KARNATAKA RERA RULES - NEED TO UNDERSTAND

KARNATAKA RERA RULES (the “Rules”):

# POINT 1: Benefits to the Allottees

RERA Act defines allottees as people to whom units have been allotted by the Promoter.

RERA Rules added to this, associations which represent such allottees collectively. The option for the allottee to be represented by the association will definitely reduce the number of individual complaints and thereby facilitate speedy disposal of grievances.

# POINT 2: Project Details

RERA Act asks for certain information related to the Project.

In RERA Rules, there are additional documents asked for such as annual report, the number of parking slots, conversion order, change of land use order, joint development details, sanctioned plan, its specifications etc.; to ensure that the project complies with statutory norms.

# POINT 3: Requirements for Ongoing projects

RERA Act categorically states that registration is required for all ongoing projects where completion certificates are yet to be issued.

RERA Rules made the definition of ongoing projects broader by excluding projects like:

· Layouts where streets and civic amenities have been handed over to the local/planning authorities;

· Apartments where common area and facilities have been handed over to the Owner’s registered Association;

· Sixty percent of the apartment/villas/sites in the project is registered in the name of individual owners;

· Application for issue of Completion Certificate/Occupancy Certificate has been submitted to the concerned authority;

· For the extent to which partial occupancy certificate has already been issued.

# POINT 4: Prior consent to be taken from Allottees

RERA Act has specified that prior consent of a minimum two-third majority of allottees needs to be obtained before making any alteration in the project.

RERA Rules has brought in the below exemptions:

· If the proposed plan is disclosed to the allottee under the Agreement before registration;

· If it complies with the order issued by the competent authority.

These exemptions provide clarity and are required to reduce the piles of complaints to the authority.

# POINT 5: Separate Bank Account

RERA Act stipulates that the promoters shall deposit seventy percent of the amount received from the allottees in a separate bank account towards land and construction costs.

Under RERA Rules, the Karnataka Government has gone ahead to ensure that the money deposited by allottees are not misused, by stipulating that the promoter deposit 100 percent of the money received if the received amount is less than the estimated Project cost.

# POINT 6: Interest Rate

RERA Act has made the interest rate same and equal for the promoters and buyers.

Karnataka RERA Rules has also fixed the rate of interest payable by the promoter and the allottee to be the highest lending rate of State Bank of India plus additional two percent. Also, the timeline of sixty days is fixed for the refund from the due date.

# POINT 7: Built-up Area

RERA Act has directed that the Promoters show the actual carpet area for the unit being sold to the buyer.

RERA Rules clarifies that in case the agreement is already made between the promoter and the allottee wherein super built up area is shown, the promoter is still responsible for disclosing the carpet area, which shall not have any impact on the legal validity of the Agreement.

# POINT 8: Agreement for Sale

It has always been a common complaint of buyers that the Agreement for Sale is always one sided, favoring the Promoters and often the Promoters refuse to make any alterations which jeopardize the interests of a buyer.

Keeping the above in mind, RERA Act has put the responsibility on the State Government to frame the forms and the particulars of the Agreement for Sale, which shall be binding on the Promoters. The intent of bringing the Performa in place will restrict the arbitrary practices by any Promoter.

However, it looks like Karnataka has missed out on this crucial point; the notification of RERA Rules does not contain any such Performa of Agreement for Sale.

Once the Karnataka Government starts implementing the RERA Rules, the real estate market will soon become a safe place for investment for buyers as well as investors.