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Real Estate (Regulation and Development) Act, 2016 key Highlights
Real Estate (Regulation and Development) Act, 2016-Role of Chartered Accountants
- Real Estate (Regulation and Development) Act, 2016 has been passed by the Lok Sabha on15/03/2018. The Bill seeks to streamline and regulate the real estate project working by incorporating various measures to safeguard general public by prescribing adequate procedures and penal provisions.
- Recognising the skills of the Chartered Accountants, they have been given due importance and role in the Bill towards protecting the misapplication of the deposits by the promoters.
Role of Chartered Accountants
- Amounts from the separate account maintained for deposit of amounts received from allottees shall be withdrawn by the promoter after it is certified by an engineer, an architect and chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.
- Also the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant. During the audit it shall be verified that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
- Also Chartered Accountants can be appointed as legal representative by the promotor to present him or its case before the Appellate Tribunal or the Regulatory Authority.
Real Estate (Regulation and Development) Act, 2016 Key Highlights Prior registration of real estate project with Real Estate Regulatory Authority.
- Before advertising, booking, selling or inviting persons to purchase any plot, apartment or building etc. in any real estate project registration of the real estate project with the Real Estate Regulatory Authority is must. Ongoing projects to make an application for registration within a period of three months.
- However Registration not required:—where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed does not exceed 8 (eight) inclusive of all phases. Also registration is not required for new allotment or renovation, repair or re-development not involving marketing, advertising.
- Registration shall be granted within 30 days and if the prescribed Authority fails to grant the registration or reject the application, the project shall be deemed to have been registered.
Display of project details for public viewing
- A web based online system for submitting application for registration of projects shall be developed. The promoter upon registration shall be given a login Id and password to create his web page on the website of the Authority and give all details of the proposed project for public viewing,
Application for registration of real estate project.
- Application shall be made in prescribed form with prescribed fee and shall include details of promoters, projects launched in past five years, approval letters/certificates to commence project, lay out plan, allotment letter, agreement for sale proforma , garage, declaration to legal title etc.
Handling with money received from allottees
- Application for registration shall be accompinied by a declaration stating that 70% of the amounts realised for the real estate project shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
Registration of real estate agents.
- No real estate agent shall be able to facilitate the sale or purchase in a real estate project registered without obtaining registration under new Act. The registration shall be given by the Authority for the entire State/Union territory.
False advertisement or prospectus
- If a person makes an advance or a deposit on the basis of false information in advertisement or prospectus, or on the basis of any model apartment, plot or building, and sustains any loss or damage by reason of any incorrect, false statement he shall be compensated and if he intends to withdraw from the proposed project, the promoter shall return his entire investment along with interest at prescribed rates.
No deposit/advance without first entering into agreement for sale and its registration.
- A promoter shall not accept more than ten per cent of the cost of the apartment, plot, or building etc. as an advance payment or an application fee, without first entering into a written agreement for sale with such person and register the said agreement for sale.
Insurance of real estate project
- The promoter to obtain all specified insurances which shall stand transferred to the benefit of the allottee or the association of allottees, as the case may be, at the time of promoter entering into an agreement for sale with the allottee.
Return of amount and compensation for delay
- If the promoter fails to complete or is unable to give possession within scheduled time, he shall in case allottee wishes to withdraw from the project, return the amount with interest at prescribed rates. For those allottee who do not wish to withdraw, the promoter shall pay interest for every month of delay, till the handing over of the possession.
Rights of allottees
- to obtain the information relating to sanctioned plans layout plans along with the specifications
- to know stage-wise time schedule of completion of the project
Real Estate Appellate Tribunal
- Appellate Tribunal to be formed within one year. The Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice. Also it shall not be bound by the rules of evidence contained in the Indian Evidence Act, 1872. However, the Tribunal shall for the purpose of discharging its functions shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908.
Offences and Penal Provisions for Promoters/real Estate Agents
- All offences by promoters/real estate agents against the requirements of the Act, order of the Prescribed Authority, Tribunal etc. have been made punishable with fine, penalty in addition to 3 years maximum imprisonment.
Offences and Penal Provisions for Allottees
- Any allottee failing or contravening the orders, directions of the Applellate Tribunal, shall be punishable with imprisonment for a term which may extend upto one year or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent. of the plot, apartment or building cost, as the case may be, or with both
Compounding of punishment with imprisonment
- However, any punishment with imprisonment may, either before or after the institution of the prosecution, be compounded by the court on such terms and conditions and on payment of such sums as may be prescribed.