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RERA Real Estate Bill 2017 – Part 3 – Duties of the Promoters and Allottees

Common Questions and Clarifications on RERA 2017: Part 3

In Part 3 of this series, Chennai Dream Homes™ will aim to simplify information around the new RERA Real Estate Bill – specifically on the duties, rights and obligations of both promoters (developers/builders) and allottees (prospective buyers). 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 covered Registration of Real Estate Projects and Real Estate Agents under RERA Real Estate Bill.

Part 3 will focus on Duties of the Promoters and Allottees in RERA. (this post)

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 3 – Duties of the Promoters and Allottees in RERA Real Estate Bill

Image result for rera act 2017

Source: The Financial Express

1. 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 on the website of the Authority. In addition, certain information also needs to be updated quarterly by the promoter, in order to make an informed choice by the buyer.

Section 4 and section 11 provide for a detailed list of disclosures on the website of the Authority by the promoter for public viewing, to be specified in the rules.

2. What are the promoter’s obligations regarding:

a) Veracity of the advertisement or prospectus

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.

b) Transfer of the project to a third party

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 two-third 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.

c) Insurance of the real estate project

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.

d) Transfer of title of the apartment / plot

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 respectively.

e) Return of amount and compensation to the allottee

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.

3. Can the promoter collect any amount of money towards booking of the apartment / plot?

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.

4. What is the ‘Agreement for Sale’ and is it binding on the ‘promoter’ and 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 for mutual benefit.

5. Can the promoter modify / amend the sanctioned plans or project specifications after having been approved by the competent authority and disclosed to the allottees?

As per section 14 of the Act, the promoter can only modify / amend the sanctioned plans or project specifications, after the approval of the competent authority and its disclosure to the allottees, in case of minor additions or alterations.

However, in case of major modification / alteration, the promoter can modify the sanctioned plans or project specification only after having taken approval from two-third of the allottees. 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.

What is the period for which the promoter is liable for any structural defects etc. in the project / apartment?
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.

6. What are the rights and duties of the allottees under the Act?

Section 19 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 – stage-wise schedule of completion of the project and the services, claim timely possession of the apartment / plot, entitlement to necessary documents and plans etc.

Section 20 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.

We hope you enjoyed this series on Duties of Promoters and Allottees both, in RERA.

Stay tuned for Part 4 of this series that will shed light on “Real Estate Regulatory Authority, Central Advisory Council & Appellate Tribunal“.