Role of Chartered Accountants in Real Estate Sector Compliance

Chartered Accountants play a crucial role in the real estate sector by providing advisory services, ensuring compliance with regulations, facilitating documentation, dispute resolution, and more. They assist in policy formation, GST compliance, land development agreements, and housing society regulations, ultimately contributing to the transparent and efficient functioning of the industry.

• Real Estate Compliance
• Chartered Accountants
• Advisory Services
• GST Compliance
• Housing Society Regulations

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1. S R L & Co. Chartered Accountants Vadodara CA .Lalit Raithatha B.com, LL.B,FCA,RV SFA, IP Address: A/14, 4thFloor, Earth Artica, Vasna Bhayli Road, Vadodara Phone:08866263000 Real Estate (Regulation and Development) Act, 2016

2. What is required - Opportunity Capability/Competence Belief/Passion Integrity/ethical

3. Purpose of Act Regulate the real estate sector Sale in transparent and efficient manner Develop the Real Estate Sector Dispute Resolution Protect the interest of Consumers

4. Role of Chartered Accountant Advisory Compliance Policy formation FROM MAP Preparation _ Environment Clearance GST RATE 15% Rule 80 IB -3% Rule for Commercial and 90 Sq Mtr - Plot Size 2000 Sq Mtr Appear before Authority Documentation Dispute Resolution Society and Builder Landowners and Development agreement Advisory on Housing Society Insurance Society handover Process Agreement services Labour Laws Execution Registration Quarterly Return Form 5 Housing Society Compliance Compliance Services to Society

5. Opportunity how to get Contact Institutions Knowledge Sharing Help to other CAS

7. Other Applicable Act Transfer of Property act, Code of Criminal Procedure,1973 Indian Penal Code,1973 Gujarat Land Revenue Code,1879 Indian Contract act Registration Act,1908 Indian Evidence Act,1872 Comprehensive General Development Control Regulations,2017 Gujarat Stamp Act IBC

8. APPLCABILITY OF ACT In case of ongoing project, Which has not received the Project Completion Certificate before 01/05/2017, Registration is required if 1. Land area to be develop exceed 500 Sq Mtrs. or 2. the number of apartments proposed to be developed exceed eight In case of new project Registration is required before launch of the project if any one condition is satisfied Applicable to all the project which are falling under planning area. Planning area has been defined by Town Planning Authority.

9. Registration Existing projects to get registration before 31 July 2017. Not to Advertise and accept the booking amount before registration of project. Application to be made in Form A as per Rule 3 declared by Gujarat Government. All details as per rule 3 to be submitted with application. Authority to grant registration with in 30 Days. Ministry speech on ongoing projects: Regarding the consequences of including the ongoing project under the bill, I discussed the issue with my officials. This shall have a bearing on the projects and consumers. In fact the select committee of Rajya Sabha too in its wisdom supported and retained the need for regulating existing projects. But at the same time, projects which are almost at the fag end of completion and all, what they require is they need to give only information.

10. Registration We are not going to harass them. Because there is so much concern among the industries circle ass to what will happen to the ongoing projects, on going projects whatever agreement your have entered earlier stands. You have to fulfil the obligations which you yourself have agreed upon through an agreement. And whatever conditions that were stipulated in your agreement, they have to be implemented in toto. Point to discuss Whether Project received BU before 01 may 2017 Can complain be made with RERA? In few building, Possession is given with all facilities and builder has not received the BU can complaint be made with RERA authority?

11. Complain Section 31: Any aggrieved person may file a complaint with the authority or the adjudicating officer as the case may be, for any violation or contravention of the provisions of this act or the rules and regulations made thereunder against any promoter, allotte or real estate agent as the case may be. Section 71 Power to adjudicate Provided that any person any person whose complaint in respect of matters covered under section 12,14,18 and section 19 is pending before any consumer forum on or before the commencement of this act, he may with the permission of such forum, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this act. Section 12 Wrong advertisement Section 14 Adherence to the sanctioned plans and specifications by the promoter Section 18 Return of Amount and compensation Section 19-Rights and duties of allottee

12. Complain Case of Sajel Gandhi Versu Jayant Narendra Mehta Complain No CC006000000000615 MAHA RERA OC was not received Entire Building was occupied by all the Buyer As project is Completed. All the Buyer has occupied the Building and even current Buyer is staying Case was dismissed as Project does not fall under RERA. Big Relief to all the Building in Mumbai not having Completion certificate. Case of Shyamsundar Karahan versus Hiren Patel Complain No:000115 Guj RERA -BU received on 27/09/2016 Possession was not given due to some issue. Even though project was completed before 01/05/2017- Decision was given. GUJ RERA has taken the reference of Writ Petition filed in Bombay High Court. -2737/2017 Neel Kamal Realtors Silver City Residents Welfare Association (Regd) Vs. Silver City Housing & Infrastructure Limited, Zirakpur Punjab RERA - The present complaint was dismissed by the authority stating the reason that the project has not been registered under RERA and the complaints against the unregistered projects are not maintainable. Punjab RERA Complaint No:GC1066 0f 2018 Non Registered project complain is dismissed.

