70% Conundrum - Haryana RERA

There is a requirement under the Real Estate (Regulation and Development) Act, 2016 (Act) to keep aside 70% of receivables from allottees in a separate, designated bank account (RERA Account). This has, from the outset, been viewed as a measure of great reform that would prevent siphoning of funds and ensure that money collected for the purpose of a particular project is, in fact, used for that project. However, the manner and method of utilisation and withdrawal of money lying in the RERA Account has always been a matter for considerable discussion and debate.

Illustratively, the Uttar Pradesh Real Estate Regulatory Authority has, in April 2019, directed banks not to adjust interest payments against the money that is required to be deposited in the RERA Account. This issue has recently come to the fore and become a matter of serious deliberation in Haryana.  
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State Real Estate Authorities Powers

The Indian Real Estate industry is experiencing a major overhaul on account of the strict implementation of the Real Estate (Regulation and Development), Act, 2016 (RERA), the Prohibition of Benami Property Transactions Act, 2016 (PBPT Act) and the Insolvency and Bankruptcy Code, 2016 (Insolvency Code).

While implementation of RERA is gaining momentum across the country with each passing day, the State Real Estate Authorities (Regulator) established under the RERA have emerged as a powerful tool for ensuring proper and effective implementation of RERA by the states across India. This article aims to provide an overview of the powers and functions of the Regulator and how it is using these powers to protect the interests of property buyers in India.
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On June 6, 2018, the Government once again amended certain provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), by promulgating an ordinance[1] (the 2018 Ordinance) which introduces sweeping changes to the both substantive as well as procedural aspects relating to the insolvency process. Some of the key changes are analysed below.

Homebuyers – A New Class of ‘Financial Creditors’

The 2018 Ordinance has amended the definition of ‘financial debt’ to include amounts raised from ‘allottees’ in respect of a real estate project (as defined under the Real Estate (Regulations and Development) Act, 2016 (RERA)). Accordingly, homebuyers will now be entitled to a seat on the ‘committee of creditors’ (CoC) of the corporate debtor. However, given the large number of homebuyers for a project, they will be treated as a class of creditors and be represented in the CoC by an ‘authorised representative’ to be appointed by the National Company Law Tribunal (NCLT).


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Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.

Franklin D. Roosevelt

The real estate sector is the backbone of the Indian economy, as it largely contributes to its growth. But despite its major influence, it has always been disorganised, inefficient and lacked transparency, which has to a degree diminished stakeholder confidence in real estate. To address this, change in legislation as well as implementation of a specialised regulator was critical to bring uniformity and transparency in the relevant laws governing this sector.

The Government of India enacted the Real Estate (Regulation and Development) Act, 2016 (Act) on May 1, 2016, inter alia, to address any shortcomings and overcome the difficulties surrounding this sector. It aims to ensure transparency, accountability, standardisation and consistency by regulating the sale of real estate and timely completion of projects.
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