BY VENKET RAOThe much-awaited Real Estate ( Regulation & Development ) Act , popularly known as RERA , has become much deliberated and debated law as well . The success of the RERA depends as much on state governments as on various stakeholders , while one may debate on many aspects of the RERA , one pricking and key issues that has become a bone of contention is the definition that various states have been assigning to ‘ ongoing projects ’. In terms of proviso to Section 3 ( 1 ) of RERA , such projects wherein the completion certificate has not been issued till the date of commencement of the Act ( i . e May1 , 2017 ), would be requiring registration with the Real Estate Regulatory Authority of the concerned state . Once a project falls within the ambit , the promoter of the project was duty bound to apply for registration of the project with the State Regulatory Authority within three months of the above referred date . This would compel him to host a whole gamut of information about the project such as track record of the promoter , |
land status including any outstanding payments towards land , encumbrances on land / project , current status of the project , proposed original time schedule of completion , delay if any , new time lines , etc . Apart from this there is a stringent mechanism on the utilisation of customer receipts , promoter has to set aside 70 percent of customer collections in a separate account and can only withdraw therefrom in proportion to the percentage of completion of the project . Though , land and construction costs could be considered for assessing the percentage of completion of the projects , it is no small task for currently cash strapped developer to manage the cash flows .
Legislative intent has been to bring in large number of stuck projects in the ambit of RERA . If one tracks the course of RERA , there has been much activism from the customers in regard to this law . Sometime , during the course , RERA was contemplated to be introduced for new projects , however , ongoing projects were introduced with the primary aim to protect the interest of buyers even in the current stuck projects . In order to understand the debate one has to principally look at the definition of ongoing projects vscentral law , in few key markets .
Almost all the states have excluded projects which have obtained ‘ Occupancy Certificate ’ apart from those which have completion certificate from the definition
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of ongoing projects . Most of the states have even excluded projects which have part completion or part occupancy or even applied for cases from being an ongoing project . Certainly , Telanganahas gone little too far in interpretation .
In short , if one tries to understand what primarily is the difference between a ‘ completion certificate ’ and ‘ occupancy certificate ’, completion certificate contemplates that the real estateproject has been developed according to the sanctioned plan , layout plan and specifications , as approved by the competent authority under the local laws ., while anoccupancy certificate ’ contemplates permitting occupation of any building , as provided under local laws , which has provision for civic infrastructure such as water , sanitation and electricity . Each state may have procedures which could be unique to each such state in issuing
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each of the said certificates . While the completion certificate refers to completion of entire real estate project , the occupancy certificate is more specific and may pertain to a building within the project .
Apart from the above part completion and part occupancy is further breaking down of the project into smaller pieces in respect of completion or occupancy or issued in respect of part of the project , by competent authority subject to fulfilment of various conditions by the developer / promoter within a certain timeline . The issuance of such part completion / occupancy only concludes part conclusion of developer obligations in respect of real estate project . Whereas ‘ completion certificate ’ of real estate project entails conclusion of entire set of obligations of the developer / promoter in respect of the project including in respect of complete infrastructure , facilities , community sites , etc .
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Invariably , procuring the part completion / occupancy is usually the course in the industry . A completion certificate of the entire real estate project , especially in case of large real estate developments , is a long drawn process and therefore developers fulfilling the obligation along the development of the project procure part completion / occupancy and offer possession to the buyers . Irrespective of position of law , the reality is that there are large number of projects , may be even completed years ago , across the country wherein completion has not been issued or obtained . One may debate over it , but developer would stand to say that he has fulfilled his obligation long and the completion certificate is stuck in red tape or buyer may complain that developer has not fully concluded on his obligations or authorities stay oblivious . The system which has been in place over the years |
takes the blame . There is strong argument from both sides , while developers feel that they are double changed in spite of giving possessions they are bought into regulatory ambit , customers are able to highlight cases where the completion / occupancy is managed and the project may not be habitable . 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 thestates to create an 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 the country . ( The author , besides the founder & chief executive of Intygrat Business Advisory ( P ) Ltd ., is a RERA expert ) venketrao @ intygrat . com |
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CHROMOHOMES • OCTOBER 2017 |
OCTOBER 2017 • CHROMOHOMES |
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