The new MahaRERA rule help home buyers to track project status

Posted on January 31, 2022 by zeeshan

MahaRERA recently issued a circular requiring promoters to provide different types of certificates. These certificates would be from engineers, architects and chartered accountants to the banks. With a copy to the real estate regulatory authority before withdrawing any amount received from the buyers, stating that the payments are in proportion to the percentage of construction completed. The amounts received from the allottees deposited to a separate account.

MahaRERA will upload these certificates provided by the architect and engineer to its website for the convenience of home buyers. This will mean that the home buyers can see the exact status of the project. For example, the amount of construction completed and costs incurred. Previously, the promoter had to receive certificates, and it was only necessary to submit a self-declaration to the bank.

Promoters must also verify their account separately within six months of the end of each fiscal year by a CA. They must also submit an account statement duly certified and signed by the CA. The audit by CA will confirm that the funds raised for a specific project have been used for that project and that the withdrawals correspond to a fraction of the percentage of work completed. This new rule applies to both ongoing, new and upcoming projects.

More financial transparency

The promoters are, in accordance with section (2)(l) D of section 4 of the Act, obliged to deposit 70% of the money raised for the project of the buyers in a separate account in the specified bank. This money used only to cover construction costs, land and other construction costs. To ensure that withdrawals are proportional to the percentage of project work performed. The developer must provide certificates from the engineer, architect and CA (Chartered Accountant) to MahaRERA, other than the bank, at each withdrawal until the project completion certificate is received.

The 2017 Maharera Circular allowed the organizer to make only one self-declaration every quarter. Instead of issuing these three certificates each time on every withdrawal from the bank account. Lawyer Anil D Souza, secretary of the Maharashtra State Bar Association, said, “MahaRERA has not only brought more transparency to the financial aspect of project management. But has also placed a greater responsibility on the promoters along with the engineer, the architect, and CA certifying at each step. Previously, home buyers were unable to know the status of their money, once they have invested in a project. But with this regulation, the authorities can regulate and track the dishonest practices of builders.

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Builders have to disclose the status of mortgage loans for apartments

Posted on November 15, 2021 by zeeshan

Real estate developers must declare security interests created by them for projects registered with an authority. The decision will increase transparency and inform potential home buyers about any mortgages or loans that the developer has taken in relation to the apartments they intend to buy, or the project itself.

This information is now available with the Central Registry for Securitization and Asset Reconstruction and Securities of India (Cersai). Cersai is the central authority that processes and stores such data. Established under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi Act), Cersai aims to prevent credit fraud, such as loans from different banks on the same property.

Cersai has collateral data created from 22 January 2016 for registered commercial banks and, with effect July 1, 2016 for all other persons registered with it. It has started the process of registration of data on security interest in residential and commercial properties under construction from June 2017.

Home buyers should be aware of the loan status of apartment-

MahaRERA has clearly stated that home buyers and winning bidders must also be aware of the security interest on real estate projects and apartments they are interested in buying. Often home buyers buy a property without knowing its mortgage or loan status, which later leads to lawsuits and legal complications.

If the developer took out a loan by mortgaging inventory or some apartments, and can not return it. The banks will then acquire the property to get their contingent back and that this process can affect the home buyer. However with the new decision this situation can be avoided as Cersai keeps a record of all properties that have been sanctioned for loan.

Real estate developers must now submit a report to Cersai on the security interests created in the property project. Along with an encumbrance certificate when the project registered with the authority.

In the absence of security interest, the developer must provide a supporting commitment or provide an undertaking. The developer also expected to submit a report to Cersai on changes in property security interests. According to MahaRERA, submitted Cersai reports must be generated within 10 days of the submission date.

Non-farm use of plot only after infrastructure in place- MahaRERA

Posted on August 18, 2021 by zeeshan

The Maharashtra Real Estate Regulatory Authority has stated that a simple conditional permit to convert an agricultural land into non-agricultural non-urban areas without providing any infrastructure can only qualify as an ongoing project and therefore must be registered under RERA.

A permit to convert a plot of land from agricultural to non-agricultural is only the beginning of the process and ends when tehsildar registers, that all imposed conditions are met and constitutes a “completion certificate”, MahaRERA explained.

Dealing in “plotted development” outside urban areas, MahaRERA instructed a developer to immediately register a project on August 10. It was found that the conditions imposed over a nearly decade-old nod for non-agriculture (NA) use by the Raigad collector remained pending.

No Advertisement before registration-

Ajoy Mehta, MahaRERA chairperson, said, the actual nomenclature of the completion certificate means that the premises are finished and suitable for human habitation. The use of Non Agricultural land starts when tehsildar corrects that all conditions are met.

Mehta ordered the developer not to advertise, sell or approve non-agricultural bookings in a project called Amarai in Kolad for sale. Until it is registered under Section 3 of the Real Estate (Regulation and Development) Act (RERA). He also imposed a fine of Rs 50,000 for non-compliance with the provision of the law and failure to register an ongoing project. “The amenities that were promised and those listed in the NA judgment were not delivered. So, the property remains deprived of the amenities to allow a buyer to use it. Therefore, the project has no CC until the date,” said the order.

Mandatory to give Amenities stated in agreement-

Last year, the Amrai Kolad Plot Owners Welfare Association filed a complaint against Sai Developers, and others. According to their lawyer Zaman Ali, in May 2012, the Raigad district collector gave conditional NA permission to the developer to build infrastructure facilities, including roads, storm drains, sewerage, water supply and open space development within two years. Shortly after receiving permission, the developer started advertising the project, promising infrastructure services and a possession period of development costs of Rs 50,000 per plot. The complaint is that despite the payment “the project remained unfinished”.

After RERA went into effect on May 1, 2017, in October 2017, the developer announced new announcements for the remaining unsold plots offering services including the pool. But if infrastructure and services are not provided, the project will fall under RERA as an ongoing project that requires registration, the association said.

The developer, through his lawyer Tanmay Ketkar, argued that the project was completed in 2014, met all the conditions of NA and all plots were sold. So this is not an ongoing project, and the complaint is a “mala fide” harassment.

“In case of planned development, it is “imperative” that all agreed amenities should be completed, said Mehta.

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