Sample Copy. Not For Distribution. · Act 2016 (RERA), Goods and Services Tax (GST), Benami Transaction Prohibition (Amendment) Act 2016, Real Estate Investment Trusts (REITs) regulations

Sample Copy. Not For Distribution.

i

RERA FOR EVERY ONE ====================

THE REAL ESTATE

(REGULATION AND DEVELOPMENT)

ACT, 2016

CA Shiva Chaudhari


ii

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iii

RERA FOR EVERY ONE

==================== THE REAL ESTATE (REGULATION AND

DEVELOPMENT) ACT, 2016

CA Shiva Chaudhari

(B.Com, FCA, CS, MBA, DIBF, FAFE)

EDUCREATION PUBLISHING (Since 2011)

www.educreation.in


iv


v

RERA for Every One

================ THE REAL ESTATE (REGULATION AND DEVELOPMENT)

ACT, 2016

With

Gujarat Real Estate (Regulation and Development) General

Rules, 2017

Gujarat Real Estate (Regulation and Development) (matters

Relating to the Real Estate Regulatory Authority) Rules,

2016,

Gujarat Real Estate (Regulation and Development) (matters

Relating to the Gujarat Real Estate Appellate Tribunal) Rule,

2016

Stamp Duty & Registration Guide

Home buyer‘s Guide

Author:

CA Shiva Chaudhari

(B.Com, FCA, CS, MBA, DIBF, FAFE)


vi

Preface

The real estate sector in India has come a long way by becoming

one of the fastest growing markets in the world. It has not only

attracted domestic real estate developers, but also foreign

investors. India is ranked fourth in developing Asia for Foreign

Direct Investments inflows as per the World Investment Report

2016 by the United Nations Conference for Trade and

Development. However, the sector was unregulated and

unorganised for long years, but after recent reforms it is emerging

as a mature, professional and regulated sector. Government has

taken several steps like Real Estate (Regulation and Development)

Act 2016 (RERA), Goods and Services Tax (GST), Benami

Transaction Prohibition (Amendment) Act 2016, Real Estate

Investment Trusts (REITs) regulations and demonetization drive in

order to bring transparency in the real estate sector and boosting

the confidence of buyers, investors and developers.

Till date most of the states have implemented the Real Estate

(Regulation and Development) Act, 2016 and have notified rules

accordingly. This is a landmark law in the history of Indian real

estate sector and will bring more transparency and accountability

of developers into the system and will increase consumer

confidence.

The Gujarat has a proven track record for attracting high volumes

of investment, becoming the most favoured investment destination

in India on the back of its sound economic policies and pro-active

governance. Gujarat government has already notified the Gujarat

Real Estate (Regulation and Development) General Rules, 2017


vii

applicable from 1st May, 2017. It is believed that establishment of

Regulatory Authority and law binding process will bring

transparency in property transactions, attract more investments and

create ample investments & employment opportunities in the

sector.

This book is written in a very simple and lucid manner with the

object to provide clear idea of provisions of RERA and rules made

thereunder. We hope that this book will help readers at large to

understand the complicated provisions and know their respective

rights and duties under the law.

With best wishes

CA Shiva Chaudhari


viii

Dedicated to

This book is dedicated to my beloved & ambitious grandfather

Late Shri Laxmanbhai Javabhai Chaudhari


ix

Index

Sr. Name of Chapter Page

PART-A (Central Act)

1 Introduction 2

2 Laws Governing Real Estate Sector 4

3 Highlights of the Real Estate (Regulation &

Development) Act, 2016

44

The Real Estate (Regulation and Development) Act, 2016

4 Preliminary 51

5 Registration of Real Estate Project 64

6 Registration of Real Estate Agents 77

7 Functions and Duties of the Developer 82

8 Rights & Duties of Allottees 97

9 Establishment of Real Estate Regulatory

Authority

101

10 Establishment of Functions of Central Advisory

Council

116

11 Establishment of Real Estate Appellate Tribunal 118

12 Provisions related to Offences, Penalties and

Adjudication

132

13 Finance, Accounts, Audit & Report of Regulatory

Authority

142

14 Miscellaneous Provisions 146


x

PART-B (State Rules)

15 Gujarat Real Estate (Regulation and

Development) General Rules, 2017

157


Development) (matters Relating to the Real

Estate Regulatory Authority) Rules, 2016

230


Development) (matters Relating to the Gujarat

Real Estate Appellate Tribunal) Rules, 2016

265

PART-C (Registration and Stamp Duty)

18 Registration of Legal Documents 276

19 Stamp Duty 365

20 Guideline for Home Buyer 413


CA Shiva Chaudhari

1

PART-A Central Act


RERA for Everyone

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Introduction

The real estate sector is one of the most globally recognized

sectors. In India, real estate is the second largest employer after

agriculture and is slated to grow at 30 per cent over the next

decade. The real estate sector comprises four sub sectors - housing,

retail, hospitality, and commercial. The growth of this sector is

well complemented by the growth of the corporate environment

and the demand for office space as well as urban and semi-urban

accommodations. The Indian real estate market is expected to

touch US$ 180 billion by 2020. The housing sector alone

contributes 5-6 per cent to the country's Gross Domestic Product

(GDP).

