Flat buyers suffer most due to lapsed registration: Real estate experts

An advocate points out that to protect the interests of the flat purchasers, orders should come in favour of the association of allottees. Representation pic/Atul Kamble

Of the hundreds of projects registered with MahaRERA whose registration has lapsed due to non-renewal, the biggest casualty is flat purchasers deprived of a speedy remedy under the authority. Real estate experts say this will impact home buyers already fighting litigation against developers for delayed projects in MahaRERA.

Ramesh Prabhu, CA and founder chairman of Maharashtra Societies Welfare Association (MahaSEWA) said, "The very purpose of establishing a regulatory authority is to ensure that every real estate project registered with it is completed within the timeline declared by the promoter at the time of registration. If for a reason the project could not be completed within the timeline, the promoter must apply to RERA for its extension by submitting the reason. The authority may grant extension for a maximum period of one year. The delay of the project impacts flat purchasers in many ways and they undergo difficulties financially, physically and psychologically."
He added that the allottees will have to form an association to take over the project under Sections 7 and 8 of RERA. "At least 51 per cent of the allottees are required to join the association," he added.

Flat buyers disadvantaged

Advocate Godfrey Pimenta said, "Sadly, many flat purchasers who wish to pursue proceedings before MahaRERA cannot do so as the registration has lapsed. However, from March 2018 to March 2020, MahaRERA took suo motu cognisance of such cases and passed almost 200 plus orders directing the developers to hand over the list of allottees of the said projects to enable them to form an association in case they wished to take over the project. In order to protect the interests of the flat purchasers, orders should come in favour of the association of allottees."

Advocate Nilesh Gala, who practices in MahaRERA said, "The RERA Act provides for a mechanism under Section 8 for projects which are revoked or lapsed. But no steps against defaulting developers have been taken for recovery towards cost of such projects' completion. The allottees are kept high and dry. No money has been recovered by Maha RERA nor have these promoters' firms/companies and group companies been blacklisted. There is no coordination between Maha RERA and planning authorities like MHADA/SRA/BMC/CIDCO, etc. to interlink these project registrations and their updates."

Advocate Akash Menon, who also practices in MahaRERA, said, "While the RERA Act is robust and comprehensive, the enforcement of its mandate is severely wanting. In cases where the RERA registration of a project has lapsed, Section 6 of the Act clearly prescribes that a developer may seek extension only if force majeure events (like natural calamities) have occurred affecting the development of the project. Section 8 sets out the obligations of the authority in case the registration of a project has lapsed, and empowers it to take remedial steps including consulting with the government to take necessary action and/or completing the development work by engaging the competent authorities or association of allottees. Unfortunately, despite having such exhaustive powers at its disposal, seldom do we see any proactive efforts in this regard from the authority."

Expert's view

Senior real estate advocate Vinod Sampat said, "When a project is revoked, it must be made glaring and publicised so that new allottees do not book in it. The law can take its course, but relief has to be given to allottees whose hard-earned money is stuck. Many times, when a project lapses, there is a loan and the project is mortgaged. The cost has to be borne by allottees or the incoming developer. The need of the hour is to blacklist not only the company which has undertaken the work, but to also take strict action against all other promoters associated directly or indirectly with construction activities related to the project."

Sampat has some suggestions for RERA. He said, "a) A title certificate issued by an advocate must have validity only of three months. Today one can annex a ten-year-old title certificate which does not serve any purpose. b) Balance sheets and income and expenditure accounts should be uploaded on the RERA website every month. Besides, a deviation of say 10 per cent or more should be brought by the auditor to the notice of RERA and flat purchasers every month."

"All complaints lodged by flat purchasers should be displayed on the builder's and MahaRERA websites. This will make builders fear flat purchasers," he added.