Real Estate Regulation and Development Act 2016 ( RERA) - Understanding-Misunderstanding

January 5, 2017

As all of you know the most a waiter ‘Real Estate (Regulation And Development) Act, 2016 received assent of the His Highness President of India on 25th March 2016. This Act extends to the whole of India except the state of Jammu on Kashmir. This Act enacted by Parliament to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumer in the real estate sector and to establish and adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decision, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connect there with or incidental thereto.


Section 84 if the act state that the appropriate government shall, within a period of six months of the commencement of this Act, by notification, make rules for carrying out the provisions of this Act. Accordingly the Maharashtra Government should have to publish its draft rules upto 31st October 2016 but it has publised the same after much delay i.e. on 8th December 2016 and asked objections or suggestions from the all concerned upto 23rd December 2016. When there is hue and cry for asking suggestions and objections within a short period the Government extend this date by one week  i.e. upto 31st December 2016.


The Maharashtra Government by Notification dated 8th December  2016 published  its Draft rules viz. The Maharashtra Real Estate  (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on website ) Rules, 2016.


The main object of the Central Act is to protect the interest of Consumer  in the Real Estate sector and  transparency in transaction. However the State Draft Rules have damage the very purpose of Central Acts. Some of the discrepancies in central  Act and State Draft Rules are as follows :-


Independence to developer not to disclose ongoing real estate project :- In view of to bring transparency in the Housing sector and home purchase transactions, the Parliament by this law has made it mandatory on the developer to register each housing project with the Housing Authority. Similarly while making such registration, it has been binding on the developer to furnish the information like projects launched by him, in the past five years, whether already completed or being developed, subjudiced cases, the number, type and the carpet area of building for sale in the projects, the time period within which the undertakes to complete the project or phase there of etc. However under the pressure of builder loby in the state, the Government of Maharashtra has given independence to the builder not to disclose such important information on the web site. This complete inconsistent and antagonist rule to the original Act.


Loopholes for the builders in Re-development Projects, Old residents deserted :- The Re-development Projects are also included in the Central law. Thereby the opportunity to get salace to the affected residents in many lingering redevelopment projects in Mumbai & State was available. However if the developer built separate building for old residents then the state government has put loophole for exempting such building from registration. In this way by leaving the old residents in the lingering re-development project in Mumbai & State on their mercy, the government has made disgraceful efforts to maintained the interest of the builders. [Rule 3(6) (iii)]


Sizeable concessions to the developers in registration fee and on the other hand extravagant fee for the consumers for making complaint :- The Central Government has suggested only Rs. 1000/- for the complaint to be made before the Regulatory Authority. However by neglecting this provision the State Government has suggested 10 time increase in this fee. And on the contrary when the Central Government has proposed Rs. 5 to 10 Lakhs for registration fee, the State Government has suggested only Rs. 1 lakh as registration fee and tried to make builder happy. This shows the pro-builder tendency of the State Government.


Unnecessary increase in the time limit for forming Housing Society :- In the Central law it is binding on the developer to formed within a period of tree months from the selling of more than 50 per cent flats, the association of allottees, by whatever name called. [Section 11(4)(e)] However the State Government has given independence to the developer to form the Co-operation Housing. Society within two months from receiving O.C. or giving possession to minimum 60 per cent flat owners. [Rule 9(1)(i)]


Independence to developer to take 30% amount at the time of executing sale Agreement :- Consumer’s protection is the main objective of the Central law. But by neglecting toward it totally the State Government has continued its business of proposing pro-builder and anti consumers provisions. According to the provision in Central law the developer can take only 10% amount of the total amount of flat before executing Sale deed. However by disobeying this provision the State Government has allowed the builder to take 30% amount at the time of agreement and if construction is made upto plinth than 45% amount from the consumers.


Gruesome provision of cancelling the sale deed within 7 days by e-mail notice :- Climax on all of these is that if the consumer is defaulted in paying even one instalment payable to the developer, then the developer by giving 7 days notice and that also not by registered post but by e-mail can cancel entire agreement. This independence to the builder is given by the State Government in the proposed draft of sale agreement. Ahead of this, if the consumer did not paid his due amount within these 7 days then our State Government has given independence to the developer to sold the said flat to other consumer on 8th day. And culmination of it is that the developer has given 6 months period to return the amount given to the developer to the customer.


Executive President


This shows that the government officials either prepared these draft rules hurriedly by trampling the interest of the consumers or under the pressuere of the builder lobby. Because the draft rules proposed by the Maharashtra Government are totally pro-builder and it seems that the higher authority in the Government has made condemnable efforts of passing many important provisions in the Central law or put loopholes openly in it for builder. While going to the press this magazine the Government has published statement that there might be printing mistake in the draft rules. This is ready silly statement behalf the Government.


CA. Ramesh S Prabhu,

Chairman, Maharashtra Societies Welfare Association

M- 9820106766 

E-mail : 

Website : / 

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He is a Chartered Account Practicing for the last 2 decades. He was a Member of Deemed Conveyance Committee of Govt. Of Maharashtra Represented before the joint Committee for Making Changes in the Maharashtra Housing Act 2012


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