UP RERA penalizes Developers for Incomplete Flat Handover to Homebuyers

The Uttar Pradesh Real Estate Regulatory Authority (UP-Rera), in response to homebuyers' complaints, has ordered all developers to immediately cease giving homebuyers unfinished apartments or bare shell units and issued a warning that doing so could result in fines of up to 5 percent of the project's total cost.

According to the May 8 judgment, RERA makes it very plain that possession cannot be granted until the unit is fully finished, all promised amenities are available, and a registered sale or lease agreement has been signed.

In accordance with Section 37 of the Rera Act, 2016, the directive was issued to prevent new purchasers from being coerced into accepting bare-shell apartments, a practice that UP-Rera has determined to be unlawful and a grave breach of the law.

The Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has ordered all developers to immediately stop delivering unfinished homes, sometimes known as "canvas flats" or bare shell units, in response to complaints from customers. The authorities cautioned that penalties of up to 5 percent of the real estate project's total cost could be imposed for breaking this guideline.

The May 8 order highlights that, in accordance with RERA, possession cannot be provided until the unit is finished, all promised facilities are available, and a registered sale or lease agreement has been signed.

The directive, which was issued in accordance with Section 37 of the RERA Act of 2016, attempts to protect prospective purchasers from being coerced into purchasing unfinished apartments, a behavior that UP-Rera has deemed unlawful.

 “The promoters found violating these rules can be fined up to 5 percent of the total project cost under Sections 38 and 61 of the Rera Act,” said Mahendra Verma, Secretary, UPRera.

“It has come to the notice of the Regulatory Authority that some of the promoters, when executing the Agreement for Sale (BBA), are making the allottees to agree to the condition of accepting physical possession of canvas flats and are, in fact, handing over possession of canvas flats to such allottees. Any such act by the promoters is contrary to the provisions of the Act and the Rules and defeats the object of protection extended to the allottees through the RERA Act. Therefore, it has become necessary to issue appropriate directions with a view to ensure that the promoters strictly adhere to the provisions of the Act and the Rules in this behalf and the interest of the allottees are not compromised in any manner whatsoever,” the notice states.