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Whether it is necessary to obtain registration of a Project when the Promoter has completed the construction and obtain occupancy certificate ?

By

E. Suhail Ahmed

Partner- TRIALBASE,

Advocates Legal Consultant-RERA CONSULTANTS LLP

 

The above question is an often repeated question from time to time that the Promoters ask to which the answers were discussed in several fora. However, the question still lingers in the minds of the Promoter s.

The answer to the said question is “YES”– it is necessary to register a Project even when the Promoter himself has invested all the funds to complete the Project and wants to sell only after obtaining occupancy certificate.

Under the Act, there is no distinction made as to time when the Promoter proposes to sell and when the new Project is required to be registered. The mandate under Section 3 of the Act is very clear that a Promoter shall not advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate Project or part of it, in any planning area without registering the real estate Project.

From the above, it can be made out that on and from the date of commencement of the act, it has now become mandatory for a Promoter to register the real estate Project before doing any of the aforesaid activities in relation to the Project. The Act does not stipulate as to whether the Project has be registered immediately after the plan sanction or at the time when the Promoter proposes to carry out the aforesaid activities in relation to the Project.

From my experience in dealing with the matters relating to registration of Projects and the method in which the Real Estate Regulatory Authorities are dealing with the registration of the Projects, it can be said that the Promoter should register the Project immediately after obtaining sanctions, failing which the authority may take action for non-registration of the Project if the registration is delayed up to the date of obtaining completion certificate or occupancy certificate. This stand is being taken by the authorities in view of the fact that it would not be possible for the authorities to monitor whether the Promoter s of the Projects for which the registration is not obtained are actually being advertised or marketed or sold, which view is rightly being taken by the authority, as it may become impossible to keep track of all the Projects in a particular State.

A Promoter of a Project would be of the view that since there are no compliances required to be fulfilled by him/her/it if the Promoter has invested all the funds necessary for completion of development of a Project and no sales in the Project are undertaken. If this view is to be accepted, then would become impossible for the regulatory authorities to make sure that the Promoter s do no contravene with the other provisions of the Act and in the even such Promoter s actually go on sale, market and sell the apartments or plots in any Projects and the Allottees are forced to take recourse against such Promoters, in which event, the regulatory authorities would find it difficult to take action as against such Promoters.

In a case where the Promoter is investing all the funds required to complete the Project and does not propose to market or sell the Project, the only formality for the Promoter to comply would be to obtain registration for the Project, Post Registration and Quarterly updates and no other compliances would be required to be fulfilled including the compliance in relation to the financial management of the Project being depositing of 70% of the amounts collected in the Project in such account and upon every withdrawal obtain certificates from the Chartered Accountants, Architects and Engineers. When such compliances would not be required when the Promoter is investing all the funds, it is advisable that the Promoter obtains registration for the Project in order to avoid any complications in future.

Query