STATUS
The Real Estate Bill was passed by the Rajya Sabha on 10th March, 2016 and the Lok Sabha on 15th March, 2016. The Bill as passed by the Parliament was assented to by the Hon’ble President on 25th March, 2016. The Act as assented to by the Hon’ble President was published in the Official Gazette on 26th March, 2016 for public information
Section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78 and sections 81 to 92 were notified by the Central Government and came into effect from 1st May, 2016. Sections 3 to 19, Section 40, Section 59 to 70 and Sections 79 and 80 were notified by the Central Government and came into effect from 1st May 2017.
The Government of Gujarat by notification dated 29th October 2016 has notified the Gujarat Real Estate (Regulation and Development) (Matters Relating to the Real Estate Regulatory Authority) Rules, 2016 (“Authority Rules”) and Gujarat Real Estate (Regulation and Development) (Matters Relating to the Gujarat Real Estate Appellate Tribunal) Rules, 2016 (“Appellate Rules”). The Government of Gujarat by notification date 4th May 2017 has notified Gujarat Real Estate (Regulation and Development) (General) Rules, 2017 (“General Rules”).
Yes. Ms. ___________ has been designated as the interim Regulatory Authority by the Government of Gujarat. The address of the Real Estate Regulatory Authority is ________________.
OBJECTS AND REASONS:
The real estate sector has grown in the recent years but has largely been unregulated from the perspective of consumer protection. Though, consumer protection laws are available, the recourse available therein are only curative, but not preventive. This has affected the overall potential growth of the sector due to absence of professionalism and standardization.
The Real Estate Act is intended to achieve the following objectives:
Section 2(g) of the Act defines ‘appropriate Government’ to mean as follows:
the Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Section 2(zk) defines the term ‘promoter’ which includes both private and public real estate promoters. Thus, both Development Authorities and the Housing Boards, when involved in sale are covered under the Act.ttT
As per the Explanation to section 2(zk) “where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder”.
As per the Explanation to section 2(za) the rate of interest payable by either the promoter or the allottee shall be the same. The rate of interest shall be the contractual rate of interest as may be mutually agreed between the promoter and the allottee. Where no contractual rate of interest is mutually agreed upon between the promoter and the allottee, the rate of interest shall be the rate which is prevalent as per existing directions of Reserve Bank of India, i.e. Marginal Cost of Landing Rate (MCLR) the State Bank of India Prime Lending rate plus two percent . In this regard please see Rule 16 of the General Rules
As per section 2(b), which defines ‘advertisement’ any medium adopted in soliciting for sale would be covered under the said definition, including sms and email
As per section 2(d) an allottee includes a person who acquires the said ‘apartment / plot’ through transfer or sale, but does not include a person to whom such plot, apartment is given on re
Section 2(n) defines ‘common areas’ to include ‘community and commercial facilities’, thus they are an integral part of the project, to be handed over to the Association of Allottees/Societ
Section 2(zf) and section 2(q) respectively, define ‘occupancy certificate’ and ‘completion certificate’. The two definition are very broad and uses the term ‘by whatever name called’. Thus, if in a State/UT only one certificate is issued which provides for both the aspects covered under the two definitions, it would suffice the requirements under the Act.
Section 2(zf) and section 2(q) respectively, define ‘occupancy certificate’ and ‘completion certificate’. Occupancy certificate relates to the occupation of the apartment/building, which has provision for civic infrastructure such as water, sanitation and electricity and is habitable. Completion certificate relates to the completion of the entire project certifying that the project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority.
Section 2(v) defines ‘estimated cost of the real estate project’, which means “the total cost involved in developing the real estate project and includes the land cost, taxes, cess, development and other charges”. The determination of the estimated cost of the real estate project is necessary due to Chapter VIII of the Act, which provides that penalties would be imposed on the promoter, for violations prescribed under the Act, based on the estimated cost of the real estate project.
Section 2(y) defines the term ‘garage’, which can be sold to the allottee independent of the ‘apartment’.
The term ‘real estate project’ has been defined under section 2(zn) and the term ‘project’ has been defined under section 2(zj), which have been interchangeably used under the Act.
Section 2(zm) defines the term ‘real estate agents’, which is a very broad and inclusive definition and covers all from of agencies involved in sale and purchase of projects, registered under the Act. Consequently, web-portals etc. engaged in selling plots or apartments are also covered under the Act and are required to comply with the duties and responsibilities as provided therein including under the Rules and regulations made thereunder
Q21) What Happens In Case A Term Is Used Under The Act But Has Not Been Defined?.
Section 2(zr) is an omnibus definition which provides that terms which have not been defined under the Act or the Rules and Regulations made thereunder, would have the same meaning as respectively assigned to them under the relevant Municipal laws or under any law for the time being in force.
Q22) Does The Act Cover Both Residential And Commercial Real Estate?
