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13 Jul 2017

Important aspects of the Karnataka Real Estate (Regulation & Development) Rules, 2017

The much- awaited Karnataka Real Estate (Regulation and Development) Rules, 2017 (KRERDR) (‘Rules’) was notified by the Government of Karnataka on 10th July, 2017. Some important aspects of these Rules are highlighted below:

  

  • Rule 4 of KRERDR provides that all ‘ONGOING’ projects (which means a project where development is going on and for which, the completion certificate has not been issued) shall make an application for registration before RERA. However, the project is excluded from the definition of “ONGOING Project” and as such, precluded from seeking registration under RERA Act and Rules if any of the following criteria  are satisfied: and the same are:

 Layouts in which the streets, civic amenities and other services have been handed over to the local authority/planning authority for maintenance;  

  1. Apartments in which the common areas and facilities have been handed over to the registered Association consisting of majority of allottees;
  2. Apartments in which development works have been completed as per the RERA Act and certified by the competent agency and sale/lease deed of at least 60% of the plots/apartments/houses have been registered and executed;
  3. Apartments in which the development works have been completed as per the RERA Act and certified by the competent authority and application has been filed with the competent authority for issue of completion certificate/occupation certificate; and
  4. Apartments where partial occupancy certificate is obtained (to the extent for which the partial occupancy certificate is obtained).

 

  • Rule 3 provides for registration fees before RERA:

 

Sl. No. Project Description Land Area Registration Fee
1. Group Housing Not exceeding 1000 sq. mts. Rs. 5 per sq. mt. with an upper cap of Rs. 5,00,000/-
    Exceeding 1000 sq. mts Rs. 10 per sq. mt. with an upper cap of Rs. 5,00,000/-
2. Mixed Development (Residential and commercial) Not exceeding 1000 sq. mts. Rs. 10 per sq. mt. with an upper cap of Rs. 7,00,000/-
    Exceeding 1000 sq. mts. Rs. 15 per sq. mt. with an upper cap of Rs. 7,00,000/-
3. Commercial Projects Not exceeding 1000 sq. mts. Rs. 20 per sq. mt. with an upper cap of Rs. 10,00,000/-
    Exceeding 1000 sq. mts. Rs. 25 per sq. mt. with an upper cap of Rs. 10,00,000/-
4. Plotted Development NA Rs. 5 per sq. mt. with an upper cap of Rs. 2,00,000/-

 

  • Rule 4 (5) provides for deposit of 70% of money received from the allottee in a separate bank account. It provides that “for the projects that are ongoing and have not received completion certificate on the date of commencement of the Act, the promoter shall, within a period of three months of the application of registration of the project with Authority, deposit in a separate bank account, 70% of the amount already realized from the allottees, which has not been utilized for construction of the project or the land cost for project as required under sub clause (D) of clause (1) of sub section (2) of the section 4, which shall be used for the purposes specified therein.

 Provided that if the receivables of the ongoing project are less than the estimated cost of balance construction, then the promoter shall deposit 100% of the amount to be realized in a separate account”

 

  • Rule 5 provides for definition of land cost for the purpose of withdrawal from a separate bank account and the same is inclusive of:

 

  1. The cost stated in the sale deed or the government guidance value, whichever is higher;
  2. TDR acquisition cost for that land; and
  3. Statutory charges and other fee paid to the competent authority/ies seeking approvals.

 And Cost of Construction shall mean

 “All such costs incurred by the promoter towards on-site and off-site expenditure for the development of real estate project including payment of taxes, fees, charges, premiums, interest etc., to any competent authority or statutory authority or the central or state government including interest paid or payable to any financial institutions including scheduled banks or non-banking financial companies etc.”.     

 

  • Rule 16 provides for the rate of interest chargeable and payable by the Developer and the same shall not exceed the State Bank of India’s highest marginal cost of lending rate + 2%;
  • Rule 17 provides for timelines for refund to the allottees in terms of RERA Act and the same is 60 days from the due date.
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