In India every sector is regulated by the regulatory authority

constituted under Statutory Act. However, real estate was the only

sector where there was no regulator concept till The Real Estate

(Regulation and Development) Act; (RERA) 2016 came into

existence. The real estate sector has grown in the recent years but

has largely been unregulated from the perspective of consumer

protection. Though, consumer protection laws are available, the

recourse available therein are only curative, but not preventive.

This has affected the overall potential growth of the sector due to

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CA Shiva Chaudhari

3

absence of professionalism and standardization. The Government

of India along with the governments of the respective states has

taken several initiatives to encourage the development in the

sector. The Smart City Project, where there is a plan to build 100

smart cities, is a prime opportunity for the real estate companies.

The Securities and Exchange Board of India (SEBI) has proposed

easier regulations for real estate investment trusts (REITs), such as

raising the cap of investment of REITs‘ assets in under-

construction projects from 10 per cent to 20 per cent, in order to

attract the interest of developers, and also plans to relax the rules

for foreign fund managers to relocate to India.

SEBI has allowed Foreign Portfolio Investors (FPI) to invest in

units of Real Estate Investment Trusts (REITs), infrastructure

investment trusts (InvITs), category III alternative investment

funds (AIFs), and also permitted them to acquire corporate bonds

under default.

The aims of RERA are to protect consumer interest, ensure

efficiency in all property related transactions, improve

accountability of real estate developers, increase transparency and

attract more investments into the real estate sector in India.


RERA for Everyone

4

Laws Governing Real Estate Sector

Real estate laws are the acts, rules and regulations that regulate

every aspect of a real estate property transaction. Intricate

requirements are involved in every real estate transaction be it

acquisition, selling, transfer, or foreclosure of a property. Real

estate laws are in place to safeguard the rights in the property

owned or purchased or sold.

Issues covered under Real Estate Laws –

Legal contracts and agreements;

Dispute resolutions related to real estate property

distribution or possession;

Buying, selling, acquisition, leasing, and disposition of

different types of real estate properties.

Taxation issues concerning real estate;

Preparing a plan and monitoring the construction of a real

estate;

Drafting deeds and contracts for real estate transactions;

Overseeing legal issues involved in real estate foreclosures.

The list of central laws governing real estate transactions are:

1. The Indian Contract Act, 1872

2. The Transfer of Property Act, 1882

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CA Shiva Chaudhari

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3. The Indian Easements Act, 1882

4. The Indian Stamp Act, 1899

5. The Registration Act, 1908

6. The Specific Relief Act ,1963

7. Power of Attorney Act, 1882

8. The Land Acquisition Act, 1894

9. The Land Acquisition, Rehabilitation and Resettlement,

Act 2013

10. The Indian Evidence Act, 1872

11. The Consumer Protection Act, 1986

12. The Arbitration & Conciliation Act, 1996

13. Income Tax Act, 1961

14. The Wealth Tax Act, 1957

15. The Co-operative Societies Act, 1912

16. The Multi-State Co-operative Societies Act, 2002

17. GST provisions

18. Foreign Exchange Management Act, 1999

19. SEBI norms for Real Estate Mutual Funds

20. Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002

21. Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest (Central Registry) Rules,

2011

22. The State Laws governing real estate transactions

23. State Laws governing Rent Control

24. Local laws relating to property tax

Apart from the above mentioned laws, each state has its own set of

laws, which govern planned development, rules for construction

and floor-area-ratio (FAR) or floor space-index (FSI) and

formation of societies but there are three laws that exist in every

state namely, the stamp duty, property tax and rent laws.


RERA for Everyone

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1. The Indian Contract Act, 1872

The Indian Contract Act codifies the way we enter into a contract,

execute a contract, and implement the provisions of the contract

and the effects of breach of a contract. Section 1 of Contract Act

provides that any usage or custom or trade or any incident of

contract is not affected as long as it is not inconsistent with

provisions of the Act. In other words, provision of Contract Act

will prevail over any usage or custom or trade. However, any

usage, custom or trade will be valid as long as it is not inconsistent

with provisions of Contract Act.

Definition of Contract

According to Section 2 (h), the term contract means an agreement

enforceable by law. According to Section 2(e), every promise and

every set of promises, forming the consideration for each other is

an agreement.

Generally, the real estate transaction begins with an agreement

between the parties. The legislation specifies when a party can be

said to have the capacity to contract. A contract pertaining to real

estate can be entered into, by an individual (who is not a minor or

of unsound mind), partners of a firm, a corporate body, a trust, a

sole corporation, the manager of an undivided family and a

foreigner. All the requirements of a valid contract, i.e.,

consideration, intention to contract and validity under the law of

the land must be satisfied.

Definition of ‘Consideration’

When, at the desire of the promisor, the promisee or any other

person has done or abstained from doing, or does or abstains from

doing, or promises to do or to abstain from doing, something, such

act or abstinence or promise is called a consideration for the

promise [Section 2(d)].


