Common Questions and Clarifications on RERA 2017: Part 2
In Part 2 of this series, Chennai Dream Homes™ will aim to simplify information around the new RERA Real Estate Bill, specifically on the Registration of Real Estate Projects & Agents. We hope you find this useful.
This post series is divided into 5 parts.
Part 1 talked about the Basics of RERA Real Estate Bill.
Part 2 will cover Registration of Real Estate Projects and Real Estate Agents under RERA (this post)
Part 3 will focus on Duties of the Promoters and Allottees in RERA Real Estate Bill.
Part 4 will focus on the Real Estate Regulatory Authority, Central Advisory Council & Appellate Tribunal.
Part 5 will focus on Offences, Penalties and Adjudication in RERA Real Estate Bill.
We will attempt to update this resource and adhere to appropriate marketing of property listings on our website as soon as it comes into full force and we have official information.
The original government document on RERA Gazzette Notification can be found here. (Source: Ministry of Housing & Urban Poverty Alleviation, Government of India)
Part 2 – Registration of Real Estate Projects and Real Estate Agents under RERA
(Source: Live Mint)
1. Does the RERA Real Estate Bill cover both residential and commercial real estate?
Yes, the RERA Real Estate Bill 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.
2. Does the Act cover ongoing / incomplete projects?
As regards the ambit of the RERA Real Estate Bill, there is no distinction between an ongoing project and a future project, i.e. both ongoing / incomplete projects and future projects are covered under the Act.
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 Regulator Authority, within 3 months of its commencement’.
3. Which projects are exempt from the ambit of the Act?
As per section 3(2), the following projects do not require to be registered under the RERA Real Estate Bill:
(a) where the area of land proposed to be developed does not exceed 500 Sq.meters or the number of apartments proposed to be developed does not exceed 8, inclusive of all phases;
(b) where the promoter has already received completion certificate for a real estate project prior to commencement of this Act;
(c) for the purpose of renovation or repair or re-development which does not involve marketing, advertising, selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.
4. At what stage can a promoter start to advertise his project for sale?
The promoter can advertise his project for sale after the project has been registered with the Regulatory Authority as provided in section 3(1).
5. What is the period of validity of registration granted to a real estate project by the Regulatory Authority?
As per section 4, the validity of the registration granted to a project shall be the period declared by the promoter under section 4(2)(l)(C), at the time of making the application for registration, within which he would complete the project.
6. Is the promoter required to maintain an ‘escrow account’ or a ‘separate account’? What are the purposes for which the promoter can withdraw the money from the separate account?
Section 4(2)(l)(D) provides that the promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy percent of the money received from the allottees shall be deposited for the purposes of construction and land cost. The account has to be self maintained and is not an escrow account requiring the approval of the Authority for withdrawal.
Section 4(2)(l)(D) clearly provides that the funds can only be used for construction and land cost.
As per section 4(2)(l)(D) first and second proviso, the promoter is required to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. In addition, the promoter is permitted to withdraw from the separate account after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
As per section 4(2)(l)(D) third proviso, the promoter is also required to get his accounts audited within six months after the end of every financial year by a chartered accountant in practice.
7. Can the registration of a project be revoked?
As per section 7 of the RERA Real Estate Bill, 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 that the association of allottees shall have the first right of refusal for carrying out the remaining development works.
8. Does the RERA Real Estate Bill also cover real estate agents? What are the duties and responsibilities of the real estate agents?
Section 9 of the Act provides that real estate agents who 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 to be detailed vide the Rules. Section 10 of the Act provides for detailed functions and duties of real estate agents.
We hope you enjoyed this series on Registration of Real Estate Agents and Projects under RERA Act.
Stay tuned for Part 3 of this series that will shed light on “Duties of the Promoters and Allottees in RERA.“.
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