How RERA Affects Joint Promoters and Joint Development Agreements

In the real estate sector, joint ventures and agreements between promoters and landowners are common. These collaborations, especially when projects are developed on a revenue or area-sharing basis, often raise questions regarding the application of the Real Estate (Regulation and Development) Act (RERA). For both landowners and promoters, understanding the implications of RERA is crucial for compliance and avoiding legal pitfalls. Let’s explore how RERA affects joint promoters, joint ventures, and development agreements.

1. What is the Role of Co-Promoters under RERA?

Under RERA, both the promoter and the landowner (or any other party benefiting from the sale of the project) are recognized as Co-Promoters. This means that both parties are jointly responsible for adhering to the provisions of the Act. If either party is involved in the sale or receives payments from allottees (buyers), they must comply with RERA’s registration and disclosure requirements.

The Act mandates that Co-Promoters jointly ensure the project is registered with the regulatory authority before any advertising, marketing, or selling of the units begins. If the landowner is also benefiting from the sale, they too must follow the regulatory framework set by RERA.

2. How Does the Act Impact Landowners in Joint Development Agreements?

In a joint development agreement, where the landowner contributes the land, and the promoter handles the development, the landowner is equally responsible for ensuring that the project is registered with RERA. The landowner must adhere to all aspects of the Act, including financial transparency, project timelines, and delivery promises.

For projects developed on a revenue share basis or area share basis, the payments from the sale of the units are shared between the landowner and the promoter. RERA ensures that both parties are legally bound to deliver the project as per the agreed-upon specifications and timelines. If there is a delay in delivering the units or any issues with the project, both the landowner and the promoter will be held accountable.

3. What Happens If the Landowner and Promoter Don’t Comply with RERA?

Failure to comply with RERA can result in penalties for both the promoter and the landowner. Non-compliance may include the inability to register the project, advertise it, or even receive payments from allottees. Additionally, if a dispute arises, both the promoter and the landowner can be held jointly liable in the eyes of RERA.

In the case of non-compliance, both parties are liable to face penalties as prescribed under RERA, which could include fines or even imprisonment for serious violations. Therefore, it is essential for both the promoter and the landowner to ensure timely registration and compliance with all provisions of RERA.

4. How Can Co-Promoters Mitigate Legal Risks?

Co-promoters can mitigate legal risks by ensuring full transparency and clear contractual terms. It’s essential that the joint development agreement between the landowner and the promoter clearly defines the roles and responsibilities of each party. The agreement should outline the financial and operational duties, including payment timelines, construction schedules, and the resolution of disputes.

Additionally, both parties should maintain accurate financial records and adhere to RERA’s requirements for the timely registration of the project. Regular communication and collaboration between the landowner and the promoter will ensure the successful completion of the project and compliance with RERA.

In conclusion, RERA’s provisions make it essential for both promoters and landowners in joint development agreements to act in unison to meet regulatory requirements. As Co-Promoters, both parties share the responsibility of ensuring transparency, timely completion, and legal compliance throughout the project lifecycle.

Source: https://maharera.maharashtra.gov.in/