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The government is working round the clock monitoring states closely in order to ensure that the Real Estate (Regulation and Development) Act, 2016 (“RERA”) and the regulatory mechanism to be established under it shall come into force by the respective states. Builders / developers and allottees / purchasers are waiting anxiously on the edge of their seats in anticipation of the various states setting up the required regulatory framework to implement this unprecedented law (RERA seeks to ensure the contractual obligation between developer and purchaser is fulfilled and shall even provide a resolution forum in case of default by either of them).

RERA also focuses on regulating the working of real estate agents/ brokers (“Agent” or “Agents”) in the country for the very first time. Previously, certain States required various forms of registration of Agents under the state laws/bye-laws/regulations. For instance in neighboring Haryana, Agents had to register themselves under the relevant regulations in order to transact business. However, in Delhi just a few kilometers away, the was no such mandatory requirement. RERA aims to regulate the business of real estate agents pan India which shall result in mandatory registration and compliance’s.

This article aims to simplify the procedures and provide broad steps for RERA compliance in a simple Q&A format.

What is an advertisement under RERA?
An advertisement is defined as “any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes;”

In is pertinent to mention that in the clarifications dated 17 January 2017 (“FAQ”) issued by the Ministry Of Housing And Poverty Alleviation (“MHUPA”), it has been clarified that the meaning of advertisement shall be wide and inclusive and shall include e-mails, websites, sms, electronic data communication etc.

Who is a real estate agent under RERA?
Under RERA, an Agent means “any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called”

RERA specifically provides that an agent shall not facilitate the sale or purchase of or act on behalf of any person(s) to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a real estate project or part of it, which has been registered under RERA (in any planning area or otherwise), without first obtaining mandatory registration. Any solicitation without mandatory compliance under the Act would be deemed to be ab-initio illegal.

How does an agent register under RERA?
RERA provides that every Agent shall make an application to the real estate regulatory authority of the state in such form, manner and within such time period accompanied by such fee (and documents) as may be prescribed in the rules issued by the State under RERA. The Agent shall require separate registrations for separate States.

The authority, at its discretion, shall within such period and in such manner prescribed and upon satisfying itself of the fulfillment of such conditions in the application:

• Grant a single registration to the real estate agent for the entire state of union territory, as the case may be;
• Reject the application for reasons to be recorded in writing

However, no application shall be rejected unless the applicant has been given an opportunity of being heard in the matter. Further, every agent who is registered under the provisions of RERA (or the rules and regulations made thereunder), shall be granted a unique registration number by the Real Estate Regulatory Authority of the state, which shall be quoted by the real estate agent in every sale facilitated by him. RERA provides that every agent must clearly provide their registration number in order to do business in India.

Every registration shall be valid for such period, and shall be renewable for a period in such manner and on payment of such fee as may be prescribed under the rules of the state under RERA.

In the event that an Agent who has been granted registration under RERA commits breach of any of the conditions thereof or any other terms and conditions specified under RERA (or any rules or regulations made thereunder), or where the authority is satisfied that such registration has been secured by the Agent through misrepresentation or fraud, the Authority may without prejudice to any other provisions under RERA, revoke the registration or suspend the same for such period as it thinks fit (provided that no such revocation or suspension shall be made by the authority unless an opportunity of being heard is given to the agent).

What are the other statutory compliances for an Agent under RERA?
• Every Agent registered under RERA shall maintain and preserve such books of accounts, records and documents etc. as prescribed in the rules of each State,
• Every Agent registered under section 9 shall facilitate the possession of all the information and documents which the allottees are entitled to, at the time of booking of any plot, apartment or building,
• Agent’s must not be involved in any unfair trade practices such as misrepresentation of facts, withholding of information, advertising or suggestion of facilities which may not be provided etc.
• Compliance with other provisions under the rules of the state as prescribed from time to time under RERA.

What are the penalties under RERA for default by an Agent?
If any Agent fails to comply with or contravenes any of the orders or directions of the Authority, he shall be liable to pay a penalty for every day during which such default continues, which may cumulatively extend up to five per cent of the estimated cost of plot, apartment or building etc. for which the sale or purchase has been facilitated and as determined by the Authority.

If an Agent, who fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal set up under the State regulatory authority, he shall be punishable with imprisonment for a term which may extend up to one year or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent of the estimated cost of plot, apartment or building etc. for which the sale or purchase has been facilitated or with both.

RERA provides mandatory registration and strict compliance in order to bring about regulation and transparency (pan India) in a previously unregulated market which is an unprecedented move by the government. RERA serves as a wake-up call to Agents who intend to continue their real estate business in India.

THE AUTHOR YUDHIST N. SINGH IS A REAL ESTATE LAWYER BASED IN NEW DELHI

One thought on “Regulation & Transparency via RERA – Real Estate Agents / Builders compliance”

  1. To what extent did Real Estate Agents / Builders compliance & home buyers safety achieved in last 3 years? Hope to not hear more loot horror stories!

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