RERA Registration – A Must for Builders

With the changing times in the Indian real estate industry, transparency and accountability have become essential. The Real Estate (Regulation and Development) Act, 2016 (RERA), is a pillar in the enforcement of these values, protecting the interests of homebuyers and creating a more organized and trustworthy industry. The very essence of RERA’s mandate is the imperative of project registration, which is a mandatory process for all real estate promoters before they can even consider promoting or selling their properties. Failure to comply with this order is not merely a procedural failing; it can result in severe financial sanctions and legal consequences.

THE MANDATE: REGISTER BEFORE YOU PROMOTE

Section 3 of the RERA Act categorically lays down that no promoter shall advertise, market, book, sell, or offer for sale any plot, apartment, or building in a real estate project prior to registering the project with the Real Estate Regulatory Authority of the concerned state. This clause is intended to introduce an element of oversight and regulation of the projects coming onto the market so that developers have all the clearances required and are bound to fulfil their commitments. This requirement is mostly for projects that involve a piece of land with a proposed area greater than 500 square meters or over eight apartments. Running projects where the completion certificate has not been released as of the commencement date of the Act also fall into this requirement for registration.

THE PROCESS

1. Though the details may differ slightly by state, the overall process for RERA project registration includes some very important steps:
2. Promoter’s details (PAN card, address proof, etc.).
3. Project details (land title, layout plan, sanctioned plan, project schedule, etc.).
4. Financial details (project cost, funding sources, audited financial statements).
5. Legal clearances and approvals from relevant authorities.
6. Proposed sale agreement and allotment letter formats.
7. Details of professionals involved (architects, engineers, contractors).

• Online Application: Most states have a website where the promoters can submit their application in the prescribed form, furnishing all the information and uploading the documents required.
•   Payment of Fees: There is a fee for registration, which differs with the state and the size/type of the project, which is to be paid.
• Submission and Verification: After submission of the application and fees, the RERA authority verifies the documents and details furnished. They may seek clarifications or pose questions.
• Grant of Registration: If the authority is satisfied, it will issue a registration certificate with a special project registration number, normally within 30 days. This registration number has to be mentioned in all advertisements and marketing material.

THE IMPLICATIONS: HEFTY SANCTIONS FOR DEFAULT

Non-registration of a project under RERA prior to public advertising or offering for sale may entail hefty sanctions. Under Section 59 of the Act, the RERA authority is conferred the power of imposing a sanction of up to 10% of the project cost of the real estate for non-registration. Additionally, if the promoter keeps violating the requirement of registration, he can be punishable with a further fine which could be up to 10% of the project cost estimate or imprisonment for a period which could be up to three years, or both. These fines are not only financial; they can severely tarnish a builder’s reputation and undermine the confidence of potential purchasers. In an increasingly transparent market, such non-compliance can be a decisive blow.

THE BENEFITS: WHY REGISTRATION IS A WIN-WIN

Registration is required, but it also has several advantages for builders:

1. Improved Credibility and Trust: RERA registration indicates to prospective buyers that the project is genuine and complies with regulatory requirements, which instils confidence and trust.
2. Improved Processes: The registration process compels developers to possess all required approvals and plans, resulting in a better-organized and potentially smoother project delivery.
3. Availability of Formal Financing: Registered projects tend to be considered more favourably by financial institutions.
4. Less Disputes: Clearly defined rules and required disclosures in RERA will reduce misunderstandings and disputes between buyers.
5. More Ethical Competition: RERA makes the playing field level by allowing all major projects to follow one set of regulations.

CONCLUSION: ADOPT COMPLIANCE FOR A GREENER TOMORROW

In today’s real estate ecosystem, RERA registration is no longer a judicial formality, but a fundamental necessity for ethics and sustainable practice. By registering projects prior to advertising or selling them, builders show their dedication to transparency, accountability, and safeguarding the interests of homebuyers. Skipping this important step can result in massive fines and damage to their reputation, ultimately affecting their growth and success in the long term. For the responsible and progressive developer, RERA registration is not an onus, but a necessity towards the development of a credible and flourishing real estate ecosystem.