Home
Legal Advice
RERA
What are the provisions related to the extension of project completion dates under RERA?

What are the provisions related to the extension of project completion dates under RERA?

25-Nov-2024

RERA

Answer By law4u team

Under the Real Estate (Regulation and Development) Act, 2016 (RERA), the provisions related to the extension of project completion dates are as follows: Section 6 - Extension in Special Circumstances: RERA allows for an extension of the project registration beyond the agreed completion date in special cases where: The delay is caused due to force majeure (natural calamities, war, floods, drought, fire, etc.). The extension is granted for a maximum period of one year. The promoter must apply to the regulatory authority for this extension, providing valid reasons. Force Majeure: The term "force majeure" refers to unforeseen events that are beyond the control of the promoter, such as acts of God, wars, and natural disasters. If force majeure is invoked, the authority may allow an extension beyond the agreed deadline. Other Valid Reasons: The authority may also consider other reasonable circumstances (besides force majeure) that might delay the project, provided the promoter gives appropriate justification and applies before the project registration expires. Penalty for Delay Without Extension: If the promoter fails to deliver the project within the stipulated time and does not seek an extension, penalties may be imposed, and the buyers have the right to withdraw from the project and claim a refund. This ensures that projects are completed in a timely manner and provides a mechanism for extension in exceptional cases, while protecting the interests of homebuyers.

Answer By Anik

Dear Client, The Real Estate (Regulation and Development) Act, 2016 (RERA) settles the provisions for extension of project completion date primarily under Sections 6 and 7(3). These provisions are discussed in detail below: Provisions for Extension of Project Completion Dates 1. Section 6: Extension of Registration: Under Section 6, promoters may make an application for a registration for an extension of the period to register the project for the maximum period of one year when reasonable circumstances exist and there has been no default on the part of the promoter. For the Application process, the promoter shall submit an application for the reasons for the delay, which shall be considered by the authority. All reasons from the authority for the grant of any extension must be recorded in writing. 2. Section 7(3): Further Extensions with Conditions: In case the extended period under Section 6 cannot be accomplished, promoters are bound to seek further extensions from Section 7(3). It gives an option to the authority not to cancel the registration but allow the same to operate based on further terms and conditions subject to the interest of the allottees. Consent from more than half the allottees is usually required where extensions are more than one year. In this case, as consent has been obtained then the authority shall extend further on the resolution passed by the association of the allottees. Further, even when no consent can be obtained it is allowed to apply for further extension with proper justification along with supporting documents. Such application shall be considered by the authority on case-to-case basis. 3. Force Majeure Considerations: The RERA authorities have been given the discretionary power to extend completion dates by up to six months in circumstances of extraordinary events, including the COVID-19 pandemic. This can be done without individual applications from builders by virtue of Section 37 which states that the authorities may issue any such directions as deemed necessary. After such general extensions, if there are further delays caused by other force majeure events, the builders can apply for additional extensions under Section 6, and possibly another six-month extension may be granted. 4. Regulatory Authority's Discretion: RERA authorities hold considerable discretion in extensions. They can present terms that entail meeting specific conditions or paying additional fees, if required for the protection of the interest of homebuyers. 5. Compliance Requirements: The promoters need to keep up with RERA's provisions and will have updated regularly and also disclose financial data. Non-compliance in this regard can have a negative effect on their applications for extensions. Hence, while RERA provides structured processes for extending project completion dates, it places an emphasis on accountability and protection for homebuyers by requiring promoter compliance and stakeholder consent in many cases. Hope this answer helps you.

Answer By Ayantika Mondal

Dear Client, One of the most significant provisions under the Real Estate (Regulation and Development) Act, 2016, for developers and homebuyers is the extension of the project completion dates. Though RERA aims to protect the interests of a homebuyer, it makes provision for developers to file reasonable extensions under special circumstances. The provisions are related to how the extension of project completion dates is to be determined under RERA. 1. Initial Project Completion Date: Under RERA, Section 4(2)(l)(C), at the time of registration of the project with the Real Estate Regulatory Authority, the developers are mandated to declare the completion date for the first project. Furthermore, the developer has to complete the project on time and hand over possession to the buyer as contemplated in the registration agreement. 2. Grounds for Extension of Completion Date: Force Majeure: If there are valid reasons beyond the control of developers that are considered "force majeure" events, developers can request an extension of the completion date. Such events include natural disasters like earthquake, floods, etc.; war; civil commotion; or public unrest. It may also include Government-imposed restrictions, strikes, or labor unrest and other extraordinary circumstances that prevent or delay construction. Delays Caused by the Homebuyer: If the delay is occasioned by the buyer (say, failure to pay instalments in time or delays in approvals from the buyer), then it can be regarded as a justifiable reason for the completion date. 3. Application for Extension: If there is a delay the applicant developer shall apply to concerned RERA for such an extension before the completion date normally RERA would have made a formal written application request with documentation to show valid reasons for delay or that the delay was a justifiable reason due to force majeure and other such reasons. 4. Granting of Extension: If RERA grants the extension, it may allow further extension of the date of project completion and shall be supported with sound reasons. The period of extension must be reasonable having regard to the nature of delay. RERA will make sure that undue delay in completion of project is not caused so the interest of the home buyers is protected. 5. Obligation to Inform Homebuyers: The developer has to advise homebuyers of extended date of completion. In case of any delay, penalties or penalty can be imposed for non-compliance under RERA. According to Section 11(4) of the Act, the developer is mandated to keep the buyers apprised of the delayed schedules and is expected to commit the new date of possession as well. 6. Penalties for Delays Without Extension: In case the project cannot be delivered in the scheduled periods, if no valid extension has been approved by RERA, the homebuyer would have to compensate the developer. According to Section 18 of RERA, when the possession is delayed, developers are required to provide compensation to the buyer and in addition to that the amount paid by the buyer attracts interest. That is usually the same rate as the interest paid by the developer for the delay. Conclusion The provisions of RERA for extending the completion of a project balance the rights to homebuyers with certain operational challenges that developers might come across in completing the entire project. Developers would be made eligible to apply based upon force majeure and other valid reasons while it would be supported with proper documentation or justification to the authority. It is therefore necessary that developers and homebuyers know how and when to seek and grant the RERA extensions in order to maintain compliance and protect their interests in the transaction of property. Hope this answer helps you.