CA Shiva Chaudhari

7

Steps involved in contract

1. Proposal and its communication

2. Acceptance of proposal and its communication

3. Agreement by mutual promises

4. Contract

5. Performance of Contract

All agreements are not contract. Only those agreements which are

enforceable by law are ‗contracts‘.

Following are essential requirements of a valid contract.

i. Offer and its acceptance

ii. Free consent of both parties

iii. Mutual and lawful consideration for agreement

iv. It should be enforceable by law. Hence, intention should be

to create legal relationship. Agreements of social or

domestic nature are not contracts

v. Parties should be competent to contract

vi. Object should be lawful

vii. Certainty and possibility of performance

viii. Contract should not have been declared as void under

Contract Act or any other law

ix. Communication, acceptance and revocation of proposals –

Communication of proposal/ revocation/acceptance are

vital to decide validity of a contract. A ‗communication‘ is

complete only when other party receives it.

x. Acceptance must be absolute - In order to convert a

proposal into a promise, the acceptance must - (1) be

absolute and unqualified; (2) be expressed in some usual

and reasonable manner, unless the proposal prescribed the

manner in which it is to be accepted. If the proposal

prescribes a manner in which it is to be accepted, and the

acceptance is not made in such a manner, the proposer may,


RERA for Everyone

8

within a reasonable time after the acceptance is

communicated to him, insist that his proposal shall be

accepted in the prescribed manner, and not otherwise; but if

he fails to do so, he accepts the acceptance. [Section 7].

xi. Acceptance of offer is complete only when it is absolute

and unconditional. Conditional acceptance or qualified

acceptance is no acceptance.

xii. Promises express or implied - Insofar as the proposal or

acceptance of any promise is made in words, the promise is

said to be express. Insofar as such proposal or acceptance is

made otherwise than in words, the promise is said to be

implied. [Section 9]. For example, if a person enters a bus,

there is implied promise that he will pay the bus fair.

Types of Contract

1) Void Contracts

Section 2 (j) of the Indian Contract Act, 1872 defines a void

contract as under:

―A contract which ceases to be enforceable by law becomes

void, when it ceases to be enforceable‖. It is clear from this

definition that a void contract is a contract which was valid

originally i.e. at the time of its formation, but becomes void

subsequently on account of the happening of some subsequent

event. In other words, it is a contract which was valid

originally, but becomes void (ceases to be enforceable by law)

subsequently.

Thus a void contract is not void ab initio It becomes void

subsequently, when it ceases to be enforceable by law. A void

contract is perfectly valid and binding on the contracting


CA Shiva Chaudhari

9

parties until it becomes void i.e., ceases to be enforceable by

law. It is for this reason that void contracts are known as ex

post facto void contracts.

2) Voidable Contracts

Section 2 (i) of the Indian Contract Act, 1872 defines voidable

contract as under:

―An agreement which is enforceable by law at the option of

one or more of the parties thereto, but not at the option of one

or more of the parties thereto, but not at the option of the other

or others, is a voidable contract‖. From this definition, it is

clear that a contract is voidable if it is enforceable by law at the

option of only one of the contracting parties, and not at the

option of both the contracting parties. In short, it is a contract

which can be enforced or which can be avoided at the option of

one of the contracting parties i.e., the aggrieved party.

A voidable contract becomes void when the party entitled to

repudiate such a contract exercises his option to repudiate the

contract. Suppose A forces B to sell his house to him for Rs.

10,000 at knife point, in this case, the contract is voidable and

it can be repudiated or avoided by B. If B decides to rescind or

avoid the voidable contract, the contract becomes void.

3) Valid Contracts

A valid contract is an agreement enforceable by law. An

agreement becomes enforceable by law only when it satisfies

all the essential elements of a contract as contained in Section

10 of the Indian Contract Act. So, a valid contract is an

agreement which satisfies all the essentials of a contract, as

contained in Section 10 of the Indian Contract Act. For

example, if A offers to sell his house to B for Rs. 10 lakhs and


RERA for Everyone

10

B accepts the same, there is a valid contract. The legal rights

conferred and the legal obligations imposed by a valid contract

are enforceable by law against each other.

4) Unenforceable Contracts

An unenforceable contract is a contract which is valid in itself,

but cannot be enforced in a court of law because of some

technical defect; say absence of writing, absence of

registration, want of requisite stamp, expiry of time, etc. For

example - An oral arbitration agreement is unenforceable

because, as per the arbitration law, an arbitration agreement is

required to be in writing. Similarly, an insufficiently stamped

bill of exchange or promissory note cannot be enforced in a

court of law.

5) Illegal/Unlawful Contracts

According to Section 23 - an illegal or unlawful contract is one

whose object or consideration

a) is forbidden by law or

b) is of such a nature that, if permitted, it would defeat the

provisions of any law or

c) is fraudulent or

d) involves or implies injury to the person or property of

another or

e) is immoral or

f) is opposed to public policy.

Contract of Agency Agency is a special type of contract. The concept of agency was

developed as one man cannot possibly do every transaction


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