Arya V Nair·
General
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An overview of the RERA ACT and the association of ALLOTTEES

  • WHY RERA?

For a long time, homebuyers have been complaining that real estate transactions were unbalanced and that decisions are made in favor of builders. RERA and the respective Government’s model code aims to make a good and equitable transaction between the seller and the buyer of properties, especially within the primary market.

It is hoped that RERA will make the transactions of real estate easier and simple, by inducting better accountability and transparency, on the condition that States don’t dilute the provisions, aim, and spirit of the Central Act. The Real Estate Act obliges each state and union territory to establish its regulator and to enact laws to govern the operation of the regulator.

  • OBJECTIVES OF RERA ACT

• To protect the interests of the allottees  and to ensure their accountability

• Removing and reducing the chances of fraud

• Improving the flow of relevant information between local buyers and sellers

• Placing the greater burden on both builders and investors

• Improving sector credibility and thus increasing confidence among investors.

  • RELEVANCY OF AN ALLOTTEES ASSOCIATION UNDER RERA ACT

As you all know the RERA Act requires that an Association of Allottees be formed the moment the majority of allottees has booked an apartment or a plot, etc., in a project. Sec 11(4)(e) mandates so and requires that an association or society or co-operative society as the case may be whichever is relevant in a particular State has to be formed the moment majority of allottees have booked an apartment or a plot, etc., in a project.

It is the duty of the promoter to form an Association of Allottees as soon as the majority of the apartments or plots are booked by it. This Association of Allottees has been conferred with a right under the Act that is to complete the project if in case the registration of the project is canceled. During these periods, many promoters are defaulting or have defaulted or even are absconding or not completing the project. There are certain instances where RERA Act has given the right to the allottees ’ association to construct the project or to complete the project in the manner it was shown to the allottees. 

  • HOW TO FORM THE ASSOCIATION OF ALLOTTEES? 

The first step that the allottees must take is to request the promoter itself to form an Association of Allottees and if in case they are not forming the same then inform the allottees as to how many apartments have been booked by them so far. If the promoter is not responding then the allottees can email or can write a letter to the regulatory authority to know about the number of flats that have been booked and upon receiving the information the allottees can serve a legal notice upon the builder to form the association within one month or else the allottees will themselves from the association. The point of the meeting should always be the project site of all the allottees and there they can organize the meeting of all the allottees and then resolve for forming an association and the office bearers may be elected, and the bye-laws may also be adopted. The entire schedule/terms of the formation of the Association of Allottees can be decided then. Once the bye-laws are finalized and the office bearers are elected then the registration will take place.

  • BENEFITS OF FORMING ASSOCIATION OF ALLOTTEES

Once it is registered, inform the RERA that it is a registered body, and the allottees can also file complaints for the benefit of all the allottees because majority of allottees will have a common grievance, certain allottees will like to exit from the project and certain allottees will like to stay in the project. Depending upon the resolution passed, they can file a case, however, it must be ensured that the thoughts/choice of one group is not enforced upon the others.

This is a very important right that has been given but unfortunately, it is not exercised by the allottees. However, when we see the entire Apartment Act, by invoking the statutory right under RERA Act they can form the Association of Allottees and fight for their rights by filing complaints u/s 31 before the RERA. 

  • RIGHTS AND LIABILITIES OF ASSOCIATION OF ALLOTTEES

Section 19(1 to 5) lays down the rights of the Allottees association. 

  1. Right to Obtain Information about a Project: It is the right to obtain information concerning the project in which the allottees are going to buy, purchase, or invest for their flat, apartment, shop, or any other kind of real estate property. This is to assure transparency with respect to the land title, the approval of the sanctioned plans, and all other approvals that are required under various acts.
  2. Right to Know schedule-wise completion of the project: When the allottees are planning to invest in a real estate project, it shall be the duty of the builder to share with them the construction schedule. When the builder is registering the project, he is also obligated to upload that schedule-wise construction of the project on the RERA website under the title ‘Registered projects’.
  3. Right to get the possession of apartment as per terms of the agreement: Once the due date of delivery or the due date of completion and the due date of possession as per the sale agreement has arrived, the allottees have the right to seek possession of the Apartment or any kind of real estate property in which the allottee may have invested. If the promoter is not giving the possession then the allottees shall have the right to exit.
  4. Right to claim refund of the amount and exit from the project, if the promoter fails to give possession: The Allottees shall have the right to claim refund and exit from the project if in case the project has not been delivered as per the terms and conditions of the Sale Agreement and the unit is not delivered by the date of the possession as mentioned in the Sale Agreement.
  5. Right to final documents with conveyance deed: Many a time, there may be certain amendments or changes that are brought into the project, and a separate completion map or the completion certificate is required to be issued incorporating the changes. So it becomes very important for an allottee to take the final approved map of the building in which their unit is located as well as that of the common area from the builder, which executes the conveyance deed and this will also include the deed of declaration of the project that is submitted under this Act.

Section 19 (6 to 11) casts the following duties upon the Allottees Association which every allottee is obligated to perform and the contravention of the same would give a right to the promoter to enforce them by filing a complaint under Section 31 of the RERA Act before the RERA Authority.

  1. Duty to make timely payments: It shall be the duty of the allottees to make timely payments as per the payment schedule given under the Sale Agreement.
  2. Duty to pay interest in case of delayed payment: This duty may arise if an allottee failed to perform the above-mentioned first duty.
  3. Duty to pay mutually decided penalty against delay: This duty reflects to be a subsidiary to the preceding duty as there is a chance for the Promoter and the allottee to arrive at a mutual agreement to reduce the rate of interest which may arise in case of default. However, it shall be the earnest duty of the allottee to pay the agreed rate of interest within a reasonable time.
  4. Duty to participate in the formation of the Allottees Association: The Allottees shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same.
  5. Duty to take possession post Occupancy Certificate (to be performed within 2 months): It shall be the duty of the Allottee to take possession of the apartment when the completion certificate is received by the promoter and an offer of possession has been made and this has to be performed within 2 months.
  6. Duty to execute conveyance deed (3 months): A duty has been vested upon an allottee to get executed the conveyance deed within 3 months from the date of the issuance of the completion certificate. Considering the last two preceding duties, an allottee has to get the conveyance deed executed and then take possession of the apartment. 


An Allottee cannot delay taking possession of his apartment once his builder has given the offer of possession along with the completion certificate. The Promoter shall have the right to recover the expenses, which he happens to spend on the apartment after the due date for taking possession by the allottee is over.

The rights and duties under RERA Act are in a way that affects both the Promoter and the allottee equally. i.e., the rights of the allottees shall be the duties of the promoter while the duties of allottees can be claimed by the promoters as their rights. Hence, it is right to say that RERA Act applies to both the promoter and the allottees impartially. It does not aim to favour any one of them blindly.

Author:

ADV. SREEDEVI S

LEXPERTIANS ASSOCIATES

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