13. Registration Registration fees as per below table: Nature of Project Land Area Fees Maximum Limit Housing Not exceefing 1000 Sq Mt Rs.5 Per Sq Mt 5,00,000 Housing Exceeding 1000 Sq Mt Rs.10 per Sq Mt 5,00,000 Mixed Project Not exceefing 1000 Sq Mt Rs.10 per Sq Mt 7,00,000 Mixed Project Exceeding 1000 Sq Mt Rs.15 per Sq Mt 7,00,000 Commercial Projects Not exceefing 1000 Sq Mt Rs.20 per Sq Mt 10,00,000 Commercial Projects Exceeding 1000 Sq Mt Rs.25 per Sq Mt 10,00,000

14. Few important definitions in RERA Promoter 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; 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; Any development authority or any other 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 purpose of selling all or some of the apartments or plots;

15. Few important definitions in RERA 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 buildings; Any other person who acts himself as a builder, coloniser, 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; Such other person who constructs any building or apartment for sale to the general public. 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 thereunder; Can Promoter include Land Owners ? Whether all promoter need to be included in Registration Procedure ?

16. Understanding of Definition First test Second test Independent building, apartments or converts an existing building in to apartments, plotting scheme Sale of development mention in first test Only land sale Not covered as only land sale in not in definition Development permission and Map is approved by land owners and entire land is sold to somebody else Land sales is not covered Long term lease Applicable as per case law of Jitendra Tulsani and Lavaza Corporation of Maha RERA

17. Few Example of Promoters Type of Person Land owners getting only land payment Land owners getting Area Share and Revenue Share Plotting Scheme Whether promoter or not No not involved in Sale Yes involved in sales activity Yes applicable Construction in plotting scheme by contractor Not applicable Except Chhattisgarh RERA Yes applicable Yes Applicable Whether Old House owner in Redevelopment is promoter or not Need to understand the contract All public bodies Housing Society Any other person who acts himself as a builder,coloniser,contractor,developer, estate developer Any other person who constructs any building or apartment for sale Where the person who constructs and sell both are different Yes Applicable Both of them

18. Few important definition in RERA Occupancy certificate: Occupancy certificate means the occupancy certificate, or such other certificate by whatever name called issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity. Completion certificate: Completion certificate means the completion certificate or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been completed according to the sanctioned plan, layout plan and specifications as approved by the competent authority under the local laws. Common GDCR: Page 43 para 2.9 it is mandatory to obtain a building used permission from the competent authority prior to occupancy or use being made of any building. Refer case of Maharashtra regulatory authority Avinash SarafNeha saraf and Runwal Homes Limited Writ Petition No.829 of 2013- held that occupying building without completion certificate cannot be permitted in law.

19. Few important definition in RERA Few important aspects of Completion Certificate Use of building without Completion certificate is not legal Construction is subject to demolition by Local Authority Both Builder and buyer are responsible Local Authority can force buyer to vacate the building It is advisable to take the possession only after Completion certificate Right now on humanity ground all facilities like Electricity, Water and drainage are given but it may stop in future Baroda, Surat and Ahmedabad and Rajkot having highest number of building without OC/BU. Refer Case law of Vaibhav Development Corporation Vs saidham Residents Mumbai Order given to pay 92 lakh to society Landmark judgement in current scenario. Expecting Scheme of Amnesty to regularise the illegal construction.

20. Few important definitions in RERA Real estate Project Means the development of a building or a building consisting of apartments or converting an existing building or a part thereof into apartments, or the development of land in to plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto. Allotee Allottee in relation to a real estate project, means the person to whom a plot, apartment, or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer, or others but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent.

21. Few important definitions in RERA Sanctioned Plans: means the site plan, building plan, service plan, parking plan and circulation plan, landscape plan, layout plan, zoning plan and such other plan and includes structural designs, if applicable,permessions, such as environment permission and such other permissions, which are approved by the competent authority prior to start of a real estate project. Section 14 require Adherence to sanctioned plans and project specifications by the promoter As per Section 14 minor additions or alternations is allowed. Additions and alternations should not lead to change in structure of project. Promoter need to declare the FSI available and used in Scheme. Order passed by Guj RERA CMP/170817/0021753 Surat Kishorchandra Jagnasha versus Tasvira Patel Order is passed to carry out the construction as per approved plan.

