RERA can freeze bank accounts; builder requires consent for transactions
In a first-of-its-kind decision, the Uttar Pradesh Real Estate Regulatory Authority (UP Rera), a month ago, has reportedly deregistered three phases of housing project Aranya in Noida. This project was being constructed by Unnati Fortune Holdings, and the deregistration has been done under Section 7 of the Real Estate (Regulation and Development) Act, 2016. The Act states that every upcoming project meeting certain conditions needs to get registered with RERA of the respective state.
Reports indicate that RERA was approached in September 2018 by the homebuyers of the project with complaints against the developer for project delay and alleged irregularities. With construction on the Rs 15 billion project initiated in 2007 – it’s been 12 years and the project is yet to meet completion. A renowned newspaper recently reported on this further stating that UP RERA has found severe financial irregularities, diversion and siphoning of funds and double allotment of apartments in three phases of the project. It is known that the final decision was made after the promoter was unable to provide a reasonable response to the show-cause notices on why the project’s three phases should not be deregistered.
If a developer – after having secured the registration number under RERA – indulges in any unfair practices defined in the RERA Act, the authority can deregister the project. And post deregistration, the concerned RERA needs to inform RERA offices in other states and Union Territories about such a revocation. Also, as reported, RERA is mandated to impose various restrictions and controls on the project and the developer in line with Clause 7 of the Act. For instance, RERA can freeze the bank accounts related to the project, and the developer is not allowed to make any payment or withdrawals from these accounts without the authority’s approval. Rules also mandate RERA to debar the project’s developer or promoter from accessing the authority’s website in relation to the concerned project. Besides, UP RERA has reportedly specified the name of the defaulting promoter in the list of defaulters, as per the rules.
Now with the project being deregistered, the responsibility to ensure its completion in time shifts to the authority. However, reports indicate that as per the Act, the authority has to first offer homebuyers a chance to complete the construction of the project on their own. This decision of the homebuyers also depends on the status and other factors pertinent to the project. However, if the homebuyers show their inability to execute and complete the remaining construction, the onus is on the authority to complete the project.
In the case of project Aranya, as reported, UP Rera is confident that its decision is a step in the right direction and is open to provide the necessary support to homebuyers.