10 February 2017

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

Recently, Uttar Pradesh government has notified the draft RERA rules. Although, the UP RERA rules has the essence of the Real Estate Regulation & Development Act 2016, several clauses in the state regulation lack transparency. In our opinion, it should add specific clauses on issues such as promotor’s liability on structural defaults, title issues and strict measure like imprisonment on noncompliance. Here is a holistic comparison of the Uttar Pradesh draft rules and the Act legislated by the Central Government in 2016. 

Main Clauses

Real Estate Regulation & Development Act (RERA) 2016 

 Uttar Pradesh 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 500 sq m or 8 number of apartments.
Compulsory registration but 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 and details to be provided if it is not so.

  • Promoter liable to compensate the allottees in case of any loss caused due to defective title of the land.

Promoter is liable to provide a copy of legal title report and details of encumbrances in case there are any. However, no clause has been included mentioning the compensation to be provided to allottees in case of any loss caused due to defective tittle of the land.
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project to be deposited in a separate account in a scheduled bank to meet the cost of the real estate project and to be withdrawn in proportion to the percentage of completion.
Online Project details  

All project details such as sanctioned plan, layout plan, floor space index, specifications of the project, authenticated copy of approvals and commencement certificate should be available online.

Lapse/Cancellation of Registration 

Remaining development work to be done by competent authority or association of allottees and appropriate government may be consulted.

Ambiguity on the process to be adopted for remaining development work in the event of lapse or cancellation of the project.

Definition of Ongoing projects 

Ongoing projects 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.

Ongoing projects means a project where completion certificate has not been issued but excludes projects where:

  • The services have been handed over to the local authority for maintenance

  • Where common areas and facilities have been handed over to the Residents’ Welfare Association for maintenance

  • Where all development work is complete and sale/lease deeds of 60% of the apartments/plots have been executed

  • Development work is complete and application for completion certificate has been submitted

Sale of the apartment

 

On the basis of carpet area only.

For existing projects, the promoter should disclose the size of the apartment based on carpet area even if earlier sold on super built up area, built up area.

Parking 

Parking spaces defined but no specifications regarding parking costs.

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 

Several imprisonment clauses have been made into compounding clauses (where money is paid in lieu of actual punishment).


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