Functions & Duties of Real Estate Promoter under RERA Act

Learn about the essential functions and duties of a promoter in the context of the Maharashtra Real Estate Regulatory Authority (MahaRERA). This article empowers prospective homebuyers in Maharashtra with insights into the role of a promoter and their responsibilities, ensuring transparency and accountability in real estate transactions.

For prospective homebuyers in Maharashtra, navigating the real estate market can be a complex journey. However, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has been established to bring transparency and accountability to the real estate sector in the state.

In the intricate realm of real estate, one essential figure often overlooked by prospective homebuyers is the “promoter.” In the context of real estate dealings governed by the Maharashtra Real Estate Regulatory Authority (MahaRERA), a promoter is a central player with significant responsibilities and duties. This article aims to explain the multifaceted role of a promoter under MahaRERA, empowering homebuyers with a comprehensive understanding of this pivotal figure from the outset.

Defining Promoter:

A promoter, as per MahaRERA regulations, is the driving force behind a real estate project. This individual or entity takes on the crucial task of developing and bringing the project to fruition. However, the role of a promoter transcends mere project development; it encompasses a spectrum of obligations and commitments aimed at ensuring transparency, accountability, and protection for homebuyers.

In this comprehensive article, we will delve into the functions and duties of a promoter under MahaRERA, shedding light on what you, as a homebuyer, need to know before making a property investment.

Project Registration and Disclosure

1. Project Registration Process:

• The journey of a promoter under MahaRERA starts with the registration of their proposed real estate project. This registration is mandatory for all real estate projects in Maharashtra.
• Promoters need to submit detailed information about their project, including its location, size, layout, and the estimated timeline for completion.
• Upon successful registration, the promoter is issued login credentials, granting them access to the MahaRERA portal.

2. Dedicated Web Page Creation

• With the provided login credentials, the promoter can create a dedicated web page on the official MahaRERA website. This web page is a critical aspect of the transparency and disclosure requirements.
• The web page serves as a public platform where all essential details about the project are made available for potential buyers, investors, and the general public to access.

3. Information Disclosed on the Web Page

• Registration Details: This section provides an official record of the project’s registration with MahaRERA. It includes the unique registration number and date of registration, which helps establish the project’s legitimacy.
• Quarterly Updates: Promoters are required to keep this section up-to-date with information on the number and types of apartments or plots booked by buyers, as well as the number of garages or parking spaces booked. This transparency ensures that potential buyers are aware of the current status of bookings within the project.
• Approvals: In this section, the promoter must document any approvals they have obtained for the project. This includes approvals from government authorities and agencies related to construction and land use. Any pending approvals subsequent to the commencement certificate must also be listed, ensuring that buyers are aware of the project’s compliance with regulatory requirements.
• Project Status: This section provides an ongoing status report of the project’s progress. It includes updates on construction milestones, timelines, and any delays or changes in the project’s development. This transparency allows potential buyers to gauge the project’s readiness and potential risks.
• Other Information: Promoters are obligated to furnish any other information and documents specified by MahaRERA regulations. This can encompass a wide range of details such as project plans, financial statements, environmental clearances, and more. The inclusion of such information helps potential buyers make informed decisions about their investments.

4. Ensuring Informed Decisions

• The level of transparency provided through the MahaRERA registration and disclosure process ensures that homebuyers have access to comprehensive project information.
• Armed with this information, buyers can make informed decisions about purchasing property. They can assess the project’s legitimacy, progress, and compliance with regulatory requirements, thereby reducing the risks associated with real estate investments.

Transparent Advertising

1. Prominent Display of MahaRERA Website Address

• MahaRERA places a strong emphasis on transparency in advertising for real estate projects. One of the key requirements is that any advertisement or prospectus issued or published by a promoter must prominently display the official website address of MahaRERA.
• This mandate ensures that potential buyers or investors have a direct and easily accessible link to the authoritative source of information about the project. It eliminates confusion and provides a clear path for interested parties to verify project details and authenticity.

2. Inclusion of MahaRERA Registration Number

• In addition to displaying the website address, MahaRERA requires that the unique registration number obtained from MahaRERA be included in all project-related promotional materials.
• This registration number serves as a crucial identifier, allowing interested individuals to cross-reference the information presented in advertisements with the official project details available on the MahaRERA website.

