MahaRERA rule ensures new builder fulfils promises of previous developer

A developer is allowed to transfer his rights and liabilities in an ongoing project to a new developer, provided he has the consent of two-thirds of the allottees and approval of the MahaRERA authority. However, the Maharashtra Real Estate Regulatory Authority now has added new conditions – the new developer will upload a registered undertaking that he shall comply with all the promises made by the erstwhile builder to the homebuyers. The original developer will also have to submit a form where he will have to declare that there's no litigation pending, at any court including NCLT. Also, there should be no prohibitory order for the transfer of property. This is being done to safeguard the interest of homebuyer future liabilities.

Under section 15 of the Real Estate (Regulation and Development) Act,201,6, a developer cannot transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining a written consent from two-third allottees, except the Promoter, and without the prior written approval of the authority.

MahaRERA secretary Vasant Prabhu said that the law allows such transfer, but we formulated the procedure so that home buyers do not suffer. "The developer now has to send the secretary an e-mail for transfer after which the legal team will do the work on finding out details of the project. We have asked developers to submit a declaration that there's no case against them in any of the courts, and also no order that prohibits the transfer," Prabhu said.

Prabhu added that this is being done to ascertain the project is not entangled in any litigation and the home buyers are not left in a lurch with the transfer of rights. "The developer might have case against him in NCLT, or the banks may have taken possession of the property under the SARFAESI Act, where he is not allowed to create third-party rights."

The authority has taken care to ensure that after the transfer, the new developer sticks to the commitments made to the previous builder. Within seven days of completion of the transfer, the new promoter shall upload on the web site of RERA, a registered undertaking stating that they shall comply with all the obligations under agreement of sale executed by the erstwhile promoter with respect to the allottees of the project.

New Conditions

• Previous developer will submit a form where he will have to declare that there's no litigation pending, at any court including NCLT
• Within seven days of completion of the transfer, new promoter will have to upload RERA website, a registered undertaking stating that they shall comply with all obligations under agreement of sale executed by the erstwhile promoter