RERA have strict guidelines for the
marketing of the projects. As per the rules,
anything shown in the marketing material
must be same with the final product or else
real estate developer will be liable to
penalties under the Act. Also, the
advertisement or prospectus issued or
published by the developer must mention
the website address of the authority, where
all details of the registered project have
been entered along with the registration
number obtained from the authority.

M2K17 MAY 26
What are the things that a real estate developer
need to share with the consumers with regards to
the project?
The real estate developer must share the progress
report of the project, receipt of pending approvals
and other such declarations which are related to
project delivery on a regular basis.
Can a real estate developer leave the project mid-
way by selling to another developer or party?
Yes, a developer can do so by taking written
approval of 2/3rd of project’s consumers and also the
prior approval of the RERA. If a consumer or his
family holds more than one unit in the project then
he/she will be considered as one consumer only.

M2K17 MAY 26
FAQs by Consumers

M2K17 MAY 26
How RERA secures consumers’ interest and empowers them?
Ans:
As per the RERA rules, the consumer is entitled to receive
information about the sanctioned plan, approved layout plan, stage
wise progress of the project, carpet area and facilitation of basic
amenities & services such as drinking water, electricity, sanitation etc.
The consumers can claim possession of the unit and the
association of consumers can collectively claim possession of the
common areas as declared by the real estate developer
In case the real estate developer fails to meet the timeline or does not
deliver what was promised then the consumer has the right to claim
refund of amount paid with prescribed interest and compensation
for the same

M2K17 MAY 26
What are the responsibilities of a consumer?
Ans:
It is mandatory for the consumers to make payments on time to the
real estate developer as per the agreement. He/she is also liable to pay
the share of registration charges, municipal taxes, maintenance
charges, ground rent, electricity charges, water supply charges etc.
Once the real estate developer issue the occupancy certificate, the
consumer is required to take possession within two months
The consumer is liable to pay prescribed interest if he/she fails to
make timely payments for his purchase
It is mandatory for a consumer to actively participate in the
formation of an association, a consumer federal or any cooperative
society. A consumer must participate towards the registration of
the conveyance deed of the unit.

M2K17 MAY 26
What is an escrow account and what is its use?
An escrow account is a bank account - account holder makes periodic deposits -
permit the bank to withdraw funds to pay for certain fixed obligations.
As per RERA regulations, a real estate developer is required to open an escrow
account in a government recognized bank - to prevent siphoning or using of funds
collected from one project for business expansion, it is mandatory for the
developer to deposit 70% of all collections in an escrow account maintained with a
scheduled commercial bank.
Developer can withdraw the funds solely for the purpose of the construction of the
said project in proportion to the stage of work.
The request for withdrawal of the funds is to be certified by an engineer, architect
or a chartered accountant.
This will give relief to the consumers from the pain of project delays and will
assure them that their payments to the real estate developer are being used for
the development of the project where he/she owns a unit/units.

M2K17 MAY 26
How can an aggrieved consumer lodge a complaint in the case of
dispute with the real estate developer?
It is mandatory to set up an Appellate Tribunal by the state
government within one year of the commencement of the Act.
Aggrieved consumer is required to approach the RERA in the case
of disputes
RERA will prescribe penalty or punishment by acknowledging the
nature of the violation. If in case the consumer is aggrieved by the
decisions of the RERA or an adjudicating officer then he/she can
appeal to the Appellate Tribunal. This setup will speed up the
process of dispute settlement because it minimizes the involvement
of the existing judicial system.
Further, if the consumer is not satisfied with the decision of the
Appellate Tribunal then he/she can appeal in the High court within
60 days of receiving the decision.

M2K17 MAY 26
What happens if there is no Appellate Tribunal established for a
particular jurisdiction during the time of appeal?
In this case, the state Government will appoint any other body as
Appellate Tribunal that currently exists to hear the appeals in the
interim. If in case the Appellate Tribunal is established during the
course of hearing then the particular appeal will be transferred to the
same under and will no longer be with the interim body.

M2K17 MAY 26
How will the project be completed if the real estate developer is
revoked after the registration of the project?
• In the given case the RERA can consult the Government to employ
a competent authority to complete the project.

M2K17 MAY 26
FAQs by Real Estate Agents or Intermediary

M2K17 MAY 26
What are the mandatory rules for the intermediary?
An intermediary is required to be registered with the RERA and
retain a valid registration number before facilitating any real estate
deal on the behalf of any real estate developer.
He/she is also required to maintain and preserve account logs and
other documents as prescribed by the Act. Also, he/she have to
facilitate all information and provide any further assistance as
prescribed by the Act to the consumer.

M2K17 MAY 26
On what grounds RERA can revoke the registration of an
intermediary?
The Act promotes professionalism in conducting real estate business
and prompts intermediary to adopt ethical means of dealing with
consumers.
Fraud,
Misrepresentation,
Breach of any terms & conditions of the act and
Any sort of unfair practice
can cause the registration to be revoked by RERA after not getting a
satisfactory reply from the intermediary.

M2K17 MAY 26
What are the penalties an intermediary would face if he fails to
adhere to the instructions prescribed by the RERA?
Ans: In case if an intermediary violates the rules prescribed by the
RERA, he/she will be liable to
• a Penalty up to 5% of the estimated cost of the unit in question.
Also, the intermediary can face
• Imprisonment up to one year if he/she breaches any orders,
decisions or directions given by the Appellate Tribunal.

M2K17 MAY 26

MBA IN REAL ESTATE MANAGEMENT WHY RERA BY PROFESSOR DR. C.S. RAMANIGOPAL VINAYAKA MISSIONS UNIVERSITY

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