Obligations of promoter in case of transfer of project to third party

Obligations of promoter in case of transfer of project to third party
  • General
  • Thursday 5th September 2019
  • Author: Shreya Uppal

Highlights

  • When an act comes into force although the main intention needs to be focussed but it cannot do injustice to any of the party involved

  • Therefore, to support the promoters in any future circumstance a section has been introduced, namely, Section 15 of the RERA Act, 2016 which permits any promoter to transfer his real estate project to a third party subject to certain conditions.

  • the intending promoter shall be liable to the consequences of breach.

We all are living with 1 misconception that the RERA Act, 2016 has been purely made with an intention to benefit the homebuyers only. However, the above statement has its exceptions too. When an act comes into force although the main intention needs to be focussed but it cannot do injustice to any of the party involved. Therefore, to support the promoters in any future circumstance a section has been introduced, namely, Section 15 of the RERA Act, 2016 which permits any promoter to transfer his real estate project to a third party subject to certain conditions.

1. As per Section 15 of the RERA Act, 2016, without obtaining the prior written consent from 2/3rd allottees and prior written approval of the RERA Authority, the promoter cannot transfer or assign his majority rights and liabilities in the respect of a real estate project to a third party.

2. According to the proviso to section 15(1) of the RERA Act, 2016, the above
transfer or assignment to the third party shall not have any effect over the allotment or sale of the plots made by the former (previous) promoter.

3. The section has clearly clarified that irrespective of the no. of apartments booked by a person in his name or his family or associated entities, he shall be treated as 1
allottee.

4. As per Section 15(2) of the RERA Act, 2016, the
intending (new) promoter shall be required to independently comply with all the pending obligations under the Act and pending obligations as per the agreement for sale entered into by the former promoter with the allottees.

5. Even though the right to transfer has been given by the act but it is not allowing any benefit relating to it in the
extension period. Therefore the transfer shall not result in the extension of time to the intending promoter to complete the project and he shall be required to comply with all the pending obligations.

6. In case of any default occurred after the transfer, the intending promoter shall be liable to the consequences of breach or delay under this Act.

Therefore, choose wisely before investing in any project and the developers must be aware of their rights and obligations.

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