FAQs

Provisions of section 2, sections 20 to 39, section 41 to 58, sections 71 to 78 and sections 81 to 92 (relating to definitions, establishment/appointment of Regulatory Authority/Appellate Tribunal, Adjudicating Officer, framing of Rules/Regulations, constituting regulatory Fund, making website etc. came into force with effect from 1st May, 2016 vide Notfn. dt. 26.04.2016 of the Central Govt. (Ministry of HUPA). Remaining provisions of sections 3 to 19, 40, 59 to 70, 79 and 80 regarding registration of real estate projects, real estate agents, responsibilities of promoters/ allottees/ agents, about penalties and offences etc. came into force w.e.f. 01.05.2017 vide Notfn. dt. 19.04.2017 of the Central Govt. (Ministry of HUPA).

The real estate has grown in the recent years but has largely been unregulated from the perspective of consumer protection. Though, consumer protection laws are available, the recourse available therein is only curative, but not preventive. This has affected the overall potential growth of the sector due to absence of professionalism and standardization.

The Real Estate is intended to achieve the following objectives:

• Ensure accountability towards allottees and protect their interest;

• Infuse transparency, ensure fair-play and reduce frauds & delays;

• Introduce professionalism and pan India standardization;

• Establish symmetry of information between the promoter and allottee;

• Imposing certain responsibilities on both promoter and allottees;

• Establish regulatory oversight mechanism to enforce contracts;

• Establish fast-track dispute resolution mechanism;

• Promote good governance in the sector which in turn would create investor confidence.

The Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Section 2(zk) defines the term 'promoter' which includes both private and public real estate promoters. Thus all Development Authorities, UITs, Municipal bodies, Housing Board, when involved in sale, are covered as Promoter under the Act.

As per the Explanation to section 2(za) the rate of interest payable by either the promoter or the allottee shall be the same. The rate of interest has been specified in Rule 16 of the Telangana Real Estate (Regulation and Development) Rules, 2017. Accordingly, the rate of interest is State Bank of India Prime Lending Rate plus 2%.

Yes. As per section 2(b), which defines ' advertisement' any medium adopted in solicitation for sale would be covered under the said definition, including SMS and emails.

Section2 (zf) and section 2(q) respectively, define 'occupancy certificate' and 'completion certificate'. Occupancy certificate relates to the occupation of the apartment/building, which has provision for civic infrastructure such as water, sanitation and electricity and is habitable. Completion certificate relates to the completion of the entire project certifying that the project has been developed according to the sanctioned plan, layout plan and sections, as approved by the competent authority.

Section 2(v) defines 'estimated cost of the real estate project', which means "the total cost involved in developing the real estate project and includes the land cost, taxes, cess, development and other charges". The determination of the estimated cost of the real estate project is necessary due to chapter VIII of the Act, which provides that penalties would be imposed on the promoter, for violations prescribed under the Act, based on the estimated cost of the real estate project.

Yes. Every real estate project which has land area more than 500 sq. meters or has more than 8 apartments’ needs to be registered .

Yes. Every real estate project which has land area more than 500 sq. meters or has more than 8 apartments’ needs to be registered.

No. The advertisement issued after1st May 2017 must carry the Registration Number of the project issued by the Authority.

The position of parking is as follows;

• Open Parking Area: This has been clearly included in the definition of "Common Areas" which need to be conveyed to the Association of Allottees after Occupancy Certificate is received. Hence, sale or allotment of Open Parking Areas by the Promoter is not permissible

• Covered Parking is permitted to be sold.

• Garage as defined in the Act is permitted to be sold.

For the purpose of this rule “Ongoing Project” means, a Project where development is going on and for which Occupancy Certificate or Completion Certificate has not been issued but excludes such Projects which fulfil any of the following criteria on the date of notification of these rules.

a. Where roads, open spaces, amenities and services have been handed over to the local authority in layout Projects.

b. Where all slabs are laid in housing projects.

c. Where all developmental works have been completed and sale /lease deeds of 50% of the Apartments / Houses/ Plots have been executed

Where development works have been completed and application has been filed to the competent authority for issue of Completion or Occupancy Certificate

Section 3(1) provides that all projects within a 'Planning areas' will require to be registered with the Authority and 'planning area' has been defined under section 2(zh). However, section 3(1) second proviso gives powers to the Authority in the interest of 'allottees' to order/direct the promoter to register projects beyond the planning area, which has the requisite permission of the local authority.

As per section 3(2) the following projects do not require to be registered under the

Act:

1. Where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be development does not exceed eight, inclusive of all phases. The State Govt. may reduce the threshold below 500 sqm. or 8 apartments.

2. Where the promoter has received completion certificate for a real estate project prior to commencement of the Act, i.e. 1st May, 2017.

3. for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.

The promoter can advertise his project for sale after the project has been registered with the Regulatory Authority as provided in section 3(1).

Section 4(2) (l) (D) provides that the promoter shall maintain a separate account for every project undertaken by him where in 70 percent of the money received from the allottee shall be deposited for the purposes of construction and land cost. Section 4(2)(I)(D) clearly provides that the funds can only be used for construction and land cost duly following the procedures’ stipulated in the rules.

As per section 4(2)(l)(D) first and second proviso, the promoter is required to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. In addition, the promoter is permitted to withdraw from the separate account after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.

Yes. As per section 4(2)(I)(D) third provision, the promoter is required to get his accounts audited within 6 months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly

certified and signed by such chartered accountant and it shall be certified during the audit that the amounts collected for a particular project have utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.

Section 6 envisages two situations within which the registration granted to a project can be extended. Extension of registration can be granted in case of force majeure, in addition, it can also be granted under reasonable circumstance, without the fault of the promoter, which shall not be more than a maximum period of 1 year. Explanation to section 6 has defined force majeure to mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project.

Registration is of the Project/Phase and hence the provisions of the Act are applicable to all units of the Project/Phase.

A promoter would be allowed to advertise, market, book, sell or offer to sell or invite persons to purchase plot, apartment or building in a phase of a real estate project, only if the said phase is registered. A promoter cannot advertise, commit or sell amenities or facilities that are in a subsequent phase which is still not registered.

Yes. Section 13 provides that the promoter cannot accept a sum more than 10 percent of the apartment/plot cost as an advance payment/ application fees. For any further collection towards the apartment/plot cost, the promoter is required to enter into an Agreement for sale with the allottee.

As per section 14(2) the promoter shall be liable for 5 years from the date of handing over of possession to the allottee towards structural defect or any other defect as specified therein.

Yes, the real estate agent can be renewed. The application fees for renewal shall be paid through online mode at the time of online submission of application, for a sum of Rs. 5,000/- in case of the real estate agent being an individual or Rs. 25,000/- in case of the real estate agent being anyone other than an individual. The real estate agent shall also submit all the updated documents as required for new registration as set out in clauses (a) to (f) of sub-rule (1) of rule 10. The renewal granted shall be valid for a period of five years.