Karnataka RERA: Deadline of July 31 to Register Projects Too Harsh on Developers!

While real estate developers across country are rushing to get their ongoing projects registered with the deadline under the Real Estate (Regulatory and Development) Act (RERA) ending today, Karnataka is facing the maximum heat! Here’s why!

A year after dragging its feet on a law, on July 10, 2017, the Karnataka state government finally notified the Real Estate (Regulation and Development) Act 2016. Despite being one of the first states to notify the draft rules last year, the ‘prolonged discussion’ took the government so long that resulted in the delay. It was expected that the law would be accepted countrywide by May 1, 2017 as the center put it out last year. However, Karnataka like several other major states maintained a status quo till July of this year, the brunt of which is being faced by the developers.

Just after two weeks of launching Karnataka Real Estate Regulatory Authority, the government launched the portal for property registration on July 25, 2017 with the short deadline of July 31. This gave developers less than a week’s time for registering their projects.The notification clearly stated that non-adherence to the rules will attract a heavy penalty, which is either imprisonment or 10 per cent cost of the project.

Come tomorrow, and developers will no longer be able to make any sale unless their project is registered.

Not to mention, as per RERA, a three-month window should have been ideally given to the developers to register the projects from the day the Act was enacted on May 1, 2017.

Developers in the state feel cheated. Few even feel that the provisions of the Act are draconian and arbitrary. And why won’t they? After all, developers in Maharashtra got a window of about 90 days to register the projects! And despite proper infrastructure, there were a lot of ambiguities about everything. It took time for developers to sort things out.

Another major issue that has come into light is the fact that while it is mandatory to upload Agreement to Sell (ATS) in the RERA website, developers unfortunately have not received this document from the respective state governments. So, how on earth are they going to register their projects?

A question that often pops up is that developers were aware that this was going to happen, so why didn’t they prepare accordingly? A point well taken. But one must also realise that any new law or provision takes time for everybody to understand. And developers are also taking their time. Moreover, as many property pundits have pointed out that registration of a project involves submitting several documents, sanctioned plans, etc, which is a cumbersome process.

Not just that, there have been several other problems. For instance, in Gurgaon, at first, there was no online system available for registering the projects. RERA sites have also crashed multiple times in several situations. Also, the Karnataka RERA website allots only 5 MB per project to upload related documents, which has become a stumbling block for many.

RERA, undoubtedly, is one of the greatest things that has happened to the Indian real estate sector. However, the way things are shaping up shows pathetic and more importantly sorry state of the management. The Karnataka’s case is a clear example of how a little crap spoils the whole brownie. Nobody is negating the wrong-doings and the clandestine practices followed by a few in the sector, but is punishing everybody a right thing to do?

Government must also understand that such a short deadline can result in several errors, which rectifying later would become a tedious task.

Earlier, developers in the state also had apprehensions pertaining to the rule that stated, “a builder could apply for an OC only if it has been certified by a competent agency. If the developer has already applied for OC, the building is exempted from RERA regulations.” Many believed that this rule was stringent as they have to get in place water connection, electricity lines and other things before applying for OC.

There have also been concerns regarding the registration fees in the state which is much higher when compared to other states. For instance, the registration fee in Gujarat is Rs 10,000 while in Karnataka it is Rs 25,000 for individual brokers.

In fact, for the penalty clause, the government has used the same yardstick for developers and brokers, which did not go well with the latter. The penalty is either imprisonment or 10 per cent cost of the project. Brokers, who make about 2 per cent commission per sale, felt cheated with this move as well.

Why is the state government blinded towards these crucial issues? If they cannot notify the rules within the set deadline, why aren’t developers given some grace period? Why are the issues pertaining to adequate infrastructure not been addressed and solved?

As we speak, we really hope that the deadline for the registration in the state gets extended so that the developers do not have to burn the midnight oil tonight! One thing that looks definite is that not all the projects are going to be RERA compliant from tomorrow. It will be interesting to see what the dawn would bring for the real estate sector.

The information has been curated from various sources and may not be verified as per RERA guidelines *
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