RERA: Key Definitions and References in Indian Real Estate Laws

Definitions in a statute are vital as they provide clarity and precision to legal language, ensuring uniform interpretation. They serve as a compass, guiding courts, lawyers, and users to understand the legislator’s intent. Clear definitions mitigate ambiguity, reducing the risk of misapplication or legal disputes. By establishing the meanings of key terms, definitions contribute to the statute’s consistency and effectiveness. This precision promotes fair enforcement, fosters legal predictability, and enhances the rule of law. In essence, definitions are the foundation of legal certainty, offering a solid framework for the application and understanding of statutes in the legal system.

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a comprehensive regulatory statute that governs the real estate sector in India. It provides unambiguous definitions for various terms related to real estate, ensuring consistency and clarity in the interpretation and application of the law.

The importance of RERA’s definitions is further emphasized by the fact that other statutes, such as the Income Tax Act, GST, FEMA, and PMLA, rely on RERA for any definitions related to real estate. This ensures that there is a uniform understanding of these terms across different legal frameworks, which is crucial for effective enforcement and compliance.

Section 2(e) “apartment” whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;

In real estate legal contexts, the term “apartment” can indeed have a more encompassing definition than what is commonly understood in everyday language. When we hear the word apartment, we always relate to a residential unit/flat. However, the definition of apartment under the Real Estate (Regulation &Development) Act 2016 is wider. The definition of the apartment includes the categories of residential, commercial, mixed development in the real estate projects.

Further reference of apartment is made throughout the Act, the word apartment referred to in the other definitions in the RERA Act viz., Real estate project, Real Estate Agent, Promoter, Carpet Area, Allottee, advertisement.

Promoters, Professionals and stakeholders to aware, understand the legal definition of the apartment while drafting the documents and giving the references.

Section 2(f)”Appellate Tribunal“ means the Real Estate Appellate Tribunal established under section 43;

An Appellate Tribunal, in a legal context, is a body that hears appeals against decisions made by lower courts or administrative agencies. Its primary function is to review the judgments or orders of lower courts/officers/authority to ensure that they were made correctly and in accordance with the law. The establishment and functioning of Appellate Tribunals are often prescribed by statutes or laws enacted by the legislative authority.

Under RERA the appropriate government (i.e., State of Karnataka) shall, within a period of one year from the date of coming into force of this Act, by notification, establish an Appellate Tribunal to be known as the (name of the State/Union territory) Real Estate Appellate Tribunal.

The Appellate Tribunal under RERA shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice and shall also not be bound by the rules of evidence contained in the Indian Evidence Act, 1872 (Section 53). Further for the purpose of discharging its functions under this Act, the same powers are vested in a civil court under the Code of Civil Procedure, 1908.

Under RERA Act 2016 under Chapter VII, starting from Section 43 to Section 45 detailed about the Real Estate Appellate Tribunal.

Section 2(g) – “appropriate Government” means in respect of matters relating to —

(i) the Union territory without Legislature, the Central Government;

(ii) the Union territory of Puducherry, the Union territory Government;

(iii) the Union territory of Delhi, the Central Ministry of Urban Development;

(iv) the State, the State Government;

RERA Act 2016 being the Central Act, the power to administer, regulate is given to the Appropriate Government’s. Accordingly, the Appropriate government shall –

1. Frame the Rules and notify

2. Notify the regulations so framed by the Authority

3. Appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act

4. Shall establish the RERA Authority

5. Shall Appoint the RERA Chairperson and its members

6. Shall establish the Real Estate Appellate Tribunal

7. Shall Appoint the Real Estate Appellate Tribunal Chairperson and its members

8. Shall Appoint the Adjudication officer to adjudicate the compensation

9. Appropriate Government shall constitute a fund to be called the ‘Real Estate Regulatory Fund’

Section 2(g) – “architect” means a person registered as an architect under the provisions of the Architects Act, 1972;

1. The RERA Act recognizes the pivotal role of architects in monitoring and certifying the progress of the development of a project.

2. Architects are responsible for issuing necessary certificates that indicate the status of the project.

3. Reliance on Architect Certificates by Authorities: Regulatory authorities rely on the certificates issued by architects when making decisions on project approvals, adjudication, and other relevant matters.

4. Mandate Under Section 4 (2) (l) (D) of RERA Act: Section 4 (2) (l) (D) of the RERA Act mandates the architect to issue certificates related to financial aspects, specifically for the withdrawal of funds from the designated bank account.

5. Architect Certificates at Various Stages: Architect certificates are required at different stages of the project, including during project registration, quarterly updates, extension of the project end date, and any changes or modifications to the plans.

