The introduction of the Real Estate Regulation and Development Act, 2016 (RERA), is a remarkable change in the real estate sector; it helps to create transparency and provide protection for consumer rights. Promoter is one of the important entities in the real estate sector and plays an important role in the development and marketing of real estate projects. Under the RERA Act, promoters have crucial responsibilities to ensure fairness and compliance with legal requirements.
A person who constructs or creates a reason to build any building or group of apartments or develop any existing buildings into new apartments, and whose purpose of doing this is to sell all or parts of those apartments to another person in the case of redevelopment of some part to another person, is the promoter as mentioned in the RERA Act. The concept of promoters is wider in the real estate sector; promoters are not only those who create apartments or buildings but also people who develop the land into a project or create structures like any commercial structures to sell those plots with or without any construction.
The concept of promoters is not only any person but also any development authority or any public body that acts as a developer for the reconstruction of any old building and sells some parts of that building or the apartments they create at the time of reconstruction for sale. Also includes any state-level cooperative housing society or any primary cooperative housing society that constructs or develops the apartments or buildings for its members and allottees. The concept of the promoters includes the person who holds the power of attorney of the land from the owner of the land for acting as a builder, colonizer, contractor, or developer for doing construction on that land for sale to other persons.
What are the obligations of the promoters under the RERA Act?
Once the property registration is completed on the RERA website. As per Section 11 of the act, after promoters receive the login ID and password, they must create a web page on the website enter all the mandatory details of the project and make it open for public view. Promoters must add the registration details of the project that was granted by the RERA Authority. Promoters must update the quarterly progress of the real estate project on the webpage. As well as he must also update other related information, like a list of the booked apartments, a list of the garages booked, etc.
As per Section 11(4) of the RERA Act, 2016, promoters must obtain the lease certificate that shows that all dues about leasehold land have been paid; this certificate is also made available to the association of allottees. The promoters are also responsible for creating a registered conveyance deed of the apartment in favour of the allottee, along with the transfer of the undivided proportionate title of the common area in favour of the association of allottees. Promoters must pay all the dues on the property before giving physical possession of the property to the allottee or consumers. Such as rent, municipal taxes, maintenance, and any other related dues of the real estate project.
As per Section 12 of the RERA Act, if the promoters take any deposit or advance money from buyers by showing them any false or misleading advertisement. If a loss is suffered by the consumers, in that case, promoters must provide compensation to the consumers. Promoters can not accept more than 10% of the cost of the apartments from the buyers as application fees. More than that amount can only be accepted after both parties enter into a written agreement as per Section 13 of the RERA Act.
As per Section 14(1) of the RERA Act, the promoters must complete the property project as per the pre-sanctioned plans and layout plans and as approved by the competent authority. If the promoters want to make any changes in the sanctioned plans for apartments, then they have to get written consent from at least 2/3 of the total allottees in the project.
Consumers face any structural defect in the quality of the property or any provision of services within five years after receiving possession of the property from the promoters. Then, in this case, the promoters have to solve those defects within 30 days after getting a complaint from the allottees. As per Section 16 of the RERA Act, promoters are required to obtain insurance for the title of the land and building as part of the real estate project and for the construction of the real estate project. Promoters must pay all premiums and charges of the insurance till they transfer the insurance to the allottees of the projects.
As per Section 18 of the RERA Act, if the promoters fail to give possession of the property within the decided timeline to the consumers. Then he must return the amount received from consumers along with interest as compensation to the consumer.
How do the legal experts help the promoters in this process?
Understanding the crucial compliances, obligations and disclosure norms for promoters is not an easy task. If the promoters do not properly understand this, how can they follow this effectively? For this, promoters must higher good legal help to make this process smoother and more time-saving. If you are a promoter searching for expert legal help for assistance in your next real estate project, visit the Right To Law firm to get professional legal advice from our lawyers. Our lawyers have years of experience handling RERA cases.
Our lawyers help you understand the registration process of the RERA while taking precautions to meet all the deadlines. Our lawyers help promoters understand the compliance of the RERA, like advertising, marketing and sales. Our firm’s lawyers make all the necessary documents for the registration and compliance process.
What is the compliance of the promoters?
Create a webpage on the authority website and fill in the details of the proposed project.
What are the general updates required to update the RERA website?
- Document Upload (Documents, Certificates, Details of encumbrances, etc.)
