06 January 2017

Maharashtra draft rules vs Real Estate (Regulation & Development) Act (RERA) 2016

News

Recently, Maharashtra government has notified the draft RERA rules. The draft document was open to public suggestions and objections until 23rd December 2016. Here is a holistic comparison of the Maharashtra draft rules and the Act legislated by the Central Govt. in 2016. 

Main Clauses

Real Estate Regulation & Development Act (RERA) 2016 

 Maharashtra draft RERA

Registration

  • Mandatory registration of the project and real estate agent with the Appellate Authority.

  • No sale and advertising before the registration.
Minimum Project Size



 Compulsory registration for projects admeasuring plot area        more than 1,000 sq meters or 12 number of apartments.  No specifications on the minimum project size.

Title

  • Promoter liable to provide a copy of the legal title report and history.

  • Land should be free from any encumbrances.

Escrow Account

 70% of the amounts realised for the project to be deposited in a separate account in a scheduled bank to meet the cost of the real estate project.

Besides the clause of depositing 70% of the project money into project account, there is an additional requirement of depositing 100% of the project money into the project account if estimated revenue from the ongoing project is less than the cost of completion.

Online Project details    All project details such as sanctioned plan, layout plan, floor space index, number of buildings or wings, etc. should be available online.

Lapse/Cancellation of Registration 

Authority to overtake the development of the project in case of lapse/cancellation of the registration.

Ongoing projects  Ongoing projects also need to register with the Appellate Authority. 
Sale of the apartment 

On the basis of carpet area only.

Promotor has the flexibility to choose carpet area basis or on any other basis such as built up area, super built up area, etc.
Redevelopment  No specific clause regarding redevelopment projects.

Mandatory for the developer to place the sale component of a redevelopment project in the public domain. 

Parking 

Parking spaces defined but no specifications regarding parking costs. 

Parking costs to be specified separately. 

Structural Default 

Developer to rectify any structural faults free of cost in case it is reported within five years of the date of possession. 

No clause regarding structural defaults. 

Penalty for non- compliance 

  • Promoter – Up to three years of imprisonment or fine up to 10% of the total project cost. 

  • Real Estate Agent - Up to one year of imprisonment or fine up to 10% of the total project cost. 

Penalty from 2% to 10% of the total project cost. No Imprisonment.





Research view

Although, the draft rules has the essence of the Real Estate Regulation & Development Act 2016, several clauses in the state draft regulation lack transparency. In our opinion, the final regulation should have specific clauses on issues such as promotor’s liability on structural defaults, sale on carpet area basis and strict measure like imprisonment on noncompliance.



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