News Source: economictimes.indiatimes.com
Builder floors in south Delhi, Gurgaon escaping RERA registration
News Source/Courtesy: economictimes.indiatimes.com

Developers of high-value independent floors in south Delhi and Gurgaon are avoiding registration mandated under the Real Estate (Regulation and Development) Act, leading to violations, brokerage firms and legal experts said.

Section 3(2) (a) of RERA does provide for an exemption from registration if the land proposed to be developed is less than 500 sq metres or the apartments proposed to be developed are less than eight.

“In some cases, developers are not complying and it is leading to numerous disputes, litigations,” said Amit Goyal, CEO at India Sotheby’s International Realty. “The most affected are elderly people, who are taken for a ride by developers too where stakes are substantially higher.”

For example, most properties in Delhi’s posh colonies are in the range of Rs 20 to 100 crore wherein existing owners, mostly elderly people, either sell or collaborate with developers.

Vijay Madan, Delhi’s former RERA chief, has said that this is a grey area, which needs to be addressed. Haryana RERA chief KK Khandelwal has also raised the issue on a number of occasions.

“RERA provides for registration of projects as mandated under Section 3,” said Simranjeet Singh, partner, Athena Legal. “However, the threshold limits as set out in Section 3 (a) are not being adhered to. Thus the onus is on the regulatory body to ensure effective enforcement of the said provisions and where any party is found to be in violation, appropriate action must be initiated as per the statute. One such provision is Section 59 of RERA.”

Section 59 provides for punishment for non registration where penalty may extend up to 10% of the estimated cost of the project.

In case the violation continues even after a penalty is imposed, the promoter can be punished with imprisonment, which may extend up to three years.

“We also need to bear in mind that these parameters were set out five years back but with our learning over the years and considering different geographies, these exemptions need to be revisited,” said Avikshit Moral, partner, Induslaw. “For instance, even in the past similar legislations were amended from time to time to meet with the desired objects of the Act.”

“Going forward, even exemption of a project from RERA should require approval of the authority. This will not only protect homebuyers but also clear the confusion around such exemptions,” Moral said. “Secondly, a total compliance exemption under this provision may be replaced with limited compliances for smaller projects to ensure transparency as per the objects of the Act.”

In south Delhi and Gurgaon, most of the developers construct up to four floors without registering the project under RERA. In some cases, the plot size is larger than 500 square metres but builders are not aware that they will have to get it registered if any of the two criteria is breached.

“The issue was rampant in Gurgaon but Haryana RERA had issued show cause notices and the number of violations came down. Delhi RERA should do the same,” said Harshit Goyal, a Gurgaon-based lawyer.

In some cases, the developers are constructing over 100 apartments but to avoid registration under RERA, they are executing each plot under a different name.

Recently, the Maharashtra RERA appellate tribunal also clarified that the law says if the plot is under 500 square meters or eight units or less are being offered for sale, RERA registration is not compulsory but if any of the two criteria is breached, the builder should register the project.

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News Source: economictimes.indiatimes.com

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