6. Qualifications and Licensing: The RERA Act specifies that architects involved in the certification process must hold a valid certificate of practice.

7. Additionally, architects are required to have a valid license from the Council of Architects, ensuring that they meet the professional standards set by the regulatory body.

8. The authority relies on the certificate issued by the architect and consider the contents while deciding on the registration of project, adjudication, extension, change or modification of plan etc

9. In summary, architects play a crucial role in the RERA Act’s framework by providing certifications that are relied upon by regulatory authorities for various approvals and decisions. The Act also mandates specific responsibilities for architects, emphasizing the need for professional qualifications and licensing to ensure the integrity of the certification process.

Section 2(i) -“Authority” means the Real Estate Regulatory Authority established under sub-section (1) of section 20;

RERA Authority refers to the regulatory body’s established under the Real Estate (Regulation and Development) Act, commonly known as RERA.

Under RERA, each state and union territory in India is required to establish its own Real Estate Regulatory Authority (RERA Authority) to oversee and regulate the real estate sector within its jurisdiction. The RERA Authority functions as a regulatory body to ensure that real estate developers, builders, and other stakeholders comply with the provisions of the RERA Act.

Key functions of the RERA Authority include –

1. Registration of Projects: Real estate developers are required to register their projects with the RERA Authority before advertising or selling them. This ensures that all projects are transparently presented to potential buyers.

2. Regulation of Real Estate Agents: RERA regulates real estate agents and mandates their registration with the authority. This helps in bringing professionalism and accountability to the real estate brokerage industry.

3. Adjudication of Disputes: The RERA Authority has the power to adjudicate disputes between homebuyers and developers. This is intended to provide a quick and efficient mechanism for resolving conflicts.

4. Monitoring Project Progress: RERA Authorities monitor the progress of registered projects to ensure that developers adhere to timelines and complete projects on schedule.

5. Imposition of Penalties: The authority has the authority to impose penalties on developers for non-compliance with the provisions of the RERA Act. These penalties are intended to discourage malpractices and protect the interests of homebuyers.

6. Ensuring Transparency: RERA promotes transparency by requiring developers to provide accurate project information, including details about the project, land status, approvals, and possession dates.

It’s important to note that the structure and specific functions of RERA Authorities may vary slightly from one state or union territory to another, as the implementation of RERA is within the purview of individual states and union territories in India. Stakeholders of the industry are encouraged to familiarize themselves with the specific rules and regulations of the RERA Authority in their respective states.

Section 2 (j) -“building” includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business, occupation, profession or trade, or for any other related purposes;

Section 2 (k) – “carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Explanation — For the purpose of this clause, the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee;

Carpet area, as defined under RERA, is the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area, and exclusive open terrace area. It essentially represents the actual area within the walls of the apartment that can be used by the allottee / home buyer.

The exclusion of certain areas ensures that only the actual living space is considered when calculating the carpet area, providing greater transparency to homebuyers about the space they are purchasing. The carpet area is significant because it is used to determine the cost of the property and is also considered while specifying the dimensions of rooms.

Developers are required to provide accurate information about the carpet area in their projects to prospective buyers under RERA. This is part of the broader objective of RERA to promote fairness, transparency, and efficiency in the real estate sector in India. It’s important for all the stakeholders of the real estate industry to be aware of the carpet area to make informed decisions about their property purchases.

Carpet Area is a transformation practice in the Real Estate Business. Prior to RERA the industry practice the business based on Saleable Area or Super built up Area or Builtup Area etc. further saleable Are not being defined anywhere (like building bye laws, etc.,) the ambiguity in terms of the area built up area being developed was always exploited to the disadvantage of a home buyer by the small section of the group.

Further the requirement of a Promoter of the Real estate project to disclose the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment in accordance with Sec 4(2)(h) of the Act, makes it that much more transparent for a home buyer while purchasing an apartment.

Allottees/Customers do understand, appreciate when they have common comparison – lets understand the sensitivity of Carpet Area with a small Example –

In summary CARPET AREA = NET USABLE FLOOR AREA + INTERNAL WALLS

To conclude RERA’s definitions is further emphasized by the fact that other statutes, such as the Income Tax Act, GST, FEMA, and PMLA, rely on RERA’s definitions. This will ensure uniform understanding of these words across different legal frameworks, which is decisive for effective enforcement and compliance.

The author is a practicing-chartered accountant, and partner at M/s. Venu & Vinay, Bengaluru. He can be reached at [email protected]