MahaRERA’s Penalties Explained: The Cost of Unregistered Real Estate Projects!

Introduction

In the continuously growing real estate industry, where homebuyers’ capital is at risk, regulatory agencies like the Maharashtra Real Estate Regulatory Authority (MahaRERA) play a crucial role in maintaining transparency, accountability, and timely project delivery.

A recent decision in Chandrakant Sitaram Kamble v. Mytri Infrahousing Pvt. Ltd. highlights the legal repercussions of not registering real estate projects under MahaRERA. This case, represented by Advocate Aditya Pratap, demonstrates the consequences developers face for failing to comply with the Real Estate (Regulation and Development) Act, 2016 (RERA).

Background of the Case

The case revolves around a complaint filed by Chandrakant Sitaram Kamble, who had signed an agreement in 2014 to purchase a flat from Mytri Infrahousing Pvt. Ltd. in their Devad Panvel project. Kamble paid over Rs. 7.5 Lakhs of the total Rs. 15 Lakhs price, but despite this, the builder failed to complete the project.

As a result, Kamble never received possession of his flat, and the company did not obtain the occupation certificate (OC). Additionally, the project was never registered with MahaRERA, which is a direct violation of Section 3 of the Real Estate (Regulation and Development) Act, 2016. This section mandates that all real estate projects must be registered with the regulatory authority before any advertisements, marketing, or sales take place.

Legal Framework: The Real Estate (Regulation and Development) Act, 2016

The Real Estate (Regulation and Development) Act was enacted to ensure transparency and consumer protection in the real estate sector.

• Mandatory Registration (Section 3): Every promoter must register their projects with RERA before advertising or selling them to the public.
• Compliance Documents: Developers must submit project layouts, approvals, and other relevant documents to prove that the project follows applicable laws.
• Penalties for Non-Compliance (Section 59): Failure to register a project can lead to fines of up to 10% of the project’s estimated cost.

Court’s Rulings and Directions

In Chandrakant Sitaram Kamble vs. Mytri Infrahousing Pvt. Ltd., the complainant sought possession of the flat, interest for the delay, and compensation. Since the developers did not appear for the hearings, MahaRERA proceeded ex-parte.

Based on the evidence, the MahaRERA Chairperson concluded that the project existed but had not been registered with the authority, violating RERA provisions. The failure to obtain an occupation certificate and the incomplete state of the project further weakened the developer’s position.

Key Directions by MahaRERA:

1. Mandatory Registration: The developers were ordered to register the project with MahaRERA within 30 days.
2. Restrictions on Sale & Marketing: Until registration, developers cannot advertise, market, or enter new sales agreements. Non-compliance attracts a penalty of Rs. 1,000 per day.
3. Additional Penalty for OC Delay: A penalty of Rs. 1,00,000 would apply if the Occupation Certificate (OC) was not obtained after RERA’s commencement on May 1, 2017.
4. Municipal Corporation Report: The Panvel Municipal Corporation was directed to submit a status report on the project within 30 days.

Additionally, MahaRERA clarified that Kamble’s claims for possession and compensation could only be considered after the project’s registration.

Implications for Buyers and Developers

This case serves as an important lesson for developers about their legal obligations under RERA.

• For Developers: Failing to register projects not only leads to financial penalties but also exposes them to legal risks and damages their reputation.
• For Homebuyers: Buyers must ensure that any real estate project is RERA-registered before making investments. Ignoring this step can lead to delays, unfinished projects, and legal disputes.

This ruling underscores the growing importance of regulatory compliance in the real estate sector and MahaRERA’s role in protecting homebuyers. Developers must secure all necessary approvals, complete registration, and maintain transparency regarding the project’s status.

Conclusion

As the real estate industry evolves, regulatory oversight becomes even more critical. This MahaRERA ruling serves as a strong reminder of the consequences of legal non-compliance for both developers and buyers.

• For Developers: Ignoring RERA registration laws can lead to severe penalties and hinder project progress.
• For Buyers: Investing only in RERA-registered projects ensures their rights and financial interests are protected.

MahaRERA continues to play a vital role in bringing accountability and trust to the real estate sector, ensuring that homebuyers are safeguarded against fraudulent practices.