Providing Information to Allottees

1. Sanctioned Plans

• Promoters are legally obligated to furnish allottees with the sanctioned plans of the real estate project. These plans have been approved by the competent authorities, typically local municipal bodies or development authorities.
• Sanctioned plans provide a blueprint of the entire project, detailing the layout, building structures, and common amenities. This information is vital for allottees as it helps them understand the design and scope of the project they are investing in.

2. Layout Plans

• Alongside the sanctioned plans, promoters must provide layout plans to allottees. Layout plans offer a more detailed view of individual units, common areas, parking spaces, and amenities within the project.
• Allottees can use layout plans to select specific units and understand their location within the complex, allowing for better decision-making.

3. Specifications Approved by Competent Authorities

• Promoters are required to share details of the specifications approved by competent authorities with allottees. These specifications encompass construction materials, quality standards, and design features of the buildings.
• By providing this information, allottees can assess the quality and standards to which their future homes or investments will be built.

4. Stage-Wise Time Schedule for Completion

• Promoters must disclose a stage-wise time schedule for the completion of the real estate project. This schedule outlines the anticipated timeline for each phase of construction and the overall project completion date.
• Allottees benefit from this information as it helps them plan their move-in or investment timelines and expectations.

5. Civic Infrastructure Provisions

• Promoters also have to include details regarding the provision of essential civic infrastructure, such as water supply, sanitation, and electricity, in their communication with allottees.
• This information ensures that allottees are aware of the basic amenities and services that will be available in the project, contributing to a more informed decision-making process.

Ongoing Responsibilities

1. Obligations to Allottees

• Promoters are accountable for fulfilling all obligations, responsibilities, and functions outlined in MahaRERA regulations, as well as those specified in the agreement for sale with allottees. This includes commitments made to individual buyers regarding the delivery of their properties and associated amenities.

2. Completion and Occupancy Certificates

• Promoters are responsible for obtaining the completion certificate and occupancy certificate, or both, from the relevant competent authority in accordance with local laws.
• These certificates signify that the project has been constructed as per the approved plans and is fit for occupancy. Promoters must make these certificates available to allottees either individually or to the association of allottees.

3. Lease Certificate (If Applicable)

• In cases where the real estate project is developed on leasehold land, promoters are further responsible for obtaining a lease certificate.
• This certificate specifies the lease period, certifies that all dues and charges related to the leasehold land have been paid, and must also be made available to the association of allottees.

4. Provision and Maintenance of Essential Services

• Promoters are required to provide and maintain essential services for the project on reasonable charges until the maintenance of the project is formally transferred to the association of allottees.
• Essential services typically include amenities like water supply, sanitation, electricity, and other communal facilities that contribute to the habitability and functionality of the project.

5. Formation of Allottee Associations

• Promoters have the responsibility to facilitate the formation of an association, society, or cooperative society, as applicable, for the allottees. This is often required under local laws or regulations.
• If there are no specific local laws in place, the association of allottees must be formed within three months of the majority of allottees booking their plots or apartments in the project.

6. Conveyance Deed

• Promoters are tasked with executing a registered conveyance deed of the apartment, plot, or building in favor of the allottee.
• This deed includes the undivided proportionate title in common areas, as stipulated under section 17 of MahaRERA. It essentially transfers ownership from the promoter to the individual allottee.

7. Payment of Outgoings

• Promoters are obligated to pay all outgoings collected from allottees for the project. Outgoings encompass various expenses such as land costs, ground rent, municipal or local taxes, water and electricity charges, maintenance fees, mortgage loans, interest on mortgages, and other liabilities related to the project.
• If a promoter fails to make these payments before transferring the project to allottees or the association of allottees, they remain liable for these expenses, which may also result in legal proceedings.

No Mortgage or Charge

1. Protection of Allottees’ Interests

• The prohibition against promoters mortgaging or creating charges on properties post-execution of an agreement for sale is a crucial safeguard to protect the interests of allottees, who are prospective buyers or investors in the real estate project.
• This safeguard ensures that once an allottee has entered into an agreement to purchase a property within the project, their rights and investments are secured and not encumbered by any financial liabilities or claims imposed by the promoter.

