Bombay HC Enforces Real Estate Transparency: MahaRERA and Local Authorities to Integrate

Introduction

The Bombay High Court has made a significant step forward towards transparency and homebuyer protection for the State of Maharashtra in directing the State government to ensure compliance with its 2023 circular. It mandated the need for a draft policy linking local authorities with Maharashtra Real Estate Regulatory Authority (MahaRERA) to ensure accountability in issuing and publishing commencement certificates (CC) and occupation certificates (OC).

The decision is in line with the prevailing trend of the court to curb fraudulent practices and provide protection to homebuyers, resulting in a robust regime for protecting consumers of real estate," said Naresh Sethi, Senior Advocate, in plea filed by individual buyers against Nirmal Lifestyle.

The Need for Enhanced Real Estate Transparency

1. Addressing Gaps in Verification  

The court’s directive stems from the lack of coordination between MahaRERA and local authorities, leading to instances of fraudulent documentation in real estate registrations. A public interest litigation (PIL) highlighted issues like forged commencement certificates and sanctioned plans, underscoring the urgency of regulatory reforms.  

2. Protecting Homebuyers  

Homebuyers often bear the brunt of regulatory loopholes. Delayed projects, incomplete documentation, and fraudulent practices harm their interests. The Bombay HC’s order aims to mitigate these risks by ensuring stricter verification processes and real-time transparency.  

Key Highlights of the Bombay HC’s Directives  

Integration of MahaRERA and Local Authorities  

- Municipal corporations, municipalities, and urban local bodies must link their websites with the MahaRERA portal within three months.  

- This integration ensures real-time verification of certificates submitted during project registrations under Section 4 of the RERA Act.  

- Until integration is complete, local authorities must upload CCs and OCs on their websites within 48 hours of issuance.  

Building Plan Management System (BPMS) Integration  

- The state’s BPMS will also be linked to MahaRERA’s platform, further enhancing oversight.  

- Developers must submit verified commencement certificates for project registration, starting June 19, 2023.  

Significance of the Court’s Decision  

1. Mitigating Fraudulent Practices  

The court's order addresses fraudulent practices such as forged documentation in project registrations. For example, MahaRERA revoked the registration of a project by M/s Sai Builders and Developers in 2021 after discovering forged CCs.  

2. Strengthening Regulatory Mechanisms  

By mandating periodic monitoring of compliance, the court ensures the integrity of project documentation and enhances accountability among developers.  

3. Collaboration for Real-Time Transparency  

The directive encourages inter-agency collaboration, with MahaRERA urging the state government to establish a centralized digital platform for document verification.  

Steps Towards Compliance 

1. Role of Local Authorities  

Local bodies must ensure prompt uploading of CCs and OCs on their websites and integrate their systems with MahaRERA. This step is crucial for validating certificates during project registration.  

2. MahaRERA’s Initiatives  

- Verification of all commencement certificates submitted by developers.  

- Revoking or suspending registrations obtained through fraud or misrepresentation.  

- Freezing accounts linked to fraudulent projects to protect buyers.  

3. Developer Accountability  

Developers must adhere to stricter standards for documentation and registration, ensuring transparency at every stage of the project lifecycle.  

Implications for the Real Estate Sector 

For Homebuyers  

- Enhanced transparency builds trust, encouraging more investments in the real estate market.  

- Reduced risk of falling prey to fraudulent practices.  

For Developers 

- Stricter compliance requirements will enhance credibility and attract discerning buyers.  

- Adherence to standardized procedures will streamline project approvals.  

For the Industry

- Improved regulatory oversight strengthens the sector’s integrity, making it more attractive for stakeholders.  

Case Study: Sai Builders & Developers  

The PIL cited the case of M/s Sai Builders & Developers in Kalyan-Dombivli, which registered a project in 2020 using forged commencement certificates. MahaRERA revoked the registration in 2021, froze related accounts, and initiated proceedings against 64 other projects with fraudulent documentation.  

This case highlights the need for stricter verification processes and inter-agency collaboration, as emphasized by the court’s directives.  

Challenges in Implementation 

1. Coordinating Across Agencies  

Integrating multiple systems and ensuring seamless collaboration between MahaRERA and local authorities may pose logistical challenges.  

2. Ensuring Compliance  

Monitoring compliance with the court’s directives requires robust mechanisms and periodic audits.  

3. Educating Stakeholders  

Developers, local authorities, and buyers must be educated about the new procedures to ensure smooth implementation.  

The Road Ahead  

Real-Time Verification  

The integration of MahaRERA with local authorities and BPMS will enable real-time verification of project documentation, reducing instances of fraud.  

2. Continued Oversight  

Periodic monitoring and audits will ensure sustained compliance with the court’s directives.  

3. Strengthened Trust in the Market  

With enhanced transparency, the real estate sector is poised to attract more investments and regain buyer confidence.  

Conclusion  

MahaRERA merger with local authorities bares intent of Bombay High Court to bring real estate transparency in Maharashtra. The court order creates a foundation for a more accountable and stronger real estate industry by closing loopholes in verification, protecting homebuyers, and encouraging cooperation between agencies.

With the focus on implementation of the 2023 circular based on Trust, Fraud Management and a level regulatory framework — will be beneficial for the entire ecosystem.