The RERA or Real Estate (Regulation and Development) Act of 2016 ensures transparency, efficiency, and accountability in the Indian real estate sector. The joint venture is another significant collaboration made by the land owners and developers in the real estate to make use of the resource which is undertaken for a project. However, it is essential to understand that while undertaking such collaboration there are so many complexities which makes it essential to understand the RERA guidelines. An in-depth understanding of the RERA for joint ventures ensures the partnership is compliant and overcome the potential risks in the future. Hence, this blog gives a step by step guide to understand the RERA guidelines in joint ventures.
Step 1: Understanding RERA:
The foremost condition in the RERA is any real estate project which exceeds 500 square meters or includes more than eight units should be registered. This condition applies for both the landowner and developers making both as “promoters” under the act. This approach means that the parties within the joint venture are equally accountable for the RERA guidelines.
Step 2: Registration Of Project Under RERA Guidelines:
The registration is a mandatory step while advertising or selling the unit. The steps involved for registering any real estate project under RERA is to gather the required documentation, submit the project details, provide the promoter information, and to pay the registration fees.
- The major documents that need to be collected include the title deeds, land approval certificates, layout plans, and details of the joint venture agreement.
- The submission of the major documents should also include the completion time of the project, financial status, and the construction milestones.
- Also, the landowners and developer collectively called as promoter should submit credentials and share of responsibilities.
- Finally, paying the registration fees as per state requirements and the project size.
Step 3: Drafting An Joint Venture Agreement:
Thirdly, drafting a clear joint venture agreement is the crucial factor in a successful partnership and should align with RERA guidelines. The major elements that should be included in the agreement are the duties of the landowner and developer, including funding, construction, and marketing. Also, it should specify the profit-sharing ratios or allocation of units. In addition, these agreements should adhere with the RERA’s project completion deadlines in order to prevent costly fines. Finally, the agreement should outline the methods regarding the disagreements ensuring smooth collaboration.
Step 4: Strict Adherence To Marketing:
The RERA guidelines mandates the strict adherence to the advertising and marketing in the real estate sector. The developer and landowner must ensure to state the original project details and misinterpretation about the projects are prohibited. Also, all the advertisements for the project should include the RERA registration number for enhanced credibility. Finally, the websites, brochures, and any other promotional content must align with the approval plans submitted during the registration.
Step 5: Transparency In Financial Transaction:
Financial security is the primary focus of the RERA. The joint ventures adhere to financial transaction guidelines such as separate project accounts, regular audits, and no diversion in the funds.
- In order to prevent fund mismanagement there should be a separate project account in which 70% of the fund must be deposited in a dedicated escrow account.
- It is essential to conduct regular audits and to submit the financial reports as per the RERA authority
- The funds which are specified for the project must not be used for other purposes.
Step 6: Stay Adhered To Timelines & Quality Standards:
It is essential in the joint ventures to stay aligned with the RERA’s stringent quality marks and timely delivery. The major considerations should include the quality construction, delivery on deadlines and liable to the defects.
- The use of techniques and materials should be of high-quality and approved with the project plan.
- The delay in delivery will lead to expensive penalties
- The promoters who are responsible for the project should address the structural defects for up to 5 years.
The RERA guidelines are the major framework of the real estate sector which ensures the transparency and accountability in the joint venture. By completely understanding and adhering to the RERA guidelines both the landowners and developers can build trust with buyers, overcome legal risks, and achieve a seamless process. Approach Innovative Homes the best joint venture builders in Chennai to stay compliant with RERA ensures legal protection and enhances credibility in a competitive market.