Saturday, 20 May 2017

How to Use Maharashtra RERA for Remedy Against Builders: Detailed Guide - Part 1

19th May, 2017: There appears to be a widespread campaign to malign Maharashtra's Real Estate Regulatory Authority as being biased in favour of builders, and not in accordance with the central Real Estate Regulation Act, 2016. This is a false story cunningly planted by the builder lobby, intended to deter citizens and flat-buyers from filing complaints against builders. The truth is that MahaRERA, as Maharashtra's Real Estate Regulatory Authority is known, is going to be the most strict taskmaster that builders have ever faced in Independent India!

A fun way to understand what I am saying is to watch these two Marathi videos:

It is as if a tsunami has reached the Mumbai coastline, and is about to hit the builders who have been taking not only flat-buyers and investors, but also the whole country for a ride. After this tsunami, when the water clears, we will find 90 percent the current builders gone. Only a small minority -- the most disciplined and law-abiding builders -- will be left in the industry after a couple of years.

Glance at some penalties prescribed by RERA for builders (termed as "promoters" under the Act). Here's Rule 5 of MahaRERA Rules for Penalties, Fines Payable, Compensation, etc.



Section 59 and 64 are applicable to promoters i.e. builders. If an errant builder wishes to avoid costly proceedings, litigation and subsequent imprisonment, he will pay fines 5 to 20 percent of the entire real estate project cost! He can be fined a whopping five percent for an offence as simple as failure to register himself with the Real Estate Regulatory Authority before 31st July, 2017, or selling a flat without first registration!

RERA's "Ten Commandments" for Builders:

As the 31st July deadline approaches, builders are scrambling to take numerous actions to avoid penalities u/s 59, 60, 61, 63 and 64. This includes all necessary actions for compliance with the below mentioned "Ten Commandments" mentioned in the below sections of Real Estate Regulatory & Development Act 2016:

Section 3 - Do not advertize or sell without registration.

Section 4 - Apply for registration before 31st July, with full details.

Section 5 - If Registration not granted, file appeal to Appellate Tribunal promptly within 60 days, otherwise you will lose your chance to appeal.

Section 7 -
(a)  Don't violate the terms of permissions & approvals given by competent authorities.
(b) Don't trigger your customers to complain to RERA.
(c) Appear at RERA hearings, fully prepared.
(d) Train your employees and estate agents to avoid making misleading statements, and never to promise what your project cannot deliver.
(e) Promptly amend your advertisements to avoid promising sun, moon and stars to buyers.

Section 11 - 
(a) Prepare website properly
(b) File quarterly updates
(c) Mention website address and registration no. on your adverts
(d) Make documents available to customers at the time of booking, and create evidence thereof (video, audio, signatures of customers, etc.)
(f) Keep customers (termed as "allottees" under the Act) updated with progress reports

Section 12 - Remove all vague & misleading content from all your literature, brochures, allotment letter; otherwise, if the allottee (i.e. flat buyer or investor) convinces the RERA Authority or Adjudicating Officer that he has been put to a loss because of your misleading content, you may have to return his entire investment with 10% interest, in addition to compensation. 

Section 13 - Register the agreement promptly in the proper RERA format after taking not more than 10% advance. In your agreement, mention every possible charge, and also the correct delivery date which you have declared before RERA. (Be careful in deciding the purchase price, construction cost & delivery date before declaring it to RERA and customer; RERA is very strict that no modifications will be allowed later.)

Section 14 -
(a) Immediately report to allottees any changes and deviations from approved plans,  and fixtures, fittings, amenities etc. mentioned in the agreement. If such changes are unavoidable, take consent of two-thirds of allotees before making changes.
(b) Rectify structural defects, defect in workmanship, quality of service, etc. within 30 days after they are it is pointed out by allottee. Such work must be done free-of-charge.
(c) Rectify any defects in the entire building that are reported for a period of five years after giving possession to each flat-holder.

Section 15 - Do not transfer or assign your majority rights to others. if you must do so, you need the approval of two-third of the allottees and also of the Real Estate Regulatory Authority. 

Section 16 - Insure the construction work, and insure the title of the land and building.

Section 17 - Give Conveyance in time, within 30 days after getting Occupation Certificate, or as per the time limits in any other existing law.

Section 18 - 
(a) If you (builder) are unable to give possession in time (as per the registered agreement) for any reason, then the allottee may withdraw from the project, and the entire amount paid by him should be returned with 10 percent interest. 
(b) However, even if the allottee wishes to continue with the delayed project, and does not want his money back, 10 percent per annum must be paid to the allottee for every month of delay until the date that flat possession is given (with occupation certificate).
(c) If allottees suffer any loss due to defects in the property title, they must be given compensation whenever such loss happens, in perpetuity. The statute of limitations does not apply.
(d) If you (the builder) fail to discharge any obligations under the RERA Act, Rules and Regulations, and also the terms and conditions of the Sale Agreement, you will have to compensate the Allottees. 

Breach of any of the above sections by a builder can lead to severe penalties. Flat-buyers and flat-owners should register themselves as "Citizen" here on the MahaRERA web portal, so that they will be able to file online complaints against their builder.

ISSUED IN PUBLIC INTEREST BY
Krishnaraj Rao
9821588114
krish.kkphoto@gmail.com

3 comments:

  1. its' fine print o.k. but who will be the final authority? like in co-operation the concerned minister is,he can STAY or CANCEL the order then go to court where their law officer take care for years like in the case of Shri Ganesh CHS/Nerul/plot No-1/sector-28, membership dispute WP-8508/2003,then it will one more money making machine,so please beware of/be cautious.

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  2. RERA dept. handling the same babus of Co-op. Dept. 3rd Floor, Bandra where they are siding with Builder/Developer than tenant. It is from my experience. Maharashtra RERA is a diluted version which is beneficial to builders rather than tenants/ buyers.

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  3. Us 17 by any other law is an escape window for the builders.

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