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RERA FOR EVERY ONE ====================
THE REAL ESTATE
(REGULATION AND DEVELOPMENT)
ACT, 2016
CA Shiva Chaudhari
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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
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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)
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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
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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
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viii
Dedicated to
This book is dedicated to my beloved & ambitious grandfather
Late Shri Laxmanbhai Javabhai Chaudhari
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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
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PART-B (State Rules)
15 Gujarat Real Estate (Regulation and
Development) General Rules, 2017
157
16 Gujarat Real Estate (Regulation and
Development) (matters Relating to the Real
Estate Regulatory Authority) Rules, 2016
230
17 Gujarat Real Estate (Regulation and
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
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CA Shiva Chaudhari
1
PART-A Central Act
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RERA for Everyone
2
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
1
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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.
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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
2
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5
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.
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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)].
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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,
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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
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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
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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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