22. Major duties/responsibilities of builder To get the registration as per the requirement of Act. Not to advertise the project before registration. To open separate bank accounts to deposit 70% of amount received from customer for utilisation towards land and construction cost. To submit the quarterly details to RERA Authority. To follow the format of Sale agreement specified in Act/Rules. Not to accept more than 10% Advance from customers without entering in to agreement to sale with customer. To take necessary insurance of Project. To adhere to original plan of project. To pay interest on delay as agreed in sales agreement. No escalation is possible during the tenure of project

23. Major duties/responsibilities of builder To take approval of 2/3 of Customers in case of change in Plan/Layout. To get the completion certificate of Certificate. To form society/Association of members. To handover all project documents to Society/Association. To rectify all defects within period 5 years from the date of handover of the possession to customer.( Warranty Period) To appoint registered Real Estate Agent To submit the Audited Accounts with RERA authority with six months from the end of financial year with special mention that funds of project is utilised towards payment of Land and Construction cost of site Sales to be done based on carpet area. New definition of carpet area.

24. Advertisement by builder Advertisement is governed by Circular No.13 Newspaper,Brouchers ,Leaflets,Outdoor publicity Big Hoardings RERA No and Authority Website - Abridged RERA number and Authority Website in Audible manner Outdoor Publicity Small Hoardings and Audio Visual Media

25. Case laws for Advertisement Order passed for Advertisement without RERA Registration number Order Passed for Advertisement of Project without writing RERA number and Authority Website Order Passed for Advertisement of Project without writing Authority Website Penalty Range 50000/- to 150000/- Highest penalty to Primal Group by MAHA RERA of INR 50 Lakhs

26. Return of Amount and Compensation by Builder to Allottee Section 18 of Act In case of delay in project handover by builder, Customer can Ask for refund of full amount with interest as agreed in sale agreement or Ask for interest for delay period till the time actual possession is given as per rate agreed at the time of sale agreement Builder liable to compensate customers for any loss incurred due to defective land title. Extension is allowed only due to force majeure. Force majeure means 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. Force majeure definition as per ATS: War, Civil Commotion or act of god, any notice,order,rule,notification of the government and/0r other public or competent authority Definition of Act will prevail not Rule Project End date in ongoing project where booking is done prior to RERA Registration is received and compensation amount ? How to consider delay ? Compensation if booing is cancelled prior to completion date ? Amount of compensation?

27. Scenario of Refund Scenario of Refund On going project where no completion date/Possession date is mention in Agreement to sale ( Refer case Law of MAHA RERA of T Bhimjiyani Realty Pvt Ltd ) On going project where Completion date/Possession date is mention in Agreement to sale Possession is given but no completion is received In All scenario What is refund amount If it is because of Builder Compensation Completion date declared with RERA authority is final and compensation can be claimed only if possession is not given before that date Completion date declared with RERA Authority is different Compensation can be claimed Compensation can be claimed Sales Price, Stamp duty, Taxes paid to Builder with Interest Refer case of Avinash/Neha Saraf versus Runwal Homes Limited judgement dated 13 /10/2017 of MAHA RERA

28. Transfer of title As per Section 17 of the Act, The Promoter Shall execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association of the allottees or the competent authority as the case may be, and handover the physical possession of the plot, apartment or building, as the case may be, to the allottees and the common area to the association of the allottees or the competent authority, as the case may be, in a real estate project, and the other title documents pertaining thereto within specified period as per sanctioned plans as provided under the local laws. Provided that, in the absence of any local law, conveyance deed in favour of the allottee or the association of the allottes or the competent authority, as the case may be, under this section shall be carried out by the promoter within three months from the date of issue of occupancy certificate. After obtaining the occupancy certificate and handing over physical possession to the allottes in terms of sub-section (1), it shall be the responsibility of the promoter to hand over the necessary documents and plans, including common areas, to the association of the allottees or the competent authority, as the case may be, as per the local laws.

29. Transfer of title Sale deed is not valid if it is done prior to receipt of Completion certificate. Possession is given and sale deed is also done. Builder is liable to give compensation if completion is not received prior to end date of project. Need to understand the current practice of Promoter. Amount of compensation if Completion is not received prior to end date of Project? Refer complaint No:CC006000000000032 of MAHA REA and Bombay High Court Writ Petition 829 of 2013 dated 15/10/2013

30. Insurance Builder to take insurance of Land title and Construction Period not mention in Act or Rules Once the sale deed is done, owner also takes insurance in case if home loan is availed, Insurance to be taken for which period ? Not clear from Act. Recommended period 5 Years as Warranty period is 5 Years as per Act. Other Insurance recommended for Builder: Third Party Liability Insurance Term Plan Insurance with MWP Act Workman Compensation Plan

31. Order issued by GUJRERA for Bank Account opening and operation Applicable section of Act Section 4(2)(I)(D) that seventy percent of the amounts realised for the real estate project from the allottes, from time to time shall be deposited in a separate bank account to be maintained in a schedule bank to cover the cost of construction and the land cost and shall be used only for that purpose. Explanation Account should be open in schedule bank. If account is open with Cooperative bank and if it is not schedule bank, then this will be considered as violation of Act. Promoter need to check the status of cooperative bank whether it is schedule bank or not. Seventy percent of fund collected from customers has to be deposited in this account.