- Building Details (Number of apartments Booked/Sold/Allotted)
- Task/Activity (Percentage of Work)
- Project Cost (Actual Total Amount)
- Promoter (Landowner)/Investor Details
- Common Areas and Facilities (Units Booked, Work Completion Percentage)
- Project Professional Details (Real Estate Agent, etc.)
What are the other updates required to update the RERA website?
- Update quarterly on the development status of the project.
- Update the quarterly number of sales in the project, along with the number of garage sales in the project.
- Quarterly, update the list of approvals taken by the project, along with the list of pending certificates for the project.
- Make updates about other information related to the project as per the directions made by the regulatory authority of each state.
- Promoters must ensure the advertisement of the project includes the website address of the project so the consumer can easily check all the details of the project, along with the registration number obtained from the authority.
- At the time of booking and issue of the allotment letter, certain information is provided to the allottee or consumers. Such as sanctioned plans, layout plans, and specifications that are approved by the competent authority. Along with that timeline for completion of the project, including provisions for basic infrastructure like water, sanitation, and electricity.
- Promoters must maintain a separate bank account for each project where they credit 70% of the amount received from the buyers.
What are the disclosure norms that apply to the promoters?
- Promoters must disclose the exact size of the apartments as per the carpet area of the flats, even in cases where they were previously sold as super-built-up or built-up areas.
- Promoters must disclose how many open parking areas and how many covered parking areas are available in the property project.
- Promoters must disclose, in the case of redevelopment projects, to the allottee how many areas promoters have sold to the consumers, along with the extent of the share of common areas and amenities.
- Promoters disclose the legal title deeds of the land, which show the title of the promoters on the land where the development is planned.
- If the landowner is different from a promoter, then promoters must disclose valid documents with the authentication of that owner for the development of the land he own.
- Promoters disclose all the documents related to the land of the development, such as rights, titles, interests, the name of any property on the land and all other related details.
- Promoters must disclose the time originally given to the consumers for completion of the project at the time of sale of the project. Along with that, if any delay occurred in the completion of the project, then disclose also how many days or months it has made delays and what the development is on completion of the real estate project.
- Promoters must disclose the annual reports of the project, which include the audited profit and loss account, balance sheet, cash flow statements, and directors’ report, along with the financial reports of the promoters of the last 3 financial years.
- Promoters must disclose to the allottee the certificate from CA, certifying the amount received from the sold apartments, as well as the estimated amount they received from the unsold apartments or other premises, which is calculated as per the prevailing ASR rate on the date of the certificate.
FAQs – Promoter Obligations Under RERA
Which obligations apply to the promoters after the RERA registration?
Promoters must maintain a separate bank account for every project, disclose the true information related to the real estate project, complete the construction and give possession of the project in the decided timeline, and if any structural defects arise in the project, then rectify that defect in the decided timeline. This obligation must be applied to the promoters after the RERA registration
How do the promoters do the RERA registration?
For registration of the promoters, they are required to submit the necessary documents and fees to the relevant state authority. Follow the provisions like project disclosure, possession timeline, and maintaining the construction quality of the project etc.
In the concept of the promoters, which public bodies are included in India?
As per this act, the concept of promoters includes all the public and private bodies that develop any land into a property project. It also includes development authorities and housing boards when they are involved in the selling and development of the plots, apartments and buildings.
Is it compulsory for promoters to register their real estate project under the state authority of the RERA?
When any real estate property project fulfils the criteria of registration under the RERA authority, then the promoters of that project are required to register their project under the applicable state authority. Before the registration, promoters can do advertisement, marketing, booking, selling or offering to sell or inviting people to purchase that real estate project.
Is insurance for real estate projects compulsory?
Applicability of the insurance on the real estate project depends on notifications from the state government, so if a notification is issued by the state government, then insurance is compulsory for the real estate project. As per the act, the State Government can prescribe various types of insurance, like a title of land and building as a part of the project, and insurance for the construction of the project. These types of insurance include but are not limited to, the following types.
As per the RERA Act, can a promoter file a complaint against the buyers or consumers?
As per Section 31 of the RERA Act, any aggrieved person can file a complaint against the promoter, allottee, or real estate agent. If any activity of the buyers breaks the rules and regulations applied by the RERA, like a non-payment of the purchase price of the property to the builders within the decided timeline, then builders can file a complaint against those buyers with the Authority or the Adjudicating officer.