After countless property site visits, talking to agents, collecting many brochures, you have finally zeroed in on your dream project. You have invested your hard earned money in to the project or have taken loan from the bank and started paying EMIs for the same. But what if your dream project is not being delivered on time or there have been structural defects post possession of your project. This article covers legal remedies under the RERA Act.
How does one address these issues such as delay in possession, no proper documentation etc? What forums are available for you? It causes a lot of mental pain and anguish apart from being a financial strain on your pocket especially if you are paying house rent as well as your EMIs. We take a detailed look at answering all these questions in this article and also understand the meaning of RERA Act.
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Some of the most common defaults/omissions by a builder/promoter in the real estate sector can be summed up as follows –
- Delay in possession
- Project scrapped
- Violation of plan
- No proper govt. approvals
- No Commencement Certificate, Completion Certificate or Occupation Certificate(OC)
- Structural defects
- Third party interests
- Hidden charges
- Not constructing amenities as per original plan
- Using shady infrastructure in construction of amenities and rendering them unusable
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Legal Scenario Pre-RERA
Before the passing of the Real Estate(Regulation and Development) Act, 2016, typically a buyer could approach a consumer forum i.e. at the district level, state level or national level. A consumer forum was set up under the Consumer Protection Act, 1986 and defines a consumer as one who:
‘hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who ‘hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes’.
Legal Remedies post RERA
After the passing of RERA, buyers and their grievances have been duly addressed under the Act. After the introduction of RERA, seeking legal redressal against defaulting buyers has becomes much more smooth. RERA now provides for a one stop forum to the aggrieved instead of dabbling between civil, criminal or consumer forums.
The Act now clearly maintains that no civil court shall have jurisdiction to entertain any matter for which this Act was passed. This means that RERA now overrides all other forums that were previously available for an aggrieved and that the Regulatory Authority and the Appellate Authority are the only forums available. Section 79 of Chapter X of RERA states the following –
No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.
With respect to this definition, consumer forums have not been specifically barred by RERA for home buyers to seek relief. A consumer forum is not considered a civil court and thus an aggrieved can approach either a consumer forum or a regulatory authority set up under RERA. However, if a case has been filed with a consumer forum the same can be withdrawn and presented before a regulatory authority under RERA.
What are the Benefits of RERA?
Let us briefly look at the various safeguards that are available under RERA for a buyer.
Make relevant documents public by the builder
The builder/promoter is obliged under Section 11 of the Act, to make public documents such as details of registration, quarterly update the list and type of documents booked, garages booked, status of the project etc.
At the same time the builder shall also have the duty to make available to the buyer information such as layout plans, sanction plans approved by the competent authorities, also stage wise time schedule of the project along with civic infrastructure like water, sanitation electricity etc.
The builder has the onus of obtaining the completion certificate/occupation certificate from the competent authority and to make available to the allottees. If the land is on a leasehold, the builder shall be responsible to obtain a lease certificate. The builder also has the responsibility of providing and maintaining essential services till the taking over of the project by the allottees. The builder additionally shall pay all outgoings till the transfer of physical possession to the allottees.
Veracity of information in advertisement/prospectus
If a buyer invests into a particular project due to information contained in a prospectus/ advertisement or after seeing a model flat/apartment and if such information turns out to be incorrect or false, then any loss incurred by the buyer shall have to be compensated by the promoter as per Section 12 of RERA.
A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale.
Adherence to sanction plan
The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities.
The promoter shall not make any additions and alterations in the sanctioned plans, layout plans and Specifications and the nature of fixtures, fittings and amenities in respect of the apartment, plot or building, as the case may be, which are agreed to be taken, without the previous consent of the allottees.
Observations and legal remedies by various RERA authorities
RERA has been into play for only around a year now, but it has proved to be extremely fruitful and beneficial for buyers and to some extent even developers. This important piece of legislation through various real estate regulatory authorities has brought out many different facets of the Real Estate (Regulation and Development) Act, 2016. Here is a compilation of some noteworthy orders/judgements that have been passed by various RERA authorities.
Redevelopment not covered under RERA
The MahaRERA in December of 2017, has ruled that redevelopment of housing societies shall not be covered under RERA. The case pertained to a housing society by the name of “Shanthi Nikethan” who had given their housing society for redevelopment to Matrix Construction, the developer. The complaint by the housing society members was dismissed on the grounds that they were not able to point out specifically which provision of RERA was violated. The society members were directed to approach a civil court as that was the correct forum.
This order has wide reaching implications as many constructions in the city of Mumbai involve reconstructions.
Relief for shortage in carpet area
A buyer was duly compensated by MahaRERA for shortage in carpet area. The builder had advertised and published in the MahaRERA website a total of 806 sqft carpet area but as opposed to this there was a shortfall of 69 sqft. The builder was then directed to reduce the cost of the flat so as to compensate the shortfall of carpet area.
Landowners can be deemed promoters
In yet another important order by MahaRERA, landowners will be liable as a builder only if they have taken a share in the sale of the project. This is a vital judgement as it makes a clear distinction between landowners and promoters. Any landowner getting a share in the revenue from the project sold or marketed shall be treated as a promoter under MahaRERA.
No same relief twice
The MahaRERA in an order dismissed a home buyer’s plea as he sought the same relief from MahaRERA of compensation and possession, a relief which has already been granted to him by a civil court. MahaRERA also directed the complainant to pay Rs 10,000 as legal costs to the developer.
