Should homebuyers who invested in pre-RERA projects get their agreements revised?

This is a grey area under RERA as it does not specify whether re-executing agreement to sell with the existing allottees of ongoing projects is mandatory. But legal experts say that buyers of ongoing projects are entitled to pre-RERA and post RERA claims.

As the Real Estate (Regulation and Development) Act, 2016 completes a year, homebuyers should be aware that the Act does not specify whether the agreement to sell with existing allottees of ongoing projects require execution of a new or revised agreement for them to avail of benefits under the legislation. But this does not mean that buyers who bought property before RERA will not be entitled to benefits that new buyers will. Existing buyers who booked units before May 1, 2017 can stake two types of claims – one under the pre-RERA regime and the other in the post-RERA regime.

The absence of any clear cut-off date for the ongoing projects gives rise to other complications. Essentially these complications may arise as existing agreements and documentation in such cases tend to be developer-friendly, and hence (maybe) in conflict with the spirit of RERA. Despite the state rules providing templates of the agreements to sell, RERA, as well as most of the state rules, do not specify whether re-executing transactions – with the existing allottees of ongoing projects – is mandatory. Without an express provision, such requirement can be safely assumed to not apply, says a white paper by Assocham and Thought Arbitrage titled RERA as Growth Impetus – Does the promise hold out on the ground.

However, in cases where the existing documentation is developer friendly (a very likely scenario), or contains commercials that may not be implementable under the RERA regime (such as assured returns to consumers), it may be worthwhile for developers and consumers alike to execute fresh agreements, which are compliant with RERA. Clarity is needed in this aspect as ongoing projects currently constitute a substantial part of the jurisdiction of the regulator. This remains a grey area. Otherwise, there is always a possibility of the multiplicity of litigations. Similarly, customer refunds in these cases can also pose further challenges – both in legislative and legal terms says the white paper.

Though there is no express provision in RERA to alter terms of contract between homebuyers and promoters in case of ongoing projects, it is understood that statute will prevail in case there is any contradiction between private contract and law. Thus, if the contract provides interest on delay in handover to home buyers by promoters at the rate of say 5 percent, the home buyers are entitled to get interest on delayed handover at such rates as provided by RERA under Section 18 which is much higher than what is provided in the private contract of most of the promoters, says Abhay Upadhyay, president, Forum For People's Collective Efforts and member, Central Advisory Council, RERA, ministry of housing and urban affairs.

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