Maharashtra Real Estate Regulatory Authority (MahaRERA) recently published an (Order) regarding amending of certain clauses in the Agreement for Sale by the developers. When registering for a Real Estate Project, the promoters are required to upload the proforma of the Agreement for Sale. The Agreement for Sale must be in accordance with Annexure-A Rule 10 of the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules,2017 (Rules). Amendment to the Agreement for Sale is permitted with certain restrictions. Despite the restrictions, developers have been making changes in certain clauses which are barred by the Rules. Hence the Order makes an absolute restriction for amendment of certain clauses. Any amendment to these certain clauses will be liable for the application for registration to be rejected.
Background
Section 4(2)(g) of the Real Estate (Regulation and Development)
Act, 2016 (RERA) mandates every promoter/developer
to upload the proforma of the Agreement for Sale while making an
application for registration of a real estate project. The
Explanatory Note in the model form of Agreement under Annexure-A
permits deviation from the given format depending on the
circumstances of a respective case without amending the event,
matter and substance mentioned in those clauses which are in
accordance with the statute and mandatory under the RERA. MahRERA
also published an order dated 3 June 2022 (Order I) mentioning that any
deviation made from the format provided in Annexure-A must be
highlighted in a different colour for speedy verification and to
ensure the deviations are in accordance with the statute. Although
the Order I mentioned that any modification to the Agreement for
Sale which is contrary to the Act will be rejected subject to
compliances made under Section 5 of RERA, there have been
increasing number of cases wherein the promoters/developers are
making material changes in the clauses which are prejudicial
towards the buyers. This has prompted MahRERA to issue a new Order
barring certain clauses as non-amendable by immediate effect.
Non-Negotiable Clauses
The following clauses cannot be amended and must be implemented in
the Agreement for Sale as provided under the Act and the Rules. It
is pertinent to note that the Order categorically states the list
provided in the Order is not exhaustive.
- Force Majeure:As per Section 6 of RERA, the definition
of Force Majeure must only include natural calamities such as
earthquakes, floods, drought that affect the development of the
project. Further under Rule 6(a) of the Rules, the period for
registration shall exclude when actual work could not be
implemented as per sanctioned plan due to a stay or an injunction
order.
- Time period for formation of Association of Allottees:
As per Section 11(4)(e) of RERA, in the absence of local laws, the
association of allottees shall be formed within a period of 3
(three) months of the majority of allottees having booked their
plot or apartment or building.
- Time period for execution of registered conveyance deed with
the association of allotees: As per Section 17 of RERA read
with Rule 9 (2) in the absence of any local laws, the conveyance
deed in favour of the allottees shall be carried out by the
promoters/ developers within 3 (three) months from the date of
issue of the Occupancy Certificate.
- Defect Liability Period: As per Section 14(3) of RERA,
in case of any structural defect or defect in quality or any other
obligations of the promoter(s)/ developers as per the Agreement for
Sale from within five years from the date of hand over possession
it shall be the duty of the promoter/ developers to rectify the
mistake.
- Changes in carpet area: As per Annexure-A if there is a
reduction in the carpet area after the construction of the
building, which is contrary to the Agreement for Sale, the Promoter
will refund the excess money paid by the allottees within 45
(forty-five) days with annual interest from the date such excess
amount was paid by the Allottee.
- Termination of Agreement by promoter/developer for default of instalments by allottee: As per Annexure-A, the Developer/ the Promoter has the right to terminate the Agreement for Sale if the allotee commits 3 (three) defaults in payments provided the promoter gives the allottee a notice in writing and sends an email providing his intention to terminate the Agreement for Sale. If the allottee does not rectify the breach within the period of notice, then the promoter is entitled to terminate the Agreement for Sale, provided the promoter refunds the allottee the money already paid after final adjustment within thirty days of the termination.
Penalty for Non-Compliance
Any application of registration where there is a violation of any
of these mentioned clauses in the Agreement for Sale shall be
rejected.
MHCO Comment:
The new Order is a welcome change for the protection of the
rights of buyers. It will also help relieve the burden of the
Courts, who are facing increasing litigations pertaining to
prejudicial Agreement for Sales by attacking the problem at the
inception of the project.
Although it is sceptical if there will be any real enforcement of
the Order, as despite Order I being issued almost 6 months prior,
which dealt with the same matter, it did not deter the promoters/
developers from altering clauses and receiving registration of
application for real estate projects.
This update was released on 12 Jan 2023.
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