Understanding Builder Transfers Under RERA and MahaRERA’s Role

November 12, 2024

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Builder-Transfers-Under-RERA-and-MahaRERA’s-Role — Builders transferring RERA-registered projects must secure buyer consent and MahaRERA approval, ensuring agreements remain intact and protecting homebuyer rights

The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to protect homebuyers and promote transparency in the real estate sector. One significant provision under RERA, specifically Section 15, addresses the procedure and requirements when a builder (promoter) wishes to transfer a RERA-registered project to another party. This article will outline the legal obligations for such transfers, including the need for buyer consent and MahaRERA’s regulatory role, ensuring allottees’ interests are safeguarded.

Homebuyer Consent for Project Transfer

If a builder intends to transfer a RERA-registered project to a third party, they must first seek written consent from two-thirds of the project’s homebuyers (allottees). This mandate is intended to ensure that buyers have a say in significant changes, as it could impact their property. A simple majority is not sufficient; it requires two-thirds consent, creating a more substantial agreement among allottees and providing them greater protection in these situations.

MahaRERA’s Approval in Transfers

In addition to buyer consent, the outgoing promoter must apply to MahaRERA and obtain its approval to proceed with the transfer. MahaRERA, the regulatory authority in Maharashtra, plays a crucial role in overseeing these transfers to ensure they are in compliance with the law. This dual consent structure—buyer consent and regulatory approval—adds an extra layer of security, reinforcing RERA’s primary objective of protecting homebuyers.

Binding Agreements with the New Promoter

Another important aspect of Section 15 is the requirement that any existing agreements between the original promoter and the buyers remain intact. This means that the new promoter cannot alter these agreements to the detriment of homebuyers. The law mandates that the terms previously agreed upon with the old developer are honored, ensuring a seamless continuation of obligations and protecting buyers from unfavorable changes.

New Promoter’s Compliance Obligations

The new promoter is required to independently comply with all obligations under RERA, including those outlined in the agreements signed by the previous promoter. This ensures continuity and holds the new promoter accountable for any pending duties. As an added assurance, the new promoter must submit a registered undertaking to MahaRERA, affirming their commitment to fulfill these obligations, reinforcing the protective framework established by RERA.

MahaRERA’s Role in Regulatory Oversight

MahaRERA’s regulatory involvement extends beyond simply approving transfers. It requires the new promoter to fulfill all ongoing and pending obligations, creating a safety net for buyers. This oversight ensures that any new promoter cannot sidestep responsibilities and must adhere to the same standards and agreements that the original developer was bound by, fostering transparency and stability in the project’s management.

Exceptions to Consent and MahaRERA Approval

Certain types of builder project transfers do not require allottees’ consent or MahaRERA approval, as outlined in MahaRERA Circular No. 24/A dated July 23, 2021. These exceptions include builder-initiated conversions within corporate structures, such as from a partnership to an LLP or from a private limited company to another form of corporate entity. These streamlined conversions avoid additional regulatory steps, provided they meet the criteria set by MahaRERA.

In conclusion, Section 15 of the Real Estate (Regulation and Development) Act, 2016 (RERA), serves as a key mechanism for protecting homebuyers’ interests when a builder transfers a project. The requirement for both buyer consent and MahaRERA’s approval ensures that homeowners are actively involved in decisions that may affect their investments. This dual-consent framework reinforces transparency and accountability, preserving the integrity of original agreements and protecting allottees from unfavorable changes. Additionally, by obligating the new builder to honor existing commitments and adhere to RERA standards, MahaRERA strengthens the regulatory environment, fostering trust and stability in the builder’s real estate sector. Together, these provisions uphold RERA’s core mission of safeguarding homebuyers and building confidence in builder housing developments across Maharashtra.

Builder compliance under Section 15 holds significance for protecting buyers from undue project transfers. Any transfer by the original builder must meet strict standards, ensuring accountability. Furthermore, if a builder changes roles within a corporate framework without transferring property rights, such changes may not require buyer approval. However, any transfer beyond the corporate scope requires a builder to obtain explicit consent and regulatory oversight. Each builder involved operates within a structure that prioritizes consumer interests, particularly in project transfers, ensuring all builder obligations are met consistently.