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Understanding Real Estate Law: RERA Act Overview and Nationwide Implementation

Gain insights into the Real Estate (Regulation and Development) Act, its impact, and the current status of implementation across India. Delve into the statutory provisions, professional involvement, rights and duties of allottees, regulatory oversight, and fast-track dispute resolution mechanisms. Discover the significance of accountability, transparency, and fair-play in the real estate sector. Explore key aspects such as promoter obligations, project registrations, penalties for non-compliance, and the role of regulatory authorities.

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Understanding Real Estate Law: RERA Act Overview and Nationwide Implementation

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  1. The RealEstate(Regulationand Development)Act,2016 Presented by

  2. Session Online / Web Session on RERA on Wednesday, 20th March 2019 For IBM India Private Limited – Finance

  3. Presentation Overview - Contents • Overview of the Act / Statute • RERA Nationwide View • Central Act, State Rules, Present KA Status • Applicability of the Act, Rules and Prior Registration of Real Estate Projects • Change in Practice – Pre and Post RERA • Professional involvement • Offences & Penalty, Authorities, Adjudication etc • Allottees – Rights and duties • Q & A / Open House

  4. Statement of Objects and Reasons of the Act Ensure Accountability Towards Allottees and Protect their Interest; Infuse Transparency, Ensure Fair-play and Reduce Frauds & Delays; Introduce Professionalism and Pan India Standardization; Establish Symmetry Of Information between The Promoter And Allottee; Imposing Certain Responsibilities On both Promoter And Allottees; Establish Regulatory Oversight Mechanism to Enforce Contracts; Establish Fast- Track Dispute Resolution Mechanism; Promote Good Governance in the Sector which in turn would create investor confidence;

  5. RERA – Nationwide View 21Statesand7UnionTerritories(UTs)haveimplementedRERA[framedrulesasrequiredunderSection84oftheRealEstate(RegulationandDevelopment)Act] Outofthese, 23 states / UT’s haveafullyfunctionalonlineRERA portal Outoftheseonly 18 States– KA, AP, Gujarat,Maharashtra,MadhyaPradesh,Rajasthan, Punjab etc., have established permanentRealEstateRegulatoryAuthority,while10States/UTshavesetupinterim authorities Few States/UTshavenamedtheAppellateTribunalsundertheRealEstateAct,FewStateshavebeguntheonlineenlistmentunderthe Act Maharashtrahasseenthemaximumresponseinprojectregistrations(~20,000projectregistrations)with itsrealestateregulatoryauthority UttarPradesh ~2,600, in KA 3000 , Gujarat 4962, andMadhyaPradesh 2109 WhiledeviationfromthemodelActisthemaincauseforconcern,slowprogressofstatesinoperationalizing Regulators imposedfineon Promoters fordelayedregistration Maharashtrahasaconciliationforum(whichhasrepresentationfromBuilders'andConsumers'Associations)tospeedupdisputeresolutionbetweenbuyersandpropertydevelopers

  6. RERA Act – 92 sections with 10 Chapters

  7. RERA Act and Karnataka - Snapshot Central Act came into force with effect from May 1, 2017 Karnataka Real Estate Regulation and Development Rules, 2017 was approved by Government of Karnataka and notified on July 10, 2017 Government of Karnataka appoints Principal Secretary to Government of Karnataka, Department of Housing as the Interim Authority - Section 20 (1) To appoint one or more adjudicating officers to settle disputes and impose interest and computation Government of Karnataka appoints Karnataka Appellate Tribunal as Interim Appellate Tribunal - Section 43 (4)

  8. RERA - Karnataka - Snapshot Online – Applications for Registration of projects accepted through website from 24th July 2017 Online – Applications for Registration of Agents accepted through website from 24th July 2017 Made mandatory filing for ongoing project within 3 months from 1st May 2017 – i.e., by 31st July 2017

  9. RERA - Karnataka – So far – India’s Top 3

  10. where the area of land proposed to be developed does not exceed five hundred square meters (5382sft) or the number of apartments proposed to be developed does not exceed eight inclusive of all phases. Applicability of the Act • where the promoter has received completion certificatefor a real estate project prior to commencement of this Act; • 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. • where the real estate project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.

  11. Ongoing Projects – KA RERA Rules Inclusions Exceptions / Exclusions Layouts - Streets and civic amenities sites and other services have been handed over to the Local Authority for maintenance Development is going on for which completion certificate has not been issued Apartments - Common areas and facilities have been handed over to the registered Association of Allottees Projects – all development works have been completed and 60 % sale deeds have been registered / executed Projects – all development works have been completed and application for CC / OC is filed (completion / occupancy) Projects in Phases - Partial occupancy certificate is obtained in case of projects are in phases All ongoing projects shall be registered within 31st July 2017

  12. Prior Registration • Section 3. Prior registration of real estate project with Real Estate Regulatory Authority • Promoter shall not • advertise, • market, • book, • sell or • offer for sale, • or invite persons to purchase • without registering the real estate project with RERA Authorities

  13. Post RERA – Business Cycle

  14. Post RERA – Customer Transactions

  15. Post RERA – Change in Practices - Transformation

  16. Post RERA – Change in Practices - Transformation

  17. Key Differentiators

  18. Professional Opportunities -

  19. Professional Opportunities - Review / Outsource

  20. Professional Opportunities - Compliances Added cost of compliances may also indirectly impact pricing:Disclosures and Transparency Registration costsInsurance – Construction and TitleStructural defect liability period – 5 yearsOngoing compliance costsRestricted utilisation of funds to specific projectsCertifications and Audits

  21. Initially,a lotof workistobedonetogettheexisting and new projectsregistered. Detailssuch asstatusof eachprojectexecuted in last5 years, promoterdetails, detailedexecutionplansetc.needstobe prepared. InitialBacklog IncreasedProject Cost Registration, regular update withRERAand insurancecostforconstruction Land andapprovalcoststobemetedoutof internal accrualsaspre launchconceptmayend . Itmayleadtoa shiftinequity financingfrom debtfinancingprevailingcurrently TightLiquidity Thecostof capitalmay go up asdevelopersmaynowhavetofundthe land,theapprovalcostthroughequity.Withfrequentdelayinobtaining approvals,debtfunding maynot beanideal routeforproject Rise inCostof Capital Withentry inthesectormadedifficult,thesectormaywitnessconsolidation. Strong financial andexecutioncapability isrequiredto launcha project.Thedevelopmentmodel/agreementmaygain prominence Consolidation Theprojectlaunchtimemay increasesincealotof timewillinvolvein Increasein ProjectLaunch Time finalizingfiner detailsbeforelaunchinga project.Detailssuch asstructuring of project, financials, risk mitigation, completedrawingsutilities layout,etc. Needstobefinalized before projectstarts.

  22. Offenses and Penalties

  23. Allottees – Rights and Duties

  24. Allottees – Rights and Duties

  25. Allottees – Rights and Duties

  26. Allottees – Rights and Duties

  27. Allottees – Rights and Duties

  28. vinay@vnv.ca

  29. RERA CONSULTANTS LLP No.13, 1st Floor, PALACE CROSS ROAD VASANTHNAGAR BENGALURU- 560 020 Tel – 080 - 2346 2003 consult@reraconsultants.in www.reraconsultants.in

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