HRERA Regulations For Sale Of Apartments On The Basis Of Carpet Area

Rationale Behind Sale Based On Carpet Area

Prior to RERA, it was a common practice by builders to list their properties based on the super area to distort the homebuyers how spacious the property was. Super area of a property includes carpet area along with balconies, terrace and areas covered by wall and common areas such as lift, stairs, etc. Sale of property on the basis of super area not only gives a wrong idea about the area of the house but also decreases the per square feet cost of the house. The concept was thus introduced to recover costs suffered by the builders in constructing the common areas. It was observed that a super area clause used in builder-buyer agreement was obscure and there was ample of disparities in its definition.

But later Real Estate (Regulation and Development) Act, 2016 was enacted which casts an obligation on all the developers to sell their apartments/floors on the basis of carpet area. This step was taken after many complaints were raised by the homebuyers regarding how unfair and vague the super area clause was. RERA has now resolved the issue of vagueness and uncertainty attached with the definition of carpet area. S. 2 (k) of the act defines carpet area as "the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment." Carpet area doesn't include common areas like lift, lobby, etc.

Key Highlights Of The Haryana Real Estate Regulatory Authority, Gurugram (Sale Of Apartments/Floors In A Real Estate Project On The Basis Of Carpet Area) Regulations, 2021

1. Promoters are required to provide full disclosures regarding number, type and carpet area of property including the area of exclusive balcony or verandah and open terrace area. To ensure more transparency and clarity for the buyers, the developers of all ongoing project have to unveil the information about the size of their apartments, based on carpet area.
2. If any of these conditions are infringed by promoters, a legal action shall be instituted against the promoter which shall include revocation of registration granted under S.5 of Real Estate (Regulation and Development) Act, 2016.
3. To avoid fraud in cases where real estate units were sold prior Real Estate (Regulation and Development) Act, 2016, the promoters are required to reveal all the components which constituted super area.
4. The conveyance deed of the property shall be registered only on the basis of carpet area.
5. If any agreement for sale is found to be made except on the basis of carpet area, it would amount to fraudulent practice by the promoter.
6. A real estate agent shall be deemed to be involved in unfair trade practices if he is found selling property on super area basis and his licence may also be revoked and additionally a penalty may be imposed on him.
7. These regulations shall be applicable to the following:

        a. Projects instituted after Real Estate (Regulation and Development) Act, 2016 was enacted.

        b. Ongoing projects which were instituted before Real Estate (Regulation and Development) Act, 2016 was enacted.

        c. Projects which are exempted from registration as per provisions of section 3(2) of the Real Estate (Regulation and Development) Act, 2016.

        d. To resale of a real estate unit.

    Penalties:

    a. If a promoter sells a unit except on carpet area, he shall be liable for fraudulent practice and as a result his license shall be cancelled and the     registration granted under Section 5 of Real Estate (Regulation and Development) Act, 2016 shall also be revoked. The authority may take this     action either on receipt of a complaint or suo moto. Promoters shall also be liable for a penalty which may extent up to five percent of the     estimated cost of the real estate project as determined by the Authority under S.61 for violation of these regulations.

    b. Non-compliance for these regulations by real estate agent would be treated as unfair trade practice under Section 10 of the Real Estate     (Regulation and Development) Act, 2016 and the registration of such real estate agent shall be revoked as per provisions of section 9(7) of the Act.

Thus, any sale of real estate project except on carpet area basis after enactment of Real Estate (Regulation and Development) Act, 2016 shall be deemed as null and void.

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