Glimpse of Real Estate (Regulation and Development) Act, 2016
Real Estate (Regulation and Development) Act, 2016 received the assent of the President on 25th March 2016, which substantially amends the original Real Estate Bill, 2013. This act will apply from a date to be notified in official gazette. The Act largely seeks to protect the interest of the allottees/purchasers by promoting transparency, accountability and efficiency in the construction and execution of real estate projects by promoters. Key Highlights of Real Estate Act, 2016 are given below: –
- Every promoter shall register every real estate project with Real Estate Regulatory Authority established under this Act except where the area of land proposed to be developed does not exceed 500 square meters or the number of proposed apartments does not exceed 8 (All phases). Promoters cannot advertise or sell any plot or apartment in any real estate project without registration.
- No registration is required if completion certificate is received for a project before commencement of this Act. In case of ongoing projects, the promoter shall register the project within a period of 3 months from the date of commencement of this Act.
- All real estate agents shall also get registered with the Authority. Every registered real estate agent shall be granted a registration number by the Authority, which shall be quoted by the real estate agent in every sale facilitated by him.
- 70% of the amounts realised for the real estate project from the allottees shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. The promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The amounts from the separate account shall be withdrawn only after it is certified by an engineer, an architect and a CA in practice that the withdrawal is in proportion to the percentage of completion of the project.
- A promoter cannot accept more than 10% of the cost of the apartment as an advance or application fee from any person without entering into a written agreement for sale with such person.
- The agreement for sale shall specify the all particulars of development of the project like dates by which payments towards the cost of the apartment are to be made by and the possession date & the rates of interest etc.
- The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans and specifications as approved by the competent authorities. The promoter shall not make any other alterations in plans of the buildings or common areas within project without previous written consent of at least 2/3rd of the allottees.
- The promoter shall not transfer or assign his majority rights and liabilities in respect of a project to a 3rd party without prior written consent from 2/3rd allottees and the Authority.
Rights/Relief to buyers
- Where any person makes an advance or a deposit on the basis of the information contained in the advertisement, prospectus or any model apartment and sustains any loss or damage by reason of any incorrect statement, he shall be compensated by the promoter. If the affected person intends to withdraw from the proposed project, he shall be returned his entire investment along with interest and compensation.
- In case any defect in workmanship or quality of services as per the agreement for sale and it is brought to the notice of the promoter within a period of five years by the allottee from the date of possession, it shall be the duty of the promoter to rectify such defects without further charge, within 30 days. In the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation.
- If the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale or duly completed by the date in agreement or due to discontinuance of business or for any other reason, he shall be liable on demand to the allottees. In case the allottee wishes to withdraw from the project promoter shall return the amount received by him in respect of that apartment with interest and compensation. Where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at prescribed rate.
Opportunities for Chartered Accountants
- Amounts from the separate account shall be withdrawn by the promoter only after it is certified by an engineer, an architect and a CA in practice that the withdrawal is in proportion to the percentage of completion of the project.
- Promoter shall get his accounts audited within six months after the end of every financial year by a CA in practice, and shall produce a statement of accounts duly certified and signed by such CA and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project.
- The appellant may appoint a Chartered Accountant or Company Secretary or Cost Accountant or Legal practitioner or any of its officers to present its case before the Appellate Tribunal or the Regulatory Authority.
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