Chanderprabhu Jain College of Higher Studies

&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)

E-Notes

CLASS : [Link].B/BBA LL.B IX SEM

SUBJECT NAME : LAND AND REAL ESTATE LAWS

SUBJECT CODE : LLB-505

FACULTY : DR. RAMESH KUMAR

Unit-3

I. REAL ESTATE DEVELOPMENT AND APARTMENT

OWNERSHIP

A. REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

Real Estate (Regulation and Development) Act (RERA) is an act passed by

the Parliament in 2016 that came into effect fully from 1st May, 2017. It

seeks to protect home-buyers as well as help boost investments in the real

estate sector by bringing efficiency and transparency in the sale/purchase of

real estate. The Act establishes Real Estate Regulatory Authority (RERA) in

each state for regulation of the real estate sector and also acts as an

adjudicating body for speedy dispute resolution.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
Need for the RERA - Real estate sector had been largely unregulated, no

standardization of business practices and transactions. - Prevalence of issues

like delays, price, quality of construction. Delays in projects had been a

major issue plaguing real estate sector- huge cost overrun due to delays. -

Numerous instances where developers cheated property buyers. - No

grievance redressal mechanism. - Huge generation of black money in real

estate sector. Objectives of RERA - Enhance transparency and

accountability in real estate and housing transactions. - Boost domestic and

foreign investment in the real estate sector. - Provide uniform regulatory

environment to ensure speedy adjudication of disputes. - Promote orderly

growth through efficient project execution and standardization. - Offer

single window system of clearance for real estate projects. - Empower and

protect the right of home buyers.

Drawbacks of the Real Estate (Regulatory and Development) Bill, 2013

It does not enumerate any difference between the Residential Real Estate

and Commercial Real Estate. - Some projects in the Real Estate with certain

investors or stakeholders do not come under the category of this Bill.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)

They are:

 Government agencies/authorities at Centre, State and Municipal level;

 Financing agencies like Bank/Financial Institutions

 Brokers, Underwriters and Bulk Purchasers  It also does not provide

any tool for transferring the booking during the construction time

 It fails to provide any additional securities for the retail purchasers.

Key Provisions of Real Estate Regulation Act

Establishment of state level regulatory authorities- Real Estate Regulatory

Authority (RERA): The Act provides for State governments to establish

more than one regulatory authority with the following mandate:

- Register and maintain a database of real estate projects; publish it on its

website for public viewing,

 Protection of interest of promoters, buyers and real estate agents

 Development of sustainable and affordable housing,

 Render advice to the government and ensure compliance with its

Regulations and the Act.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
 Establishment of Real Estate Appellate Tribunal- Decisions of RERAs

can be appealed in these tribunals. Mandatory Registration: All

projects with

Plot size of minimum 500 [Link] or eight apartments need to be registered

with Regulatory Authorities. Deposits: Depositing 70% of the funds

collected from buyers in a separate escrow bank account for construction of

that project only. Liability: Developer’s liability to repair structural defects

for five years. Penal interest in case of default: Both promoter and buyer are

liable to pay an equal rate of interest in case of any default from either side.

Cap on Advance Payments: A promoter cannot accept more than 10% of the

cost of the plot, apartment or building as an advance payment or an

application fee from a person without first entering into an agreement for

sale. Defines Carpet Area as net usable floor area of flat. Buyers will be

charged for the carpet area and not super built-up area. Punishment:

Imprisonment of up to three years for developers and up to one year in case

of agents and buyers for violation of orders of Appellate Tribunals and

Regulatory Authorities.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)

Benefits of RERA:

Timely delivery of flats - Developers often make false promises about the

completion date of the project, but hardly ever deliver. - Strict regulations

will be enforced on builders to ensure that construction runs on time and

flats are delivered on schedule to the buyer.

If the builder is not able to deliver the flats on time, he/she will have to

refund the purchaser with interest.

Furnishing of accurate project details: - In the construction stage, builders

promote their projects defining the various amenities and features that will

be part of the project. But not everything goes as per plan, with several

features missing.

As per the Act, there can't be any changes to a plan. - And if a builder is

found guilty of this, he/she will be penalized 10% of the project’s costs or

face jail time of up to three years. Specifying carpet area: - Generally,

builders sell flats on the basis of built-in area, which includes a common

passage area, stairs and other spaces which are 20-30% more than the actual

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
flat’s area. - But, not all buyers are aware of the concept of carpet area. -

With this Act it will become mandatory to declare the actual carpet area.

