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The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has taken a tough stand against builders from delivering incomplete apartments, or bare shell units, to homebuyers. UP RERA also acted based on many complaints about this practice and is now directing all developers to halt this practice. If builders are found to violate this direction, violators may be subjected to fines of up to 5% of the total project cost to protect homebuyers from receiving units are not delivered with all the promised amenities.
Key Highlights of the Directive
The order, dated May 8 under Section 37 of the RERA Act, 2016 states that developers must specify:
- Possession must be given when the apartment is ready for occupancy.
- All amenities promised must be in operation.
- Legal sale or lease deeds must be executed before giving possession.
- Developers who violate these laws and regulations may be penalized under Sections 38 and 61 of the RERA Act, which states that relevant fines can be as high as 5% of the estimated cost of the project.
Protecting Homebuyers from Incomplete Flats
The direction of UP RERA is intended to stop developers from coercing buyers to accept units that they have not finished. UP RERA has declared this practice illegal and a serious violation of the RERA Act. Mahendra Verma, Secretary, UP RERA said, "Promoters who hand over canvas flats or bare shell units to buyers are violating the law and the interests of home buyers. The direction will ensure developers are following the provisions of the Act."
Compliance with Building Bylaws
According to Uttar Pradesh’s building bylaws, developers must secure multiple no-objection certificates (NOCs) before handing over possession. These NOCs include:
- Fire safety clearance
- Dues clearance
- Provisions for parks, lifts, pools, and other common services
Once these parameters are met, the Noida Authority inspects the site and grants an Occupancy Certificate (OC). Transferring possession without an OC is deemed illegal. Additionally, developers must execute a registered agreement before collecting more than 10% of the property cost from buyers.
Defining “Ready-to-Move-In” Units
The order identifies ready-to-move-in apartments as those in which the entire internal works including flooring, plumbing, electrical connection, fire safety, doors, and windows are completed. These specifications should be consistent with the advertised description in the brochure and the sanctioned plans. The price offered to consumers should include land costs, construction charges, development dues, and all promised amenities. Deviations from the agreed-to specifications and costs will constitute a default and breach of Rule 1.8(3) of the UP Agreement for Sale Rules, 2018.
Strict Adherence to Sale Agreement Rules
The UP RERA requires all sale agreements (BBA) to conform to the model form prescribed under the U.P. Real Estate (Regulation & Development) (Agreement for Sale/Lease) Rules, 2018. The developers must obtain completion or occupancy certificates and deliver fully completed apartments along with all promised facilities.
Penalty for Non-Compliance
Violations of the UP Agreement for Sale Rules, 2018, may result in penalties of up to 5% of the project’s cost under Sections 38 and 61 of the RERA Act. The directive emphasizes the importance of delivering units that meet all legal and safety standards to protect homebuyers.
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Reactions from Stakeholders
Homebuyers have welcomed the UP RERA directive, seeing it as a necessary step to safeguard their interests. However, developers have raised concerns about increased compliance demands, especially in projects delayed due to utility connections or final clearances.
Dinesh Gupta, Secretary of the Confederation of the Real Estate Developers Association of India (Credai), stated, “Developers must complete all facilities and legal formalities as promised in the builder-buyer agreement. These steps are critical not just for compliance but also for ensuring safety.”
Conclusion
The UP RERA's tough stance shows its commitment to protecting homebuyers and increasing transparency in the real estate sector. By implementing the penalties for developers who hand over incomplete flats, the authority is ensuring developers meet the highest standard of quality and legality. As the real estate sector evolves, this type of admission will create further transparency and trust between developers and homebuyers.
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Ans 1. UP RERA has directed developers to halt the delivery of incomplete flats, or "bare shell" units, to homebuyers. Possession should only be handed over when the units are fully completed, with all promised amenities and necessary legal formalities.
Ans 2. Developers violating this directive may face penalties of up to 5% of the total project cost under Sections 38 and 61 of the RERA Act, 2016.
Ans 3. A ready-to-move-in flat must have all internal works completed, including flooring, plumbing, electrical connections, fire safety measures, doors, and windows. The unit must match the specifications in the sanctioned plans and promotional materials.
Ans 4. An OC is issued by the Noida Authority after inspecting the property to ensure it meets all safety and building standards. Possession cannot be legally transferred without this certificate.
Ans 5. The directive mandates all BBAs to conform to the model form prescribed under the U.P. Real Estate (Regulation & Development) Rules, 2018. It emphasizes that developers must complete all promised facilities and legal formalities before delivering the unit.
Ans 6. No, developers cannot collect more than 10% of the property cost from buyers before executing a registered sale agreement.
Ans 7. Homebuyers have welcomed the directive as a significant step toward safeguarding their interests and ensuring developers deliver on their promises.
Ans 8. Developers have expressed concerns about increased compliance demands, particularly for projects delayed due to utility connections or other final clearances.