Central RERA & RERA (UP)

Contravention of Provision

1. The rules framed by the Centre have said that “If any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten percent of the estimated cost of the real estate project as determined by the Authority. (2) If any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both.

Penalty for compounding

2. The UP RERA Act states “The money to be paid for compounding shall be proportionate to the term of imprisonment subject to a maximum of 10% of the estimated cost of the real estate project for three years.

Completion certificate issue

3. The rules also state that a building without a completion certificate will come under the ambit of the RERA Act. The UP government has interpreted it to say that if 60% of people are residing in a particular project or if an application has already been filed by a builder with the authority for the certificate, these rules will not apply to them.

4. UP Rules define ongoing projects as under-development projects for which completion certificates have not been issued. It excludes projects (i) where services have been handed over to the local authority for maintenance (ii) where common areas and facilities have been handed over to the association or the residents’ welfare ­association for maintenance (iii) where all development work has been completed and sale/lease deeds of 60% percent of the apartment/houses/plots have been executed (iv) where all development works have been completed and application has been filed with the competent ­authority for issue of completion certificate.

5. Handing over possession of a building without a completion certificate is illegal. “The rules should have clearly stated that if people have taken possession under duress and the building has not received a completion certificate, RERA should apply to them. UP Apartment Act strangely has a provision for partial completion. To give legal sanctity to these activities, rules have been framed in a manner to protect these activities but this can
go against buyers,”

Rate of interest

6. UP rules do not have any reference to the rate of interest (NOT DEFINED) at which the money has to be refunded to homebuyers as against the central RERA Act under which developers will now be required to refund or pay compensation to the allottees with an interest rate of the State Bank of India’s highest marginal cost of lending rate plus 2% within 45 days.

Projects as defined

7. While UP has come up with four exemptions to exclude incomplete projects from the category of “ongoing projects” On the contrary, the law enacted by the Center earlier this year provides for mandatory registration of all “ongoing projects” that have not received completion certificate.

8. The central law, which is binding on all states, does not differentiate between ongoing and future projects for registration. However, it provides for registration of incomplete projects within three months from the commencement of the Act, on its part, the Uttar Pradesh government has also provided a handle for developers to retain some land in their projects under the guise of commercial activity rather than hand over such land to
house owners.

Facilities provided under project

9. While the central law clearly says that all community and commercial facilities in a project will be treated as common areas, rules notified by UP says, “Community and commercial facilities shall include only those facilities, which have been provided as common areas.

Compoundable offence

10. Section 70 envisage that the nature of crime is Compoundable in nature by depositing money only and hence the applicability of the same should be taken as granted by the builders so, to curtail such kind of offences a rigorous imprisonment should be implemented.

It will be difficult for builders to sell units based on carpet area for buildings which are under construction and where some units have already been sold under super built up area.Therefore, an exemption to this effect may be inserted under section 4(h) of the Act to resolve the conflict.  Further the word ‘net usable floor area’ must be defined in the Act for greater clarity.
Rules don’t seem to allow criminal proceedings against the developers.

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