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RERA: Why are builders in a hurry to get the Occupancy Certificate before RERA kicks in from May 1?


The real estate (regulation and development) Act, 2016 (RERA) is set to become effective across all the states from 1 May 2017. This means every state has to establish a Regulatory Authority by that date. The Regulatory Authority will, however, have another three months to frame the rules and regulations.

In the meantime, several builders of ongoing projects, which are nearing completion, are busy arranging the occupancy certificate (OC) from their local authorities. A plausible reason could be that they may not wish their on-going project to fall under the purview of RERA.

Rohit Gera, MD, Gera Developments and VP Credai – Pune Metro says, “RERA is not applicable to those projects that have the Occupancy Certificate as on the date of notification. The objective of RERA is to protect customers especially through the period of the construction of the project. Once a project has the Occupancy certificate the risk to the consumer reduces drastically. Therefore projects which are at the end stage and are able to obtain the Occupancy certificate best advised to do so.”

Why the hurry

All those projects which have not received the OC prior to the commencement of the Act will come under the purview of the Act. For projects where the OC has already been issued, the developers need not go for its registration.

So, in case they fail to procure the OC from the local authorities, before May 1, they will have to mandatory get the under-construction projects registered within 3 months from the date of commencement of the Act, which is May 1.

Builders, therefore, have another three months to complete unfinished work and obtain the OC to escape the mandatory registration clause. By keeping the ongoing projects under the purview of RERA even the existing buyer who hasn’t got possession is benefited. “Excluding ongoing projects from the ambit of RERA would have served no purpose at all. By including ongoing projects at least there is hope for those customers who have purchased in these projects and are stuck for one reason or another,” says Gera.

What is Occupancy Certificate?

Occupancy certificate is a certificate issued by the competent (local) authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructures such as water, sanitation and electricity. As per RERA, once the promoter obtains the OC it has to be made available to the allottees individually or to the association of allottees, as the case may be.


In these times, when the builder will be in a hurry to expedite completion of development work, make sure the required elements are in place. As a developer, they need to ensure that both external and internal development work is completed before giving possession to buyers.

External development works include roads, water supply, sewage and drainage systems, electricity supply transformer, substation, solid waste management and disposal or any other work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws.

Similarly, internal development works would mean roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, provision for community buildings or any other work in a project for its benefit, as per sanctioned plans. Not all could be specifically there in all projects but as a buyer, one needs to ensure these are met by the builder if they were part of the plan.

RERA rules: 10 important facts to know

RERA Rules:

The government on Monday notified the final rules to implement the Real Estate (Regulation and Development) Act, 2016 (RERA) that aims to bring transparency and set accountability in the sector and help in completion of stalled projects. The rules will be applicable for five Union territories without legislature of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh.

Here are the key points you should know about:

1) Pay compensation:

Developers will now be required to refund or pay compensation to the allottees for delay in projects with an interest rate of the State Bank of India’s highest marginal cost of lending rate plus 2% within 45 days of it becoming due. This would come to around 11% to 12%.

2) Deposit Money:

For the completion of ongoing projects, developers will have to deposit 70% of the amount collected and unused within three months of applying for registration of a project with the Real Estate Regulatory Authority in a separate bank account.

3) Punishment:

The rules also contain clauses providing for compounding of punishment with imprisonment for violation of the orders of Real Estate Appellate Tribunal against payment of 10% of project cost in case of developers and 10% of the cost of property purchased in case of allottees and agents.

4) Sale of Properties:

Discrimination in sale of properties on any grounds will also not be entertained under the new rules. Adjudicating Officers, Real Estate Authorities and Appellate Tribunals shall dispose of complaints within 60 days.

5) Certification:

In respect of the ongoing projects that have not received completion certificate in specified time, developers will have to make public the original sanctioned plans with specifications and changes made later, total amount collected from allottees, money used, original timeline for completion and the time period within which the developer undertakes to complete the project.

6) Carpet Rrea:

Promoter shall also declare size of the apartment based on carpet area even if it was earlier sold on any other basis.

7) Registration:

or registration of projects with the authorities, developers will be required to submit authenticated copy of PAN card, annual report comprising audited profit and loss account, balance sheet, cash flow statement and auditors report of the promoter for the immediate three preceding years, authenticated copy of legal title deed, copy of collaboration agreement if the promoter is not the owner of the plot. Promoter also has to declare information regarding the number of open and closed parking areas in the project.

8) Income Tax Returns:

The requirement of disclosing Income Tax returns proposed earlier has been withdrawn in the final Rules keeping in view the confidentiality attached with them and as pointed out by legal experts and promoters.

9) Fee For Registration:

To incentivize registration of projects and Real Estate Agents with Regulatory Authorities, fee for the same has been reduced by half based on suggestions from promoters for reduction of fee.

10) Information About Details:

To enable informed decisions by buyers, Real Estate Regulatory Authorities will ensure publication on their websites information relating to profile and track record of promoters, details of litigation’s, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc.

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