MahaRERA allows developers to apply for extension of construction period without majority homebuyer consent

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To ensure that delayed real estate projects are completed, the Maharashtra Real Estate Authority (MahaRERA) has allowed developers to apply for extension of property registration without the need for consent of 51 percent of homebuyers.

Developers will be required to state the reason why registration should be extended without such consent. MahaRERA also asked developers to declare their interest in multiple real estate projects during registration, a step that would help homebuyers to take an informed decision.

Also read: MahaRERA to have dedicated vertical for 4,500 stalled real estate projects in Maharashtra

MahaRERA, in its order dated December 27, 2022, said developers do not get consent homebuyers’ consent often despite being willing to complete an unfinished project.

The order states: "It has been noted with concern by the Authority that in matters regarding extension of project registration under Section 7 (3) of the Act when promoters are seeking consents from the concerned association of allottees consisting of a majority of allottees who have booked their plot or apartment or building in the real estate Project, the consents are not being provided for the following reasons (not exhaustive)."

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Mehul R Thakkar

Special Correspondent|Moneycontrol

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Reasons for not getting consent

The three reasons mentioned in the order include homebuyers’ concern that their complaint to the Authority would be dismissed, that relief would not be forthcoming if the consent is given and lack of confidence that the developer would complete the project.

When homebuyers do not consent to the renewal of registration, it stops the developer from executing a project. This, the order said, is not in favour of  homebuyers.

"Developers shall submit the consents as obtained from the allottees irrespective of the number of such consents along with reasons why the required percentage of consents from allottees could not be obtained and why the application for extension should be considered without the required 51% consent."

Developers have been asked to additionally submit an explanatory note, setting out the grounds and reasons for the delay in completion of the real estate project as well as setting out the need for grant of extension along with documents supporting such grounds and reasons.

The promoters were also asked to state the steps they would take to complete the project within the extended period sought.

The order adds, "Application of extension of validity of the project registration shall be accompanied with the prescribed fees calculated in the manner as stated in Rule 7 (3) of the Rules. The grant of extension of the project validity shall not affect/jeopardise the rights accrued in favour of the allottees who have booked their plot, or unit or apartment or building in the said real estate project as the case may be for which extension of project validity is sought."

Experts say the order may be in good faith, but it can be challenged in a court of law.

Chartered Accountant Vinit Gada, RERA Advisor & Partner of Swapnesh & Vinit, said: " The order paves the way for real estate developers of Maharashtra to continue the project and stay away from the revocation situation. Through the order, the procedure required to be followed to get extension is liberalised as the order allows promoter/developer to obtain extension even when 51 percent of allottees have not given consent to it on providing satisfactory explanations and following conditions imposed by MahaRERA. This will make life easier for the developers to remain in the game especially when all the toil is already done and project is significantly over."

He added: "This will further help them register the sales agreements and answer lending banks for the validity of projects under RERA. The deadlock created due to lapse of RERA Registration seems to be smoothen by the MahaRERA. The authority has in this order also clarified that the rights of allottees/ customers of the project remain unaffected because of obtaining such an extension. However, there are certain grey areas in the order which leads to having two opinions. Hence, the order may be challenged in the court of law.”

Also read: MC Exclusive | Over 50% projects tagged ‘ongoing’ since MahaRERA, still await completion

 Developers asked to submit details of interests in other projects:

Further, in another order to ensure the homebuyers make an informed decision, MahaRERA has asked developers to declare their interests in other real estate projects in the entire country while applying for registration for a real estate project in Maharashtra.

The order dated December 27, 2022, in this context states, "While applying for registration of a real estate project, developers shall upload a Self-Declaration in the format Annexure A annexed hereto on the letter head of the promoter (developer)."

The developer has to disclose whether he as an individual or as a Proprietor or as a Director / Designated Partner / Partners of the promoter Organization, has/ have any interests in other real estate organisations whose real estate project are registered with any Real Estate Regulatory Authority across the country along with the said organizations performance/status in completing such real estate projects."

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