Issues regarding Section 3(2)(a) of RERA

Introduction

The Real Estate (Regulation and Development) Act (“Act”), which was enacted in 2016  has now regulated the real estate sector. It seeks to protect home-buyers as well as help boost investments in the real estate industry. The full set of provisions of the Act came into force on 1 May 2017. However some Real Estate Development projects are left out of the ambit of RERA to specific extents. This study aims to assess the status of exemptions from RERA for certain classes of projects.

Exemption for Projects having Built Up Area less than 500 SqM or 8 Apartments

Section 3 (2) of the Act, lays down various criterias according to which real estate projects are not required to be registered under the Act. 

Under Section 3(2) (a), if the land proposed “does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed 8 inclusive of all phases”, than the project need not be registered.  However, it is pertinent to note that this clause has been interpreted differently by various RERAs across the country, while keeping in mind that allottees have to be protected. According to a three-member Coram of Maharashtra REAT (Real Estate Appellate Tribunal), the word “or” is to be read disjunctively, therefore, if a project meets any of the requirements, then the project is exempted from registration.  

Additionally, the Bihar RERA stated that registration of a project will be required if any one of the two criterions are met under Section 3(2). Rajasthan RERA too delved deep into the matter and decided that projects that satisfy both criterions should be exempted from registration, but projects that satisfy only one are required to register. Additionally, Rajasthan RERA has also stated that, if a promoter does not advertise, market, offer, book, sell to persons, nor do they invite people to purchase any plots/ apartments etc of a project, then such a project is not required to be registered.

The Delhi RERA has also opined on this issue and clarified its position as to which real estate projects are to be registered within the Delhi Development Authority Master Plan 2021 area. It stated that, both the conditions need to be met for a real estate project to not be registered.  

This issue will not be settled unless it reaches and is decided by a higher court, till then the objective and intent of the RERA Act has to be kept while deciding on such issues which may hamper the rights of allottees.