2. Preventing Unauthorized Financial Transactions

• Allowing promoters to mortgage or create charges on the properties after the agreement for sale could potentially lead to unauthorized financial transactions that could adversely affect the allottees.
• Without this safeguard, promoters might use the properties as collateral for loans or other financial dealings, putting the allottees’ investments at risk and potentially complicating the transfer of property titles.

3. Ensuring Clear Title Transfer

• The prohibition ensures that property titles are clear and unencumbered when they are eventually transferred to the allottees.
• It prevents any third-party claims or disputes arising from mortgages or charges on the property, simplifying the title transfer process and reducing legal complications for the allottees.

4. Promoting Trust and Confidence

• By implementing this safeguard, real estate regulatory authorities like MahaRERA demonstrate their commitment to building trust and confidence in the real estate market.
• Allottees can have greater confidence that their investments are protected, and that the terms of the agreement for sale will be honored without unforeseen financial encumbrances.

5. Compliance with Regulatory Framework

• Prohibiting promoters from mortgaging or creating charges aligns with regulatory frameworks aimed at ensuring fair and transparent dealings in the real estate sector.
• This prohibition reflects the principle of consumer protection, which is central to many real estate regulations.

6. Legal Recourse for Allottees

• If a promoter violates this prohibition, allottees have legal recourse to protect their interests. They can challenge any unauthorized mortgages or charges on their properties through legal channels.

Cancellation of Allotment

1. Agreement for Sale Terms and Conditions

• When an allottee enters into an agreement for sale with a promoter, the terms and conditions governing the allotment of the property are clearly outlined in this legally binding document.
• The agreement specifies the obligations, rights, and responsibilities of both parties, including the circumstances under which a cancellation of allotment can occur.

2. Cancellation Process in Accordance with Agreement

• Promoters can cancel allotments only in strict accordance with the terms and conditions specified in the agreement for sale. Common reasons for cancellation may include non-payment of dues, breach of terms by the allottee, or other contractual violations.
• The agreement typically outlines the steps that must be followed in the event of a cancellation, including notice periods, refund procedures, and any penalties or deductions.

3. Right to Seek Relief from MahaRERA

• If an allottee believes that cancellation is unjustified and not in line with the terms of the agreement for sale, they have the right to seek relief from MahaRERA.
• MahaRERA serves as a regulatory authority that oversees and regulates real estate transactions in Maharashtra. It is responsible for ensuring transparency and fairness in the real estate sector.

4. MahaRERA’s Role in Resolving Disputes

• When an allottee files a complaint with MahaRERA regarding a cancellation dispute, the authority initiates a process to mediate and resolve the issue.
• MahaRERA has the authority to review the agreement for sale, examine the reasons for cancellation, and assess whether the promoter’s actions align with the terms and conditions outlined in the agreement.

5. Possible Outcomes

• After a thorough review, MahaRERA may issue a decision that upholds the allotment cancellation if it is found to be in accordance with the agreement for sale.
• Alternatively, if MahaRERA determines that the cancellation is unjustified or in violation of the agreement’s terms, it may order the promoter to reinstate the allotment or take other appropriate corrective actions.

6. Importance of MahaRERA’s Intervention

• MahaRERA’s intervention in allotment cancellation disputes ensures that the rights of the allottees are protected and that promoters adhere to the terms and conditions specified in the agreement for sale.
• This regulatory oversight contributes to transparency and accountability in the real estate sector and provides a mechanism for allottees to seek redress if they believe their rights have been violated.

Compliance with Sanctioned Plans

• One of the primary responsibilities of a promoter in a real estate project is to strictly adhere to the sanctioned plans, layout plans, and specifications that have been approved by competent authorities.
• These plans serve as the legal and regulatory framework for the construction and development of the project. They detail the project’s design, layout, and structural specifications.

1. Minor Additions and Alterations

• Promoters are permitted to make minor additions or alterations to individual apartments or buildings. These changes may be requested by an allottee or deemed necessary for architectural and structural reasons.
• However, such minor alterations must follow specific procedures to ensure transparency and compliance:
• Recommendation by Authorized Architect or Engineer: Any proposed minor additions or alterations must first be recommended and verified by an authorized architect or engineer. This professional ensures that the changes are structurally sound and comply with building codes.
• Declaration and Intimation to the Allottee: Once the changes are approved, the promoter must provide a proper declaration of the alterations to the concerned allottee. This declaration outlines the nature and scope of the modifications.