No refund of advance amount
The Tamil Nadu RERA(TNRERA) has ruled that refund of the advance amount which has been paid to book an apartment by a buyer cannot be refunded if the buyer intends to withdraw from the project. The correct forum to approach would be the consumer forum and refund can be sought on the basis of the written agreement signed between the buyer and the builder.
Lease transactions outside RERA
In yet another order that may have far reaching consequences, the MahaRERA has ruled that lease transactions are totally outside the purview of RERA. The order states that the term used under RERA is “allottee” and not lessee. MahaRERA was hearing a case which involved several buyers who had booked flats in the Lavasa project near Pune. Construction in the project had been halted due to an order from the Ministry of Environment and Forests and thus possession has been delayed due to the same.
However MahaRERA ruled in favour of the developer, the Lavasa Corporation after examining the documents which states that agreements were of long term lease for a period of 999 years and not of sale. Thus the buyers of the flats cannot be deemed as allottees and would be termed as lessees in legal parlance.
Formation of society
The MahaRERA has made it mandatory that a society or any legal entity akin should be formed by the developer after 51% of the flats have been booked or allotted. This is an important ruling as it allows home buyers to oversee the developmental work in their project and they can seek regular updates from the developer for the same as against earlier when a society or an legal entity was formed only after the project was complete and completion certificate was issued.
Refund of booking amount
In an order passed by the MahaRERA, a buyer got the booking amount refunded in a complaint filed against the Lodha Group. The buyer alleged that there were discrepancies in the booking offer as guaranteed by the developer. The buyer was assured that he would not have to pay EMIs till about a year if he booked before a certain period of time.
Also the developer also undertook to pay the stamp duty. However on further probe it was found that the amount tended to be higher than promised and he would have to pay interest on the unpaid EMIs. The buyer after pursuing the developer, approached the regulatory authority for refund of booking amount as well the amount spent on registering the complaint. The buyer was duly refunded the amount.
Ambit of RERA after rejection of project application
In a landmark case coming out of Punjab, the Punjab RERA in the case of Bikramjit Singh versus M/s HP Singh, has held that the ambit of RERA does not extend to projects whose application has been rejected by the authority. Also complaints against projects that are not registered with the authority cannot be entertained by the authority.
The authority also cleared the ambiguity regarding the maintainability of any complaint where the alleged builder violations took place prior to the commencement of the Real Estate (Regulation and Development) Act. It laid down three conditions that must be fulfilled for such complaints to be considered by it.
Firstly, the alleged violations, though commencing before the enforcement of the RERA Act, must be continuing till date; secondly, the alleged violations must also constitute a contravention of the RERA Act and the rules and regulations made thereunder; and thirdly, the issue should not have been decided or be pending in any forum/court before approaching this authority. This is necessary to avoid multiplicity of litigation. The order reads,
“Only if all the three conditions are fulfilled, and the onus would on the complainant to prove these, would any alleged violations that took place before the coming into force of this Act be considered by this authority”.
Office and commercial spaces under RERA
The MahaRERA in a recent order directed a builder, to execute the agreement, give possession of the offices within the stipulated time and charge the rate as per the original allotment letter. This has extended the scope of RERA to even office and other commercial spaces.
RERA not for investors in a project
The MahaRERA in yet another significant order has laid down that investors cannot seek relief for themselves under RERA. The MahaRERA dismissed the complainant on the ground that after perusal of the necessary documents, it was found that the complainant and the developer signed an MOU (Memorandum of Understanding) in which the complainant is an investor and not an allottee, thus in turn becoming a co-promoter as per the definition under RERA.
Government agencies under RERA
It has been clarified by the Government of Karnataka, that all bodies whether private or public that develop real estate projects for sale to the public shall come within the ambit of RERA. As a result, even government bodies shall have to complete projects on time and adhere to the rules and regulations as laid down under the Act.
RERA to supersede arbitration proceedings
The MahaRERA in an important ruling has stated that it can supersede arbitration applications as well as issue order to complaints filed by a co-purchaser. MahaRERA clarified that it has the jurisdiction over the arbitration applications as Real Estate (Regulation and Development) Act (RERA) was enacted after the Arbitration and Conciliation Act of 1996. The provisions of RERA have an overriding effect over the provisions of section 8 of the Arbitration and Conciliation Act, 1996, MahaRERA said, adding that they get can get the jurisdiction to adjudicate upon disputes related to an arbitration deal.
- Parking space must be provided by the Builder
In a judgement by MahaRERA in the case of Sanjeev Dhakar (Home Buyer) Vs. M/s. Arkanade Realty (Builder), MahaRERA ruled that the Builder cannot sell parking area to any outsider who doesn’t own property in the said project. And a parking provision must be provided as per RERA norms to every home buyer in the gated society.
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With the changing legal scenario post the introduction and implementation of RERA, home buyers and developers alike can look forward to a healthy and conducive legal environment for settlement of disputes and redressal of grievances including compensation for any omission, negligence, delays etc.
With a number of good judgements/orders coming from various state RERA authorities, one can surely be rest assured that RERA is indeed a right step in the right direction. However there are still certain grey areas that need to be addressed by RERA in the long run.
It is important that in the changing face of Indian real estate law and regulation, home buyers update themselves with the law of the land ensuring safer investments. It is best to shortlist projects which meet basic criteria of regulation, budget and liveability.
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