The Maharashtra Real Estate Regulatory Authority (MahaRERA) is going to start issuing suo motu show-cause notices to developers of over 4,500 lapsed real estate projects in the state from next week, senior MahaRERA officials confirmed to Moneycontrol.
Issuing notices will start from July 25
According to senior officials, the standard text for the notices is ready, and they will be issued from July 25, after entering project-specific details. Initially, notices will be issued to priority groups, and in due course all 4,555 lapsed projects will receive the notices. According to officials, once a project lapses, there is no need for any buyer for the project to come forward, and MahaRERA can issue notice to the developer.
How many projects are lapsed and registered in Maharashtra?
According to MahaRERA data, 4,555 real estate projects have lapsed in Maharashtra, as of March 2022. The largest chunk is from Pune and Mumbai with 1,216 and 649 lapsed projects, respectively.
The third highest number—560—is from Raigad district, with several areas falling under the Mumbai Metropolitan Region (MMR). This is followed by Thane and Palghar districts—also parts of MMR.
Numbers of lapsed real estate projects in different parts of Maharashtra. (Data source: MahaRERA)
Also read: Here's why the number of lapsed real estate projects increased by 112% in Maharashtra
Further, in the last five years to June 22, 2022, MahaRERA registered over 36,000 projects worth Rs 8.69 lakh crore. Of these, over 12 percent or 4,500 project registrations have lapsed, the worth of which adds up to around Rs 78,000 crore.
Number of real estate projects registered in Maharashtra. (Data source: MahaRERA)
Notices to developers on basis of category
According to MahaRERA, it has categorised real estate projects to smoothen the exercise of issuing notices. Starting from next week, notices will be initially issued to developers of real estate projects where more than 50 percent booking is done but there is zero expenditure or no substantial work going on at the project site. Notices will next be prioritised to those projects where 70-90 percent work is completed, given that pushing these projects could result in quick relief to homebuyers.
A senior MahaRERA official, who asked not to be named, said, “Initially, we have categorised projects on the basis of 30, 60 and 100 percent towards completion. There are certain projects where booking is 50 percent and expenditure is zero so we are identifying such projects and will start issuing show-cause notices to them, but the objective is to issue show-cause notices to all 4,500 lapsed projects.”
The official added, “Each project will have different facts and so a general notice will not be possible but a project-specific notice will be needed. This time we are not issuing generic or uniform notices but we are identifying projects, going into details, drafting the notices and issuing notice. These notices will not be served online but will be hand-delivered, hard copy notices from our legal team. This entire exercise will take time, and hence it is difficult to commit to any timeline but in any case we will be starting issuing notices by July 25.”
How are real estate projects divided in categories?
According to the MahaRERA official, as far as interest of allottees is concerned, “earlier we used to go after projects which are 60-70 percent complete as by our persuasion it was assumed that projects will get completed, and at least these many buyers will get relief”.
The official added, “However, this time there are certain projects where booking is more than 50 percent but the project is not progressing, and we are aware that in that case there will be a long-drawn legal process. We will call the developer, call the allottees, and ask them if they would want to take over the project or if they would like to bring in their developer. Now, if they have paid a substantial amount to their current developer, they might have to shell out more money for completion of the project. So whether they agree to that is a challenge. But if a large amount of inventory is unsold, and if a new developer can sell the balance and get returns even from balance payment of existing buyers, new developers will come but this will be on a case-to-case basis.”
When is a real estate project declared as lapsed?
Every real estate project that is registered by a developer with MahaRERA is given three to four years for completion, considered a reasonable time period, followed by the issuance of a registration number for the project. A search on the MahaRERA website using this number will throw up all details relating to the project. The registration number is to be published by the developer in every advertisement or promotion activity related to the project.
However, a project is termed as ‘lapsed’ when the timeline given for completion is not met, and the developer has not applied for extension. Once the registration of the project is declared ‘lapsed’, the developer cannot advertise, market, book, sell or offer to sell, or invite persons to invest in these projects. Such projects cannot be registered by the registrar of the revenue department.
Numbers and lapsed real estate projects vertical of MahaRERA
MahaRERA chairman Ajoy Mehta on June 22 had announced the formation of a dedicated vertical on lapsed or stalled real estate projects. The objective of this vertical is to ensure that these lapsed projects get moving either by developers taking it ahead, buyers taking over the project or handing the project to a new developer.
Mehta was quoted as saying on June 22, “We have verticals for grievances, complaints, registration, adjudication, and administration. Similarly, this vertical will be for stalled projects. If we have to look essentially at stalled projects, the situation is such that out of 4,500 stalled projects, 1,500 do not have bookings. In terms of apartments, out of the 3 lakh apartments that are stuck, 1.28 lakh do not have bookings. My focus is on stalled projects where there is money from homebuyers involved. The approximate worth of stuck projects is expected to be Rs 78,000 crore. We will tackle money from banks and financial institutions at a later stage.”
Also read: MahaRERA to have dedicated vertical for 4,500 stalled real estate projects in Maharashtra
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