Homebuyers have to wait for redress: RERA authorities extend completion deadlines by 3 months

UP RERA also asked erring developers to give details of properties that can be auctioned

Several real estate regulatory authorities - MahaRERA, Karnataka RERA and now UPRERA - have decided to extend the date of completion of real estate projects by three months in view of the lockdown.

Interestingly, the authority circulars have focused on the RERA timeline and not the completion date agreed between the buyer and the builder as per the contract or the Builder-Buyer Agreement signed between them.

“RERA authorities have not extended the contractually agreed date by three months. They have only extended the RERA agreed date,” says Kunaal Shah, partner at Trilegal.

“The authorities by extending the RERA timelines have not provided any benefit to the developers vis-à-vis handover commitments to the homebuyers. The only thing the extension has achieved is that the builder would not have to apply for separate extension of RERA registration dates,” he said.

This means that on account of closure of RERA redressal forum - a homebuyer whose contractual handover timeline expires during the lockdown period, will have to wait until the lockdown is lifted to seek redressal.

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It should be noted that post the implementation of RERA in 2017, most of the older projects had a completion date as per the Builder-Buyer Agreement signed between the homebuyer and the builder and a different RERA timeline proposed by the concerned developer to the relevant RERA authority.

In case of the latter, builders had intentionally pushed back the delivery date to allow themselves a buffer in case the project gets stuck for some reason. However, newer real estate projects are likely to have the same contractual and RERA deadlines.

On April 2, Maharashtra Real Estate Regulatory Authority (MahaRERA) has decided to extend the validity period for registration of real estate projects, whose date of completion or for that matter extended completion date gets over on or after March 15, for a period of three months which in this case is June 30.

On April 14, UP Rera said that in view of the slow pace of construction work due to the need for social distancing and movement restrictions and stoppage of the work following the national lockdown in March, the Authority has decided to extend by three months the date of completion of the projects with the date of completion between March 15 and December 31.

All RERA registered projects, whose completion date (including revised completion date) expires on or after March 15, has been extended by three months until June 30, the Karnataka circular had stated.

The issue with the three orders is that the date that concerns the homebuyers most is not the RERA deadline date but the date which they agreed to with the builder under a contract or the Builder Buyer Agreement. These authorities are silent on the issue.

Homebuyers rights are not governed by the RERA date but by the contract date. Majority of projects where 10 percent to 20 percent construction work had commenced when the RERA was introduced in 2017 had a prior contractually agreed date and a later RERA date.

To cite an example, if the RERA agreed date was June 30 but the contractually agreed date was April 15, then both from a legal perspective and even a RERA precedent, the relevant date is April 15 and not June 30 as far as the homebuyer is concerned. The ability of the homebuyer to sue the builder for seeking interest on delay in delivery or invoking termination of allotment (with interest), actually fructifies on April 16 and not on July 1.

Why are RERA authorities silent on the issue?Rera authorities have focused on completion timelines because the Authority by itself cannot change the contracts signed between the two private parties – between developer and homebuyers.

“The two parties have signed a private contract and only the private parties can amend the contract. Alternatively, any extension of contractually agreed timelines will have to be dealt with as per extension caveats, if any, built under the contract, on a case to case basis, as the RERA circulars does not extend the contractual handover date and only cover to extend the project registration validity” says Shah.

Also, in terms of committed delivery date - what takes precedent is the date specified under the contract or the BBA and not the RERA completion date.

As per a 2017 Bombay High Court order in the matter of Neelkamal Realtors Suburban Pvt Ltd versus Union of India, it was made clear that under the provisions of Section 18, the delay in handing over the possession would be counted from the date mentioned in the agreement for sale entered into by the promoter and the allottee prior to its registration under RERA.

Under the provisions of RERA, the promoter is given a facility to revise the date of completion of project and declare the same under Section 4. The RERA does not contemplate rewriting of contract between the flat purchaser and the promoter.

Also, Section 4(2)(l)(C) enables the promoter to revise the date of completion of project and hand over possession. The provisions of RERA, however, do not rewrite the clause of completion or handing over possession in agreement for sale.

Section 4(2)(l)(C) enables the promoter to give a fresh timeline independent of the time period stipulated in the agreements for sale entered into between him and the allottees so that he is not visited with penal consequences laid down under RERA. In other words, by giving the promoter a fresh timeline under Section 4(2)(l)(C) he is not absolved of the liability under the agreement for sale.

“Therefore, if a buyer has a contractually agreed date, the developer despite the RERA circular brought out during COVID-19, may still have to abide by the contract and pay delay penalty to the buyer and the buyer has every right to proceed against the developer for having delayed the project delivery,” says a legal expert.

Having said that, the homebuyer has no relief because though he can proceed against the builder, the RERA redressal forum is not open for the buyer to proceed. He can proceed only after RERA reopens after the lockdown.

RERA came into effect from May 1, 2017 and Maharashtra was the first state to implement it by setting up MahaRera. The act ended the practice of real estate developers diverting funds collected from homebuyers to other projects or for land purchase.