Rera’s ongoing pain

Geetu Vaid

Excitement is the sentiment that has scored over positivity in the realty sector be it Punjab or Haryana. The mood may not be upbeat businesswise, but  there are animated discussions and hectic parleys in official as well as public corridors. Well, the main reason for all this anticipation and perspiration is the new kid on the policy block — RERA— the Real Estate (Regulation and Development) Act. 

With Haryana as well Punjab putting their regulatory bodies and rules in place towards the fag end of the deadline mentioned by the government, most of the developers had to make the final dash to submit their applications for registration to RERA bodies before the July 31 deadline. But it is not this last minute sprint that most stakeholders are sweating about, it is the ring of ambiguity around some of the provisions of the new law and the difference between the Centre’s version and the “adaptation” of it by different states that is fuelling debates at different platforms. 

Experts are perturbed over the manner in which the government that was instrumental in getting the law passed, has donned the robes of an onlooker ever since its implementation. The awareness campaigns regarding different clauses and rules and their implications are woefully missing and failure to provide clear operative definitions for some key terms used in the law have given certain state governments a wide field to dilute the spirit of the law. One one hand the developer lobby’s cup is brimming with queries regarding the expenditure of money parked in the separate account and drafting and registration of buyer-builder agreements. On the other hand the existing homebuyers, who have been bearing the brunt of delays and lengthy litigations, too are not in a happy state as with a little manouvering of operative definitions their developers can steer clear of the stringent net of regulation promised by the law. This will leave the buyers whose money is blocked in delayed projects stranded once again. Industry bodies like CREDAI   , especially in Punjab, are playing a proactive role by providing opportunities to stakeholders to air their views on the pain points relatated to RERA so that its implementation can be worked out smoothly. Some of the main areas of concern that developers as well as the buyers are confronted with at the moment are: 

Dispute over definition

For the buyers who have been waiting for the law that has been tagged as consumer-centric, the main concern is to find out whether the project in which they have already booked an apartment or a plot will be covered under RERA because only then will they be able to reap the benefits of timely completion and get suitably compensated for the delay or exit if the project remains in limbo for a significant length of time. The factor on which this depends is the definition of “ongoing projects” as the promoters/developers will be required to register their projects with the respective regulatory body if their project falls in the “ongoing projects” criteria. The move to include ongoing projects was meant primarily to give some relief to the buyers who have been suffering due to prolonged delays and other discrepancies in the existing projects. The under construction/development projects that do not fall in the “ongoing” category, however, will be able to steer clear of the RERA registration and thus would be exempt from its various punitive provisions. This is where the central law left a huge margin by not clearly specifying the basis on which a project will be deemed ongoing. According to Section 3(1) of RERA, the projects wherein the completion certificate has not been issued till the  date of commencement of the Act (i.e May 1, 2017), would be requiring registration with the Real Estate Regulatory Authority of the state concerned.  Completion certificate with regard to a realty project means  conclusion of all the obligations of the developer/promoter concerned with the project, including  complete infrastructure, facilities, community sites etc. And getting this for integrated townships as well as large projects is a long drawn process. And the general practice in such projects is to obtain part completion certificate and offer possessions. But with several states adding the occupancy certificate, wherein part possession have been offered, to exclude projects from the registration process, the basic spirit and intent of the law have been diluted. 

Skewed scales in Haryana

Haryana RERA (HRERA) has got flak over this with the consumers alleging that it is more biased towards the developers. According to HRERA a project will be excluded on the following grounds:  

n any project for which after completion of development works, an application for  CC  or Occupancy Cetifiacte is made to the Competent Authority on or before July 28, 2017

n that part of any project for which part completion/completion, occupation certificate or part thereof has been granted on or before publication of these rules. 

“Thus, Haryana has exempted projects with even partial completion/occupancy certificates. In simple words, this means that projects with multiple towers of which some have been completed but project-level amenities are not yet in place or are delayed — and where even possession was delayed — are out of the purview of RERA”, explains Rohan Sharma, Associate Director – Research & REIS, JLL India.

And with a large number of developers in Gurugram, especially,  scrambling to apply for occupancy certificates in the period between October and November 2016 and getting these a number of projects are now out of the purview of RERA.  Giving details Sharma says that  over 21,000 apartment units were completed in Noida and Ghaziabad over the past six months and another 7,500 were completed in Gurgaon — many in projects where common facilities were not fully completed and handed over to the respective RWAs (Resident Welfare Associations). And this means that buyers are stuck with “virtually” incomplete/undeveloped projects but with no means to seek redressal under RERA. 

Punjab’s endeavour for balance

Taking the case of Punjab one notices that efforts have been made by the state authority to adhere to the central law by and large.  Punjab has tried to link this to development and has also excluded  partial completed projects from the definition.  According to Rule 2(h) of Punjab Real Estate ( Regulation & Development) Rules 2017 “ongoing project” means the projects  in which development and development works as defined in Section 2(s) and Section 2(t) of the Act are still under way, excluding the area of portion of the project for which partial completion or occupation certificate, as the case may be, has been obtained by the promoter of the project 

RERA - Section 2(t) defines “Development” and 2(t) defines “development works”. This is not an out and out exclutionary approach as a majority of the projects will be required to seek RERA registrations in the state. However, voicing the concerns of developers Jagjit Singh Majha, CMD PCL, New Chandigarh, says that while the onus for completing the internal development in a project is on the developer, the term development works or Section 2(t) includes amenities that depend on the civic body of the area, so even if a developer has completed his obligation he may be in a tight spot as the civic body has not done its part”. 

---

Completion Certificate Vs Occupancy certificate

Completion Certificate contemplates that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws.

Occupancy Certificate' contemplates permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity. 

While ''Completion Certificate refers to completion of the entire real estate project, 'Occupancy Certificate' is more specific and may pertain to a building within the project.  

Looking for balance

The buyers as well as developers both have legitimate concerns  due to the different connotations of the term “ongoing projects”. ““There is strong argument from both sides, while developers feel that  they are double changed inspite  of giving possessions they are bought into regulatory ambit, customers are able to highlight cases where the completion/occupation is managed and the project may not be habitable”, says Rao.

The solution according to Sharma is:  “The Central RERA tenet of projects which did not have completion certificates by July 31, 2017 deadline being covered under the Act should be adhered to in the spirit of this legislation”, says Sharma. 

 “The need is  to draw a line and bring in such projects which have been stuck and buyers are suffering  across the country under the ambit  rather than leaving it to  the states, to create utter confusion. It may be an exercise of an Expert Panel involving  all stakeholders within a defined time frame to come up with a formula, for implementation across country”, says Venket Rao, RERA expert and Corporate Advisor, Founder & Chief Executive, Intygrat Business Advisory(P) Ltd.