All clearances are mandatory before beginning a project: - Builders often

attract buyers with huge discounts and pre-launch offers. And, the buyer,

enticed by the offers, does not bother about the clearance. - But, due to

delays in getting clearance, the buyer does not get the flat on time. - This Act

ensures that developers get all the clearances before selling flats. Each

project should have a separate bank account: - Developers raise funds

through pre-launch offers and use them to purchase some other land or

invest it in other projects. - This Act will make it compulsory that a separate

bank account be maintained for each project. - Each transaction will have to

be recorded, and diversion to another project will not be entertained. After

sales service: - As per an interesting clause in the Act, if the buyer finds any

structural deficiency in the development of the building, the buyer can

contact the builder for after sales service. - But, the buyer should approach

the builder within 5 years of purchase to rectify such defects without further

charges.

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)

B. THE DELHI APARTMENT OWNERSHIP ACT, 1986 –

The construction of multi-storied apartment buildings in Delhi has been a

constant affair throughout the region’s history post-independence. Being the

national capital, Delhi has attracted people from both within the country and

abroad, primarily because of the lucrative business and investment

opportunities on offer in this region. This has resulted in a strong demand for

living in apartment buildings and complexes.

In the past, the regular construction of apartments in Delhi used to cause

avoidable litigation, as the rights and obligations of the apartment owners

and associations weren’t set in stone, legally. So in the year 1986, the Delhi

apartment ownership Act was drafted and passed by the parliament.

The Act clarifies the rights and obligations of apartment owners, such as in

relation to inheritance, restrictions on transfers like mortgage and sale, and

the right to common areas and facilities.

Important Terms used in the Act:

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
Administrator: An Administrator is an authority appointed to the union

territory of Delhi, by the President of India, as mandated by the Article 239

of the constitution.

Authority: An authority is one who is established or constituted under a law.

Bye-Laws: Bye-laws are laws made under the Delhi Apartment Ownership

Act, 1986.

Common Areas and Facilities: Common Areas and Facilities constitutes the

land on which the multi-storied apartment building is located, the gardens,

basements, cellars, parking areas, and any other such creations, and all the

structural elements like lobbies, corridors, fire escapes, and beams and

columns. Common Expenses and Common Profits: Common expenses are

sums of money, lawfully assessed against the apartment owners, which go

into administration, repair, and maintenance or for modifying common areas

and facilities. After the deduction of the common expenses, what’s left after

balancing all the incomes and profits are the common profits.

The Key Features Of The Act Applicability of the Act - The Delhi

Apartment Ownership Act, 1986 is applicable to all multi-storied apartment

buildings, with at least two stories and four units, constructed by any group

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
housing cooperative society, person, or authority, before or after the

commencement of the Act.

The Act is applicable to the whole of the union territory of Delhi. - Bye-

Laws to be framed as per administrator’s Model Laws - The bye-laws

framed by any association of apartment owners should be exactly in

accordance with the model bye-laws framed by the Administrator. In case

the association wishes to make any changes, the members of the association

require a prior approval from the Administrator. Apartments to be heritable

and transferable According to the Act, every apartment, including its

common areas and facilities, will be a transferable and heritable immovable

property. The apartment owner can transfer his apartment and his share of

the non-partitioned common areas and facilities by way of lease, mortgage,

sale, exchange, or gift. Common Areas and Facilities to be used by all

apartment owners for intended purposes all common areas and facilities will

be available for use by all apartment owners. The common areas and

facilities will not be divided or partitioned. Each apartment owner will use it

for the purpose that it’s intended for, without hindering or encroaching upon

another apartment owner’s right to use the space. The Common Profits and

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
Expenses to be shared in a certain proportion - The profits will be

distributed, and the expenses charged, to all the apartment owners in

proportion of the percentage of the undivided interest they hold in the

common areas and facilities. - Sometimes it so happens that the apartment

owner isn’t an occupant of his or her apartment. In this case, the person

currently occupying that apartment needs to pay his or her share of the

common expenses. Certain Works Are Prohibited - No apartment owner can

make such changes to the structure of the apartment as would lead to the

reduction in the property value and affect the safety and soundness of the

property. To do so, one would have to acquire consent from all the

Apartment owners of the association. - Excavating a cellar or additional

basement, or adding any material structure is the kind of works that are

prohibited. What the Act means for the people involved? - An apartment

owner can easily transfer, purchase, or gift multi-storied residential and

commercial apartments, co-operative group housing society apartments, and

private apartments.

Earlier, the apartments in Delhi were monopolized by such parties as the

Registrar of the Group Housing Society, Delhi Development Authority

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 Chanderprabhu Jain College of Higher Studies
&
School of Law
An ISO 9001:2015 Certified Quality Institute
(Recognized by Govt. of NCT of Delhi, Affiliated to GGS Indraprastha University, Delhi)
(DDA), and the builders. With the implementation of this Act, this

monopoly comes to an end. All of the rights are now given to the

associations of apartment owners.

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