Haryana RERA Warns Real Estate Promoters: Submit Annual Reports in 30 Days or Face ₹5 Lakh Fine
The Haryana Real Estate Regulatory Authority (H-RERA), Gurugram, has issued a firm warning to real estate promoters to adhere to mandatory compliance requirements under the Real Estate (Regulation and Development) Act, 2016 (RERA). The authority has set a 30-day deadline for promoters to submit their annual project reports. Failing to meet the deadline will result in a penalty of ₹5 lakh, with further stringent penalties for continued non-compliance.
This move is part of H-RERA’s ongoing efforts to strengthen accountability and transparency within the real estate sector, ensuring better protection for homebuyers and the efficient use of funds.
The Legal Mandate: What Promoters Must Do
Under Section 4(2)(l)(d) of the RERA Act, 2016, real estate promoters are obligated to submit an annual audit report for each ongoing project. The report must include:
- A statement of accounts prepared by a chartered accountant (CA).
- Verification that funds collected from allottees have been utilized solely for the specific project they were collected for.
- Assurance that the proportion of funds withdrawn aligns with the progress of construction work.
This requirement aims to ensure that project finances are managed transparently and to prevent diversion of funds to other ventures or personal gains. It also helps identify any financial irregularities that could delay project completion.
H-RERA’s Warning and Penalties
Promoters now face an immediate deadline of 30 days to submit their reports. The authority has clarified that failure to comply will result in the following consequences:
1. Initial Penalty of ₹5 Lakh
If the reports are not submitted within the stipulated 30-day window, a penalty of ₹5 lakh will be levied on the promoters.
2. Escalating Fines for Prolonged Non-Compliance
For promoters failing to act within 60 days of the notice, a daily penalty of ₹10,000 will be charged until the reports are submitted.
3. Severe Action for Persistent Violations
H-RERA has warned that deliberate non-compliance or submission of false reports will invite penalties up to 5% of the estimated project cost, as prescribed under Section 61 of the RERA Act. For larger projects, this penalty could amount to crores of rupees.
Rising Concerns over Non-Compliance
H-RERA’s strict directive comes in response to widespread non-compliance by developers in the state. During a recent review meeting, the authority observed that a significant number of promoters have not been submitting their annual reports as mandated by law.
Non-compliance undermines the regulatory framework established under RERA, leaving home buyers vulnerable to project delays and financial misuse. Moreover, it compromises transparency in fund utilization, often resulting in stalled construction and disputes between developers and buyers.
By enforcing stricter penalties, H-RERA aims to send a clear message to the real estate sector: accountability is non-negotiable.
Impact on the Real Estate Sector
For Homebuyers
The lack of timely financial audits has long been a pain point for homebuyers, who often bear the brunt of delays caused by mismanagement of funds. H-RERA’s move will help restore trust in the sector by:
- Ensuring that project finances are properly utilized.
- Accelerating project timelines by holding developers accountable.
- Reducing the risk of financial fraud or fund diversion.
For Promoters
The directive puts significant pressure on developers to streamline their operations and maintain meticulous financial records. While this may initially seem burdensome, it ultimately fosters better governance and credibility for compliant promoters. Those failing to comply, however, risk substantial financial penalties and reputational damage.
For the Industry at Large
H-RERA’s stringent enforcement of compliance requirements reflects a broader trend of tightening regulations in the real estate sector. This aligns with the government’s efforts to make the sector more buyer-friendly and reduce the number of incomplete or abandoned projects.
Challenges for Promoters
While the directive has been welcomed by homebuyers, some developers argue that complying with the financial audit requirements can be challenging due to:
- Complexity of Financial Management: Large-scale projects often involve multiple stakeholders, making it difficult to isolate funds for specific projects.
- Lack of Expertise: Smaller developers may lack the financial expertise or resources needed to comply with stringent audit requirements.
- Delays in Regulatory Approvals: Delays in obtaining approvals from other government bodies can hinder project progress, affecting the financial reporting process.
Despite these challenges, H-RERA maintains that promoters must comply with the law to safeguard buyers’ interests.
Broader Implications of Non-Compliance
The penalties outlined by H-RERA are not just financial; they carry significant operational and reputational risks for promoters. Non-compliance could lead to:
- Project Delays: Authorities may halt construction activities until compliance is achieved.
- Legal Proceedings: Persistent violations could lead to legal action, further delaying project timelines.
- Loss of Credibility: Developers failing to comply with RERA regulations risk losing the trust of homebuyers and investors.
Way Forward
H-RERA’s warning to real estate promoters marks a decisive step toward enforcing stricter compliance within the real estate sector. By mandating the timely submission of annual reports, the authority aims to enhance transparency, protect homebuyers, and promote responsible financial management.
For developers, this is a wake-up call to prioritize accountability and align their practices with RERA guidelines. For buyers, it is a reassurance that their interests are being safeguarded.
As H-RERA tightens its grip on non-compliance, the industry must adapt to the new standards of transparency and accountability, paving the way for a more robust and trustworthy real estate sector.
Image source- hareraggm.gov.in