2. Major Alterations

• Any substantial alterations or additions to the sanctioned plans, layout plans, and specifications of buildings or common areas within the project require a more rigorous process and the written consent of the allottees. These alterations may significantly impact the project’s design, appearance, or functionality.
• Consent Requirement: For major alterations, the written consent of at least two-thirds of allottees (excluding the promoter) who have agreed to take apartments in the affected building is mandatory.
• Transparent Decision-Making: The requirement for two-thirds consent ensures that such decisions are not made unilaterally by the promoter but are collectively agreed upon by a significant majority of the affected allottees.
• Protection of Allottee Interests: This process safeguards the interests of allottees by ensuring that any significant changes to the project are made with their informed consent.

Rectification of Defects

• One of the significant responsibilities of a promoter is to ensure that the real estate project is free from structural or workmanship defects, quality issues, or service-related shortcomings. These defects can encompass a wide range of issues, such as cracks in walls, leaky roofs, electrical problems, plumbing issues, or subpar finishing.

1. Timeframe for Identifying Defects

• Allottees have a window of up to five years from the date of possession to identify and report defects in their properties or common areas of the project.
• This timeframe allows allottees to observe and experience the condition of their properties and report any issues that may have arisen due to construction or workmanship problems.

2. Duty of the Promoter

• If any such defects are identified by allottees within the stipulated five-year period, it becomes the duty of the promoter to rectify these defects promptly.
• The promoter is legally obligated to address these issues and ensure that the properties meet the quality and standards promised during the sale.

3. Timely Rectification

• According to MahaRERA regulations, the promoter must rectify these defects within thirty days of being notified by the allottee.
• This ensures a timely response and resolution to quality-related issues, providing relief to affected allottees.

4. Rights of Aggrieved Allottees

• In the event that the promoter fails to rectify the defects within the specified thirty-day period, aggrieved allottees have the right to seek appropriate compensation under MahaRERA.
• Compensation can include financial remedies to cover the cost of repairs, damages, or any inconvenience caused to the allottees due to the defects.

Transfer of Rights and Liabilities

• In certain circumstances, a promoter of a real estate project may seek to transfer or assign their majority rights and liabilities in the project to a third party. This transfer could occur due to various reasons, such as financial constraints or changes in project management.

1. Approval Requirements

• MahaRERA regulations mandate that such transfers or assignments of majority rights and liabilities require approval from two-thirds of allottees (excluding the promoter).
• Additionally, approval from the regulatory authority, in this case, the Authority, is also necessary to ensure compliance with regulatory standards and to safeguard the interests of allottees.

2. Safeguarding Allottee Interests

• The requirement for allottee approval, along with the Authority’s oversight, is a crucial safeguard to protect the interests of allottees in the project.
• It ensures that any transfer of rights and liabilities is not undertaken unilaterally by the promoter without consideration for the allottees’ concerns and obligations under MahaRERA.

3. Continuity of Obligations

• When a transfer is approved, the new promoter or third party taking over the project is obliged to assume all existing obligations under MahaRERA.
• This includes obligations related to project completion, rectification of defects, providing essential services, and adhering to the terms and conditions outlined in the agreement for sale with allottees.

4. Transparency and Accountability

• The approval process adds a layer of transparency and accountability to the transfer of rights and liabilities.
• Allottees have a say in the decision, and the Authority ensures that the new promoter is capable of fulfilling their responsibilities, promoting confidence in the project’s continuity.

5. Legal Protection for Allottees

• Allottees are legally protected from sudden changes in project management that could potentially disrupt the project’s progress or quality.
• They can be confident that the new promoter will be held accountable for fulfilling the obligations previously undertaken by the original promoter.