32. Offences, Penalties and Adjudication Section Section 3 -for registration Section 3 -for non registration continuous offence Section 4- for giving false information Other section of Act Failure to comply with order or direction of RERA authority Failure to comply with order of direction of Appellate Authority Penal Action as per Act 10% of Estimated Cost Imprisonment up to 3 Years or with fine up to further 10% or with both 5% of Estimated Cost 5% of Estimated Cost Maximum up to 5% of Estimated Cost Imprisonment up to 3 years or with fine up to further 10% or with both

33. Financial institutions/Banks Requirements from builder Need to submit RERA registration certificate before issue of APF for site. Yearly submission of Audited accounts to make sure that 70% fund of project utilised for Project Cost ( Land and Construction Cost). Regular check up of Website of RERA Authority by FI/Banks to make sure that registration is active and there are no negative remarks on Project. Declaration from promoter that all the requirements of RERA Act will be followed throughout the Project tenure and any deviation or any non compliance will be the sole responsibility of builder.

34. Rules of RERA by Gujarat Government Rule 1- Short title and Commencement Rule 2-Deffinitions Rule 3-Information and documents to be furnished by promoter for registration of project Rule 4-Disclosure by promoters of ongoing projects Original sanctioned Plans, Layout and specifications Total Advance collected and balance to be collected Status of project Development and period required to complete the project. To be certified by engineer. Rule 5-Withdrawal of sums deposited in separate accounts

35. Rules of RERA by Gujarat Government Rule 6 Grant or rejection of registration of the project. Rule 7 Extension of registration of the project. 50% fees payable New Registration Government can give waiver if extension is due to force majeure Rule 8-Revocation of Registration of the project. After giving opportunity of hearing to Builder, Authority may cancel the registration. On cancellation authority will give first right of refusal to association of allottee to complete the balance construction. After refusal by association of allottee, authority will decide how to complete balance work.

36. Rules of RERA by Gujarat Government Rule 9 -Agreement to Sale The format is define in Annexure A of Rule -9. Builder and Customers can change the format if they agree provided that it should not violate the provisions of the Act. Rule 10 to 15 Real Estate agent Rule 16- Rate of Interest payable by the promoter and Allottee. Interest as agreed between both MCLR of SBI plus 2% - if it is not agreed. Rule 17-Timelines of Refunds To refund with in 45 days it becomes due.

37. Rule 9 Agreement for sale in Prescribed format The format is define in Annexure A of Rule -9. Builder and Customers can change the format provided that the said agreement for sale shall not violate the provisions of the Act or the rules and regulations of the Act. Important points to be covered in agreement to sale Break up of Payment to be received at different stage. Date on which the possession of the building/plot is to be handed over. Particulars of project to be developed Total Carpet area of the Building/plot and consideration for same Price charged for common areas and facilities.

38. Rule 9 Agreement for sale in Prescribed format Interest payable on default by both the parties. Mention of FSI available and used. Mention of Defect Liability period of 5 Years. Post completion Society/Section 7 Company will be formed and common facilities will be handed over to society Promoter will not have any right on common facilities.

39. Hierarchy in RERA for Complain First Complain to be made RERA Authority or Adjudicating authority. Any Person aggrieved with the order of RERA Authority will complain to Appellate Tribunal Any Person aggrieved with the order of Appellate Tribunal will complain to High Court

40. Rules of RERA by Gujarat Government Rule 18-Manner of giving effect to the recommendation to the central advisory council Rule 19-Terms and Conditions and the fine payable for compounding offence Section Imprisonment under sub section (2) of section 59 Failure to take registration continuous default Extend up to 3 years Imprisonment under section 64-Failure to comply with order of Tribunal Imprisonment under section 66-Failure to comply with Tribunal order by Real Estate Agent Money to be paid for compounding the offence 5% of the estimated cost of the real estate project 5% of the estimated cost of the real estate project 5% of the estimated cost if the plot, apartment or building as the case may be of the real estate project for which the sale or purchase has been facilitated 5% of the estimated cost if the plot, apartment or building as the case may be Imprisonment under section 68-Failure to comply with order of Tribunal by Allottee.