TNRERA Rejects Complaint: Person in Joint Venture with Developer Not a Homebuyer
The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has dismissed a complaint, ruling that a person involved in a joint venture agreement with a developer is not a homebuyer. The complainant had sought damages and compensation for delays and mental d
TnreraJoint Venture AgreementHomebuyerReal EstateDeveloperReal Estate NewsOct 06, 2024
Facts
The complainant is the owner of a flat in a project named 'Uthra Flats,' situated in Madipakkam, Chennai. The project has a total area of 4800 sq. ft. When the apartment building became old, all the owners decided to demolish it and construct a new building through a common developer under a joint venture scheme.
The respondent was selected as the developer with an agreed share ratio of 60% for the owners and 40% for the developer. However, without the owners' consent, the developer entered into a Joint Development Agreement with a changed ratio of 56% for the owners and 44% for the developer.
Initially, the complainant was allotted a flat with a built-up area of 666 sq. ft. and 273 sq. ft. of UDS (Undivided Share) land. Given that the complainant had provided a larger extent of 302 sq. ft., he requested the developer to allot additional built-up area. On 10.02.2021, the complainant paid Rs. 10,80,000 towards the sale consideration for an additional built-up area of 180 sq. ft. and UDS of land.
Despite this payment, the developer did not start the construction work, which was due from December 2019, when the apartment was handed over for work. To expedite the work, all the flat owners executed a General Power of Attorney in favor of the developer on 03.07.2021. However, the construction work proceeded very slowly.
Observation and Direction by Authority
To determine whether the complaint was maintainable, the authority referred to Section 3 and Section 2(zk) of the Real Estate (Regulation & Development) Act, 2016.
Section 3 Prior Registration of Real Estate Project
- No registration of the real estate project shall be required where the area of land proposed to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases.
- The appropriate government may reduce the threshold below 500 square meters or eight apartments, if necessary.
The authority held that since the total extent of the project is 4800 sq. ft., which is less than 500 sq. meters as prescribed under Section 3(2) of RERA, 2016, the project is not required to be registered under the authority.
Section 2(zk) Promoter
- A person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees.
The authority held that the respondent was only responsible for constructing the flats and acted as a builder, not a promoter. Instead of paying the landowner in cash, the respondent provided apartments as consideration, which were built at the developer's own expense. Therefore, under Section 2(zk), the respondent is not a promoter.
Additionally, the authority held that the complainant is not an allottee or homebuyer but is involved in a joint venture arrangement. Consequently, the authority rejected the complaint.
Case Details
- Case M. Marudhachalam Vs M/s. Harish Builders
- Citation S.R.No. 41 of 2024
- Order Date 25.09.2024
In conclusion, the TNRERA has ruled that the person involved in the joint venture agreement with the developer is not a homebuyer, and the developer is not a promoter under the RERA Act. Therefore, the complaint was dismissed.
Frequently Asked Questions
What is the role of TNRERA in regulating real estate projects?
The Tamil Nadu Real Estate Regulatory Authority (TNRERA) is responsible for regulating real estate projects in Tamil Nadu. It ensures that developers adhere to the Real Estate (Regulation & Development) Act, 2016, and protects the interests of homebuyers.
Why was the complaint dismissed?
The complaint was dismissed because the person involved in the joint venture agreement with the developer is not considered a homebuyer under the RERA Act. The developer is also not a promoter, but a builder.
What are the criteria for a project to be exempt from RERA registration?
A project is exempt from RERA registration if the area of land proposed to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases.
What is the difference between a promoter and a builder in the context of real estate?
A promoter constructs or causes to be constructed an independent building or a building consisting of apartments, for the purpose of selling all or some of the apartments to other persons. A builder, on the other hand, is responsible for the construction but may not be involved in the sale or promotion of the property.
How does a joint venture agreement affect the rights of property owners?
A joint venture agreement typically involves property owners and developers agreeing on a share ratio for the new construction. Property owners are not considered homebuyers under RERA if they are part of such an agreement, and their rights are governed by the terms of the joint venture agreement.
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