Buyers Fear RERA May Delay Ongoing Projects

With the Real Estate Law coming into force, many prospective buyers are relieved and a sense of security prevails. However, with the State regulators slowly making their way across India, the provisions laid out in the Act have raised some pertinent questions as well. One of it being — Would ongoing projects get further delayed?

Stage at which projects could face delays

The Real Estate Law states, "Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act."

Also Read: Buyers Have Nothing To Fear, RERA Is Here

It does sound comforting to any aggrieved buyer. But, let's look at where there could be certain issues:

Projects already under construction will take some more time for the compliances. We are assuming that these projects would not be revoked but given the long list of compliances that promoters need to submit, this would-be time-taking. Some state regulators have excluded registration of under-construction projects such as in the case of Uttar Pradesh, Rajasthan and even Maharashtra where completion certificate and occupation certificate has been used interchangeably. As for most others, it is yet to be decided.

Projects where possession has been given but completion certificate/occupation certificate have not been provided: These also stand a risk. In 2016, the Noida Authority decided that it would take a hard action against developers who had given possession without obtaining an occupation certificate. Almost 20,000 home buyers were affected by this move in Greater Noida alone. In Mumbai, an estimate says that there are as many as one lakh homes that do not have an occupation certificate. In 2015, Bengaluru recorded almost 10,000 buildings without an occupancy certificate. Instances such as these plagues almost every Indian city. In such cases, where home buyers are already in possession of their units but lack access to basic amenities have little or no respite. Would these need to be regularised? Would the process of seeking these certificates from the authority take time? It surely adds to the delay.

Projects where completion certificate has already been applied for, too, stand a chance for further delay. With the RERA era setting in, many developers have rushed to get a completion certificate as soon as possible to keep out of the ambit of RERA. It is not only to avoid being scrutinised to bits but also because the compliances and its costs are high. However, with the pool of these applications coming in, would completion certificates be provided on time? Uttar Pradesh rules say that projects, where 60 per cent of flats has been allotted, are exempt from RERA. But it is not the same case everywhere.

 Other concerns

RERA is not one sided and it rightly seeks to benefit both promoters and buyers. Therefore, those promoters whose projects have been delayed significantly would get one more chance to fix the issue. The promoter is free to choose the timeline by which he will complete the project given that it shouldn't be an unreasonable timeline. Madhya Pradesh Regulatory Authority Chairman, Anthony de Sa was recently quoted saying, “If a project was launched eight years back and the developer returns for registration seeking another four years for completion, it cannot be granted. There is no hard or fast rule to fix the deadline, which will depend on the existing condition and stage of implementation of the project.”

Therefore, this is another delay. It could prove effective for aggrieved buyers but the delay cannot be discounted.

Also Read: RERA's Warranty Clause Will Strengthen Homebuyer-Developer Ties

“Provided that where extension of registration is due to force majeure the regulatory authority may at its discretion waive the fee for extension of registration. Extension of registration of the project shall not be beyond the period provided as per local laws for completion of the project or phase thereof, as the case may be.”However, there are checks and balances too. According to the Madhya Pradesh Regulator rules, an extension of registration is tough. "The application for extension of registration shall be accompanied by a demand draft drawn on any scheduled bank for an amount equivalent to twice the registration fee…. Along with an explanatory note setting out the reasons for delay in the completion of the project and the need for extension of registration for the project, along with documents supporting such reasons," it reads.

Also Read: What Does RERA Say About Timely Delivery Of Projects?