Q. We are a group of homebuyers stuck in a project for more than six years. The development consists of six towers with around 1,200 buyers and has lapsed because the developer did not apply for an extension
of the project registration. There are several financial irregularities, and the developer was even jailed for a few years. Buyers have already paid 50 to 80% of the amount. Can the allottees come together and take over the project? Will MahaRERA allow such a takeover? Some buyers have secured MahaRERA orders for refunds with interest and compensation. If the allottees take over the project, will these liabilities of the defaulting developer shift to the association?
—– Affected homebuyers from Navi Mumbai
Yours is a large project caught in severe irregularities, but homebuyers are not without remedies. Relief lies in Sections 7 and 8 of the Real Estate (Regulation and Development) Act, 2016 (RERA). Section 7 allows you to approach MahaRERA for revocation of the project’s registration, and Section 8 permits completion of a stuck project by allottees or another agency.
Section 7 empowers MahaRERA to revoke registration if the developer: (a) defaults under the Act, Rules or Regulations, (b) violates conditions of approvals from competent authorities such as the municipal body, Fire Department, or Environment authorities, (c) engages in unfair practices or irregularities, or (d) indulges in fraudulent activities. Given the information you have shared, this appears to be a fit case for allottees to jointly apply under Section 7 for revocation of registration.
Once such an application is filed, MahaRERA issues a 30-day notice to the developer asking why the registration should not be revoked. During the hearing, MahaRERA may consider giving the same developer a final chance to complete the project under strict conditions. If the Authority concludes that the developer cannot complete the work, it may revoke the registration.
Section 8 then obligates MahaRERA, in consultation with the state government, to ensure completion of the remaining construction through a competent authority such as Mhada, CIDCO, the association of allottees (AoA), or in any other appropriate manner. The AoA must be given the first right of refusal to complete the project. In its landmark Anamika CHSL judgment, the Maharashtra Real Estate Appellate Tribunal (MREAT) noted that once a project is registered, it falls within the exclusive domain of the regulatory authority, which is obligated to protect homebuyers.
You should therefore form an AoA, preferably a co-operative housing society, and apply under Section 7 for revocation. After revocation, obtain an architect’s valuation of completed and pending work, along with unsold inventory, to assess the feasibility of completing the project yourselves. If the AoA takes over, the developer’s liabilities and MaharERA refund/compensation orders will not transfer to the AoA; they remain the sole responsibility of the defaulting developer.
If the AoA finds it cannot complete the project, you must request MahaRERA to ensure completion through a government agency, which the Authority is duty-bound to do in light of the Anamika ruling.
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