Haryana draft rule seeks developers to submit sinking-fund details to body of allottees

"A large number of complaints and representations have been received by the state government from individual allottees as well as from the AoA with regard to the formation of an AoA, functioning of the associations, maintenance of common area facilities, and the role of promoters vis-à-vis individual allottees and the AoA," said the guidelines prepared by the HRERA.

These rules may be called the Haryana Real Estate (Regulation and Development) Amendment Rules, 2022, and shall come into force from the date of their publication in the official gazette of the government of Haryana.

Formation of Association of Allottees

The draft guidelines seek to order the developers to form an AoA within 30 days in case of real-estate projects in which possession of plots, shops, residential apartments, office space, etc., have been handed over to one-third or more allottees.

"The promoters of real-estate projects shall issue a notice to each of the allottees of the project, asking them to form their associations. The promoters shall prepare a list of allottees, along with their addresses, e-mail IDs, telephone numbers, etc. The list shall be promptly displayed on the notice board of the project, and a copy thereof made available at all times during reasonable hours in the office of the promoter," said the rules.

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If the developers furnish the details of buyers, it will help in forming the association, compared to the current situation where buyers from even the same project are finding it difficult to connect with one another, said real-estate experts.

The draft rules also asked the promoters to fix a date and time, within 45 days of the publication of these rules, for organising a meeting of all allottees.

Functioning of RWAs

The draft says that the general body meeting of the AoA shall be held at least once in six months.

"A notice of the general body meeting shall be sent to all members at least 15 days before the date of the meeting. The notice should be affixed on the notice board and an intimation should be sent by e-mail/ SMS on the registered mobile numbers of the members...all expenditures above Rs 10 lakh shall require the approval of the general body of the association. The association may award maintenance contract to one or more than one companies/ individuals, but such contracts shall be awarded only after issuing an advertisement in newspapers and after discussion in the general body meeting," reads the draft.

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It also asks resident welfare associations (RWAs) to take all decisions by a majority voting of two-third members present.

"If, however, in a meeting, the vote of the two-third members present and voting cannot be secured in respect of any agenda item, the meeting will be adjourned by one week to be held on the same day and time next week for re-consideration of the agenda. In such a reconvened meeting, the agenda can be decided by a simple majority of members present and voting," it said.

Handing over maintenance, funds to RWAs

The draft says the promoter shall send an offer for handing over maintenance of infrastructure facilities to the association within 15 days of the formation of AoA. It also seeks to mandate the promoter to submit various financial information to the AoA. They include:

* The rate at which the money on account of interest-free maintenance security (IFMS) was collected from allottees; the total amount so collected from the allottees; and the bank account where the money collected on account of IFMS is lying along with the current available balance.
* Amount of money collected on account of the sinking fund, or any other fund of a similar nature collected from the allottees, and the bank account in which this money is lying along with the current available balance.
* The terms and conditions of the maintenance contract, if executed with a third-party maintenance agency or any other agency for the maintenance of the project.
* The account receivables on account of maintenance charges from allottees and the amount payable to any agency for having executed the maintenance work in the past.
* A statement of assets and liabilities with regard to the maintenance of the project.

It also said that the promoter shall issue a certificate to the effect that all facilities have been set up as per approved plans and satisfy the association about its veracity.

"The association will take over the maintenance of the project after proper verification of the information supplied by the promoter, provided that if the installed infrastructure is not in accordance with the approved plan and in accordance with agreements executed with allottees, the promoter shall remain bound to bridge such deficiencies by way of actual installation or monetary compensation given to the association for executing deficient works at their own level," said the rules.

It added that in case the facilities in the project are not as per approved plans or builder-buyer agreements, the promoter shall remain obliged to create such facilities or transfer funds to the AoA for construction at their own level.

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Venket Rao, RERA expert and founder of Intygrat Business Advisory, said that the move will minimise disputes and ensure transparency."This is a welcome development and most certainly will minimise disputes. There have been multiple disputes ranging from non-handover of maintenance to the Association to multiple associations concerning a single project, I hope these would come to end. Another, grievance of a lot of allottees in real estate projects is that the association has been formed by the builder itself and it carries puppets of the builder, by making it mandatory to hold a general body within 60 days of notification of these rules for electing a new governing body will ensure a transparent mechanism," he said.

Rao added that many times, a builder does not hand over the maintenance or even if done, it is not done in a proper manner. "Builders don't share requisite documents with respect to the project or do not hand over accounts of maintenance or do not hand over Interest-Free Maintenance(IFMS) to the association. These practices should come to end by having defined rules," he said.

RWAs support govt move

Members of RWAs Moneycontrol spoke to hailed the move.

Dharmendra Pradhan, RWA president of Ansal Esencia, said that be it the matter of the sinking fund or infrastructural issues, these guidelines will bring the developers to task. "While the rule will force developers to provide details of sinking funds, the main challenge before the authorities will be to get the funds restored in case of misuse by the developer," said Pradhan.