FUNCTIONS AND DUTIES OF PROMOTER UNDER THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

[Mr. M. GOVINDARAJAN]

Chapter III of the Real Estate (Regulation and Development) Act, 2016 (‘Act’ for short)  provides the functions and duties of the promoter.

Promoter

Section 2(zk) of the Act defines the term ‘promoter’ as-

• a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or
• a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or
• any development authority or any public body in respect of allottees of-

• buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
• plots owned by such authority or body or placed at their disposal by the Government

for the purposes of selling all or some of the apartments or plots; or

• an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or building; or

• any other person who acts himself as a builder, colonier, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
• such other person who constructs any building or apartment for sale to the general public.

Deemed promoter

The explanation to Section 2(zk) provides that where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified under this Act or the rules and regulations made there under.

Functions and duties of promoter

The following are the functions and duties of the promoter-

Creating web site

Section 11(1) provides that the promoter shall create his web page on the web site of the Authority and enter all details of the proposed project for public view, including-

• details of the registration granted by the Authority;
• quarterly up-to-date the list of number and type of apartments or plots, as the case may be, booked;
• quarterly up-to-date the list of number of garages books;
• quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate;
• quarterly up-to-date status of the project; and
• such other information and documents as may be specified by the regulations made by the Authority.

Advertisement

Section 11(2) provides that the advertisement or prospectus issued or published by the promoter shall mention the web site address of the Authority.

Information to allottees

Section 11(3) provides that the promoter at the time of booking and issue of allotment letter shall be responsible to make available to the allottee the following information-

• sanctioned plans, layout plans, along with specifications, approved by the competent authority, by display at the site or such other place as may be specified by the regulations made by the Authority;
• the stage wise time schedule of completion of the project, including the provisions for civil infrastructure like water, sanitation and electricity.

Responsibility of promoter

Section 11(4) provides that the promoter shall be responsible-

• for all obligations, responsibilities and functions under the Act or rules or regulations made there under or to the allottees as per the agreement for sale, or to the association of allottees till the conveyance of all the apartments, plots or buildings to the allottees, or the common areas to the association of allottees or to the competent authority.
• to obtain the completion certificate or the occupancy certificate from the relevant competent authority and make it available to the allottees individually or to the association of allottees;
• to obtain the lease certificate specifying the period of lease and certify that all dues and charges in regard to the leasehold has been paid and to make the lease certificate to the association of allottees;
• for providing and maintaining the essential services, on reasonable charges, till the making over the maintenance of the project by the association of the allottees;
• enable the formation of association or society or co-operative society of the allottees or a federation of the same under the applicable laws;
• to execute a registered conveyance deed of apartment, plot or building in favor of the allottee along the undivided proportionate title in common areas to the association of allottees or competent authority;
• to pay all outgoings until he transfers the physical possession of the real estate project to the allottee including land cost, ground rent, municipal or other taxes etc.,
• after executing an agreement for sale for any apartment etc., not to mortgage or create on such apartment, plot or building; even ifmortgage is done it should bne ensured that it shall not affect the rights and interest of the allottee;

Accepting deposits

Section 13 (1) provides that a promoter shall not accept a sum more than 10% of the cost of the apartment, plot or building as an advance payment or an application fee from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.

Agreement

Section 13(2) provides that the agreement for sale shall be in such form as may be prescribed.  It shall specify the particulars of development of the project along with the specifications and internal development works and external development works, the dates and manner by which payments towards of the apartment etc., are to be made by the allottees and the date on which the possession of the department etc., is to be handed over, the rates of interest payable by the promoter to the allotter and the allottee to the promoter in case of default and other such other particulars as may be prescribed.

Adherence

Section 14 provides that the project shall be developed and completed in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities.  The promoter shall not make any additions in the sanctioned plans, lay out plans and specifications without the previous consent of the person.  The promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorized architect or Engineer after proper declaration and intimation to the allottee.

Rectification of defects

Section 14(3) provides that in case any structural defect or any other defects in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale such development is brought to the notice of the promoter within a  period of 5 years by the allottee from the date of handing over possession.  The promoter shall rectify such defects without further charge, within 30 days and in the event of promoter’s failure to rectify such defects the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided in the Act.

Transfer to third party

Section 15 provides that the promoter shall not transfer or assign his majority rights and liabilities to a third party without obtaining prior written consent of two thirds of allottees, except the promoter and without the prior written approval of the Authority.  Such transfer or assignment shall not affect the allotment or sale of the apartments etc.,   On the transfer or assignment being permitted by the allottees and the Authority, the intending promoter shall be required to independently comply with all the pending obligations under this Act or rules or regulations made there under.

Insurance of real estate

Section 16 provides that the promoter shall obtain all such insurances as may  be notified by the appropriate Government, including but not limited to insurance in respect of-

• title of the land and building as a part of the real estate project; and
• construction of the real estate project.

Up to handing over of the apartment to the allottee, the promoter is responsible to pay the premium and charges in respect of the insurances.

Transfer of title

Section 17 provides that the promoter shall execute a registered conveyance deed in favor of allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority and hand over the physical possession of the plot etc., to the allottee and common areas to the association of allottees or the competent authority.

After obtaining the occupancy certificate and handing over physical possession to the allottees, it shall be the responsibility of the promoter to hand over the necessary documents and plans, including common area to the association. 

Return of amount and compensation

Section 18 provides that if the promoter fails to complete or is unable to give possession of an apartment etc., in accordance with the terms of the agreement for sale or due to discontinuance of his business as developer on account of suspension or revocation of the registration he shall be liable on demand to the allottees, to return the amount received by him in respect of that apartment etc., with interest at such rate as may be prescribed in this behalf including compensation in the manner provided under the Act. 

The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is developed in the manner as provided under the Act and the claim for compensation shall not be barred by limitation provided under any law for the time being in force.  If the promoter fails to discharge any other obligations imposed on him he shall be liable to pay such compensation to the allottees in the manner provided under the Act.