The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square meters, or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution. For ongoing projects which have not received completion certificate on the date of commencement of the Act, will have to seek registration within 3 months. Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA. On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA. For failure to register, a penalty of up to 10 percent of the project cost or three years' imprisonment may be imposed. Real estate agents who facilitate selling or purchase of properties must take prior registration from RERA. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him. In this blog you will be unleashing the necessity and How to register as an Real Estate Developer under RERA Act
Impact on the Real Estate Developer:
- Major impact of RERA is on on-going projects. The builders who have not received completion certificate they have to register with RERA and have to give their status of the project at the time of the registration as well as they have to update the department from time to time about the project.. Projects at various stages got impacted because of new rules and regulations and in return there will be delay in project deliveries.
- The major delays and cost escalations are created not by developers but by various governmental authorities which sanction requisite projects and monitor during the course of development. Everybody is aware of the long drawn battle to firstly avail sanctions which now-a-days takes over 12-18 months and during the course of project, there are several challenges which affect projects.
- Cost for developers will increase as sales can only happen post registration which is possible only post approvals. So gone are the days of pre-launches where first set of buyers benefitted with a reasonable price during early stages of projects. With higher holding costs, these increases would eventually be transferred to consumers and hence prices are bound to increase.
- Refund in 60 days is unjustified as developers are not banks with liquidity. All the money is pumped into construction and incase of cancelations, there should be a re-allotment clause and not strict 60 day guideline for refund as it will be impossible for developers to do so in such circumstances. Infact, with RERA, there will be strict monitoring of monies via escrow account and this refund timeline is not relevant. If several buyers seek to cancel at one go, it may jeopardize the entire project.
- With RERA, there will be a consolidation in the market and hence only fewer players may exist. This is not good for market as prices for consumers are bound to increase with decrease in competition. Competition already keeps prices in check and small developers who were able to offer that additional buck might cease to exist and buyers will have limited choices to choose out of.
Some of the important compliance are:
- Informing allottees about any minor addition or alteration.
- Consent of 2/3rd allottees about any other addition or alteration.
- No launch or advertisement before registration with RERA
- Consent of 2/3rd allottees for transferring majority rights to 3rd party.
- Sharing information project plan, layout, government approvals, land title status, sub-contractors.
- Increased assertion on the timely completion of projects and delivery to the consumer.
- An increase in the quality of construction due to a defect liability period of five years.
- Formation of RWA within specified time or 3 months after majority of units have been sold.
The registration process in some states is through online mode and in some state its offline, the documents required may differ from state to state. Following is the list of documents required:-
To register as a developer with RERA
- Brief details of his enterprise including its name, registered address, type of enterprise, proprietorship, societies, co-operative society, partnership, companies etc;
- Particulars of registration including the bye-laws, memorandum of association, articles of association etc. as the case may be;
- Name, address, contact details and photograph of the real estate agent if it is an individual and the photograph of the partners, directors etc. in case of other entities;
- Self-attested copy of the PAN card;
- Self-attested copy of the address proof of the place of business.
Registration Process for Real Estate developer
- File an application form along with fee and documents to get registered with RERA.
- You will receive a registration number from the regulator. This need to be mentioned in every property sale.
- On a quarterly basis, you are required to maintain the books of account, records and documents related to the transactions.
- Share all the information and documents about the project with the buyer.
- Agent may be suspended for the misrepresentation or fraud during the registration process.
How can a builder be RERA compliant?
- Project registration.
- Withdrawal – POC method.
- Website updation/ Disclosures.
- Carpet area.
- Alteration in project – approval of 2/3 allottees.
- Project accounts – Audit.
- 70% of the funds collected from allottees needs to be deposited in the project account. Withdrawals to cover construction and land cost.
- Withdrawals to be in proportion to the percentage completion method.
- Withdrawal to be certified by an engineer, architect, and CA.
- Provision for RERA to freeze project bank accounts upon non-compliance.
- Interest on delay will be same for customer and promoter.
What information does a builder need to provide under RERA
- Number, type and carpet area of apartments.
- Consent from affected allottees for any major addition or alteration.
- Quarterly updating of RERA website with details such as unsold inventory and pending approvals.
- Project completion time frame.
- No false statements or commitments in advertisement.
- No arbitrary cancellation of units by promoter.
We at Wazzeer believe that Real Estate Developers registering with RERA will enhance customer success, we will be glad to help you register under RERA Act seamlessly. Let’s connect to build a better relationship.