Answer By law4u team
Under the Real Estate (Regulation and Development) Act, 2016 (RERA), developers are obligated to complete and deliver real estate projects within specified timeframes while ensuring transparency and accountability. The law outlines strict regulations for project registration, completion, and handing over possession to homebuyers. Here are the key requirements for the completion and possession of real estate projects under RERA: 1. Project Registration Under RERA All real estate projects, except those below certain thresholds (e.g., small developments on plots under 500 square meters or with fewer than eight units), must be registered with the state's Real Estate Regulatory Authority (RERA). Developers must provide detailed information during registration, such as: Project timeline for completion. Layout plans and approvals. Status of construction. Title of the land and any encumbrances. Details of the financial arrangements for completing the project. 2. Adherence to Declared Project Timeline Developers must complete the project within the timeframe declared at the time of registration. The timeline is a legally binding commitment made by the developer to the regulatory authority and the homebuyers. If the developer fails to complete the project on time, they may face penalties, including fines, interest payments to buyers, or cancellation of the registration by the authority. 3. Completion Certificate (CC) A Completion Certificate (CC) must be obtained from the local authority (municipality or urban development authority) before offering possession to buyers. The CC certifies that the construction of the project complies with the approved plans, building codes, safety regulations, and other legal requirements. Without the CC, possession cannot be legally handed over to the buyers. 4. Occupancy Certificate (OC) After the project is completed and before handing over possession, the developer must obtain an Occupancy Certificate (OC) from the local authority. The OC certifies that the building is fit for occupation and meets all safety, structural, and civic requirements, such as fire safety, water supply, sanitation, and electricity connections. Possession of a property without an OC is illegal, and buyers can refuse to take possession until the developer provides this certificate. 5. Mandatory Handing Over of Possession Once the project is complete and the Completion Certificate and Occupancy Certificate are obtained, the developer must hand over possession of the property to the buyers. Under RERA, developers are required to hand over possession within the timeframe stipulated in the agreement for sale, failing which they may be liable to pay compensation to buyers. 6. Provision for Extension of Project Deadline RERA allows developers to apply for an extension of the project completion deadline under certain circumstances, such as force majeure (unforeseeable events like natural disasters). The extension is typically limited to one year, and developers must provide valid reasons for seeking the extension. 7. Penalty for Delay in Possession If the developer fails to complete the project or hand over possession within the agreed timeline, they are liable to pay interest on the amount paid by the homebuyers for the delayed period. This interest is calculated from the date the possession was supposed to be handed over until the actual possession date. The interest rate is often linked to the State Bank of India’s highest marginal cost of lending rate plus 2%. 8. Structural Defects Liability Under Section 14(3) of RERA, developers are liable for structural defects or poor-quality construction for five years after possession is handed over. If any structural defects are found within this period, the developer must rectify them at no additional cost to the buyer. In case of non-compliance, the homebuyer can seek compensation or take legal action against the developer through the RERA authority. 9. Escrow Account for Project Funds RERA mandates that developers must deposit 70% of the project funds (received from homebuyers) into a separate escrow account. The funds in the escrow account can only be withdrawn in proportion to the completion of the project, and withdrawal requires certification by an engineer, architect, and chartered accountant. This provision ensures that the funds collected from homebuyers are used for the specific project and are not diverted for other purposes, reducing the likelihood of project delays. 10. Transfer of Title and Common Areas Once the project is completed, developers must ensure the timely transfer of the title to the property and common areas (if applicable) to the homebuyers or the registered association of buyers (Residents’ Welfare Association or RWA). RERA also mandates that developers form an association of buyers to manage the common areas and ensure smooth operation and maintenance of the property. 11. Buyer’s Right to Withdraw If a developer delays completion or possession, homebuyers have the right to withdraw from the project and claim a full refund of the amount paid along with interest. If buyers choose to stay invested in the project, they are entitled to interest for every month of delay until possession is handed over. Conclusion RERA establishes a robust framework for regulating the completion and possession of real estate projects, focusing on protecting the interests of homebuyers. Developers must strictly adhere to the declared project timelines, obtain necessary approvals (CC and OC), and hand over possession on time. Failure to comply with these requirements can result in penalties, interest payments, and potential legal action from buyers.