The Act covers both residential and commercial real estate. Section 2(e) defines ‘apartment’ and section 2(j) defines ‘building’ which include both residential and commercial real estate.
Section 3(1) first proviso provides that promoters of ‘all ongoing projects which have not received completion certificate will need to register their project with the Regulatory Authority, within 3 months of its commencement’.
The promoter of a new project can advertise his project for sale after the project has been registered with the Regulatory Authority as provided in section 3(1).
Section 4 of the Act provides for details / information and undertaking to be provided by the promoter to the Authority for registration of the project. The mechanism for registration i.e. the requisite forms to be filled, the fees to be paid etc. are determined in the General Rules made by the Government of Gujarat. Please see Rules 3(2), 3(3) and 3(4) of the General Rules.
The promoter is required to make an application as per Form and fees prescribed by the General Rules made by the Government of Gujarat, along with the documents / information and undertaking specified in section 4 to the Authority for registration of the project. In addition, the promoter is also required to append other / additional documents / information as specified in the General Rules.
Section 4 envisages that for a period of one year the application process can be both manual and online based, however, after one year it is mandatory to make the entire process online.However, for the purposes of project information to the prospective consumers, it would help in establishing the web portal at the earliest.
Section 6 envisages two situations within which the registration granted to a project can be extended. Extension of registration can be granted in case of force majeure, in addition, it can also be granted under reasonable circumstances, without the fault of the promoter, which shall not be more than a maximum period of 1 year. nExplanation to section 6 has defined force majeure to mean ‘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’.
The terms and conditions, the application form and the fees payable for extension of registration shall be in the manner as prescribed by Rule 7 of the General Rules.
As per section 7 the Authority has the powers to revoke registration of a project, for violations specified under the said section. However, revocation of registration of a project is envisaged as a last resort and can only be done after providing a reasonable opportunity of being heard.
In case a project is revoked, section 8 provides for various mechanisms in which the project can be completed. However, in such a scenario, the association of allottees shall have the first right of refusal for carrying out the remaining development works.
Section 9 of the Act provides that real estate agents which engage in selling projects registered under the Act, can only do so after registering themselves with the Authority. The mechanisms for registration, the fees payable, the period of registration, subsequent renewal etc. are matters stipulated in Rules 10 to 15 of the General Rules.Section 10 of the Act provides for detailed functions and duties of real estate agents
FUNCTIONS AND DUTIES OF PROMOTER
Q42) What Are The Important Functions And Responsibilities Of The Promoter After Registration Of The Project With The Authority?
As per section 11 of the Act, the promoter is required to update all project information as furnished at the time of application (as provided under section 4) on the website of the Authority. In addition, section 11 also provides for certain information, which needs to be regularly (quarterly) updated by the promoter, in order to make an informed choice by the buyer In addition, the promoter is required to carry out all the responsibilities as envisaged under section 11 at various stages of development of the project and upon its completion.
Q43) What Are The Disclosures To Be Made On The Website Of The Regulatory Authority?
Section 4 and section 11 provide for a detailed list of disclosures on the website of the Authority by the promoter for public viewing. Also, The detailed list is specified in Rule 10 of the Authority Rules
As per section 12 the promoter is responsible for the veracity of all information contained in the advertisement and the prospectus. In case of any loss sustained by any person due to false information contained therein, the promoter is liable to make good the loss sustained due to the same.
Section 13 provides that the promoter cannot accept a sum more than 10 percent of the apartment / plot cost as an advance payment / application fees. For any further collection towards the apartment / plot cost, the promoter is required to enter into an ‘Agreement for Sale’ with the allottee.
As per section 13(2) the appropriate Government is required to specify through Rules the ‘Agreement for Sale’ to be entered into between the promoter and the allottee. This Agreement is binding on the parties, however, internal flexibility could be provided in the said Agreement for Sale, for determination / insertion of other provisions as decided between the parties.
As per section 14(2) the promoter shall be liable for 5 years from the date of handing over of possession to the allottee towards structural defect or any other defect as specified therein.
As per section 15 the promoter is not entitled to transfer or assign his majority rights and liabilities in the project to a third party, without obtaining the prior written consent of twothird of allottees and the Regulatory Authority.In addition, for arriving at the number of two-third allottees, the number of apartments held by the promoter will be excluded. Also, irrespective of the number of apartments held by an allottee he/she shall only be entitled to one vote.
As per section 16 the promoter is required to seek an insurance of the real estate project towards title of the land and towards construction of the project. However, the said section provides that this provision shall only come into effect after and in the manner as may be notified by the appropriate Government.
Section 17 of the Act provides for detailed provisions regarding transfer of title of the apartment and the project to the allottee and to the association of the allottees/society respectively
Section 18 of the Act provides for provisions as regards various situations in which the allottee would be compensated by the promoter due to delay in completion of the project etc.
Q53) What Are The Rights And Duties Of The Allottees Under The Act?