Insurance Requirements

Promoters are mandated to obtain specific insurance as notified by the appropriate government. These insurances serve to protect both the developer and the allottees. The two primary insurance categories are:

1. Title Insurance

• Title insurance is a crucial component in real estate transactions that safeguards the title of the land and buildings within the real estate project.
• Its primary purpose is to protect both the developer (promoter) and the allottees from any disputes or claims that may arise regarding property titles.
• Key aspects of Title Insurance include:
• 1. Resolution of Title Disputes: In case of title disputes or defects that threaten the property’s ownership, title insurance provides financial coverage to address and resolve these issues.
• 2. Protection of Allottee Interests: Allottees benefit from knowing that their property titles are secure and that they will not be affected by undisclosed claims or disputes.
• 3. Promoter’s Responsibility: The responsibility for obtaining and maintaining title insurance falls on the promoter, including the payment of premiums and charges.
• Transfer to Allottees: The insurance coverage specified under this section is transferred to the benefit of the allottee upon entering into an agreement for sale. This ensures that the allottees inherit the protection of the title insurance.

2. Construction Insurance

Construction insurance is another critical insurance category that covers various risks associated with the construction phase of the real estate project. This insurance provides financial protection against a range of events, including accidents, damage to property, and delays in construction.

Key aspects of Construction Insurance include:

• Mitigating Construction Risks: Construction is inherently risky, with potential hazards and uncertainties. Construction insurance helps mitigate these risks by providing a safety net for the promoter.
• Timely Completion Assurance: Construction insurance can cover delays in construction, ensuring that the project is completed on schedule.
• Allottee Protection: Allottees benefit from construction insurance as it helps ensure that their investments are not jeopardized by construction-related mishaps or delays.
• Promoter’s Responsibility: Similar to title insurance, the promoter is responsible for procuring and covering the costs of construction insurance.
• Transfer to Allottees: Just as with title insurance, the insurance specified under this section is transferred to the benefit of the allottee upon entering into an agreement for sale, assuring them of ongoing protection during the construction phase.

Significance of Insurance Requirements:

• These insurance requirements are vital for protecting the interests of both promoters and allottees in a real estate project.
• Title insurance safeguards property ownership and ensures that allottees receive clear and uncontested titles.
• Construction insurance mitigates the inherent risks during construction, providing financial protection and assurance of timely project completion.
• By placing the responsibility for obtaining and paying for these insurances on the promoter, MahaRERA ensures that promoters take proactive steps to mitigate risks and uncertainties, ultimately contributing to a more secure and transparent real estate market in Maharashtra.

Timely Possession and Compensation

• Promoters are obligated to adhere to the possession schedule that has been agreed upon with the allottees for apartments, plots, or buildings within the real estate project.
• If the promoter fails to meet these possession timelines or faces business discontinuation, they become liable to return the amount received from the allottees along with interest. The interest rate is prescribed by MahaRERA.
• Additionally, if an allottee chooses not to withdraw from the project due to delays, the promoter must pay interest for every month of delay until possession is finally handed over.

Significance: This provision ensures that allottees receive their properties within the agreed timeframe, and if delays occur, they are compensated for the inconvenience and financial impact caused by the delay. It also encourages promoters to stick to their promised possession dates.

Compensation for Defective Title:

• If a promoter fails to deliver a clear and marketable title for the land on which the project is developed or has been developed, they are obligated to compensate the allottees as prescribed under MahaRERA.
• Importantly, the claim for compensation in this regard is not subject to any limitation imposed by existing laws.

Significance: This provision safeguards the interests of allottees by ensuring that they receive properties with legally sound titles. If title defects are discovered, allottees have the right to compensation without being restricted by any legal limitations. It encourages promoters to diligently resolve any title-related issues.

Other Obligations

• In addition to the specific responsibilities mentioned above, promoters must fulfill any other obligations stipulated by MahaRERA, its rules, regulations, and the agreement for sale.
• Failure to meet these obligations can result in compensation being payable to the allottees, following the procedures laid out in MahaRERA.

Significance: This provision ensures that promoters adhere to all obligations and commitments they have made, whether explicitly in the agreement for sale or as mandated by MahaRERA regulations. It provides allottees with legal recourse in case promoters fail to meet these obligations.

To conclude, understanding the functions and duties of a promoter under MahaRERA is paramount for homebuyers in Maharashtra. By familiarizing yourself with these regulations, you can make informed decisions when investing in real estate projects. MahaRERA’s emphasis on transparency, accountability, and buyer protection ensures a more secure and reliable real estate market for all stakeholders. Always ensure that any project you consider complies with these regulations to safeguard your investment and interests in the ever-evolving real estate landscape of Maharashtra.