Section 19 provides for the various rights of the allottees. This section specifies various rights which the allottees have against the promoters including those which the promoters are liable to fulfill based on the agreement entered into with the allottees, namely – stagewise schedule of completion of the project and the services, claim timely possession of the apartment / plot, entitlement to necessary documents and plans etc
Section 19 provides for the various duties of the allottees, which provide for matters relating to payment regarding the apartment / plot, liability towards interest for delay in payment, responsibility to take possession, participate in formation of association etc.
As per section 20 the Regulatory Authority is required to be established within 1 year of the commencement of the said section. As section 20 has been notified with effect from 1st May, 2016, the Authority is required to be established maximum by 30th April, 2017. However, for speedy implementation of the Act, section 20 empowers the ‘appropriate Government’ to appoint an interim Regulatory Authority, until the establishment of the full time Authority.
As per section 22 the Chairman and the Members of the Authority are required to be appointed by the appropriate Government on the recommendations of a Selection Committee comprising of the Chief Justice of the High Court (or his nominee), the Housing Secretary and the Law Secretary. The section also provides for the qualification etc. that are required for the appointment of the Chairman and the Members.
Section 31 of the Act provides for filing of complaint by an aggrieved person with the Regulatory Authority. The form and manner and the fees payable for filing the complaint are specified in Rule 11 of the Authority Rules.
Section 29 provides that the Authority should endeavour to dispose of the questions / complaints as expeditiously as possible but not later than sixty days from the date of filing the same. However, where it could not be disposed of during the said period the Authority is required to record its reasons for the same.
Q59) What Is The Timelines For Establishment Of The Appellate Tribunal Under The Act?
As per section 43 of the Act, the Appellate Tribunal is required to be established within 1 year of of the commencement of section 43. As section 43 has been notified with effect from 1st May, 2016, the Appellate Tribunal is required to be established maximum by 30th April, 2017.
However, for speedy implementation of the Act, section 43 empowers the ‘appropriate Government’ to designate an existing Appellate Tribunal (under any other law in force) to function as an Appellate Tribunal under the Act.
The Appellate Tribunal is a quasi-judicial body, which is empowered to hear appeals from the orders / decisions / directions of the Regulatory Authority or the Adjudicating Officer, as the case may be. The form and manner and the fees payable towards filing the appeal and the manner for hearing and disposing the appeal are provided in Rule 3 of the Appellate Rules made by the Government of Gujarat
Any person aggrieved by the decision or order of the Appellate Tribunal can file and appeal with the High Court as provided in section 58 of the Act.
Section 44 provides that the Appellate Tribunal should endeavour to dispose of the appeal as expeditiously as possible but not later than sixty days from filing the appeal. However, where the same could not be disposed of during the said period the Appellate Tribunal is required to record its reasons for the same.
As per section 46 the Chairman of the Appellate Tribunal shall be a sitting or retired Judge of the High Court. Section 46 also provides that the Appellate Tribunal shall comprise of at-least two Members one of whom shall be a Judicial Member and the other shall be a Technical or Administrative Member.
As per section 46 the Members of the Appellate Tribunal are required to be appointed by the appropriate Government on the recommendations of a Selection Committee comprising of the Chief Justice of the High Court (or his nominee), the Housing Secretary and the Law Secretary. The section also provides for the qualification etc. that are required for the appointment of the Judicial / Administrative Members.
Q64) What Is The Punishment Prescribed For Non-Registration Of A Project Under The Act?
As per section 59, where under the Act, it is obligatory for the promoter to register a project with the Authority, and if the promoter fails to do the same, he shall be liable to a penalty upto ten percent of the estimated cost of the real estate project.
However, in case the promoter consistently defaults or does not comply with the directions / orders of the Authority as regards registration of the project with the Authority, he shall be liable to further ten percent of the estimated cost of the real estate project or imprisonment upto 3 years or both.
As per section 60 if the promoter defaults as regards matters covered under section 4, he shall be liable to a penalty upto five percent of the estimated cost of the real estate project.
Q66) What Is The Punishment Prescribed For Violation Of Other Provisions Of The Act By The Promoter?
As per section 61 if the promoter defaults any other provision of the Act or the Rules and Regulations made thereunder, he shall be liable to a penalty upto five percent of the estimated cost of the real estate project.
As per section 63 if the promoter fails to comply with the orders of the Authority, he shall be liable to a penalty for every day of default, which may cumulative extend upto five percent of the estimated cost of the real estate project.
Section 71 proviso permits the complainant to withdraw his complaint as regards matters under section 12, 14, 18 and section 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.
The laws of the country do not permit forum shopping, thus, an aggrieved can only approach one of the two for disputes over the same matter.
As per section 81, the Authority is empowered to delegate such of its powers and functions under the Act to any Member, officer or any other person subject to conditions specified in the order issued for the same. However, the Authority cannot delegate the responsibility of making Regulations under section 85 under the Act.