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Approvals & Compliances in Real Estate

Gurmeet Singh - November 14, 2021 - - 0 |
Approvals & Compliances in Real Estate

When I look at the well planned and unparalleled townships, magnificent and luxury group housing setups, impressive commercial projects, their breath-taking architecture and perfect locations, I truly am fascinated and wish to live or invest in one such projects. All such features are enough to allure me, and thrust upon me to make an emotional decision and invest my hard-earned money therein.

But is it wise to do so?

The prime question that should cross my mind is whether the project is legal?

Only by looking at such engineering marvels should I invest in my dream house. Has the developer fulfilled the necessary compliances?

A project is considered legal, once its developer possesses completion/occupancy certificate; and for an under-construction project, all sanctioned layout and building plans along-with other approvals.

Now, before investing in such a project, a buyer should know the invisible part of it i.e. whether the Approvals, Sanctions, and Clearances of the project are in place or not.

And a developer should know all about the cardinal compliances, and have them in place before commencement and after completion of a project. Quite often the developers themselves are unaware of compliances and existing acts that regulate the Real Estate Sector. But not knowing is not an excuse. The famous latin term used in judicial language “Ignorrantia juris non excusat,” which means “Ignorance of the law is no excuse,” is apt in this regard.

There are numerous Laws and Acts applicable to the Real Estate Sector and it is mandatory for developers to get these necessary approvals, NOCs and clearances as per these Acts and Laws. I have listed a few Acts below, but this list is not comprehensive.

Real Estate Developers have to comply with the following Acts:

  • Environment Protection Act 1986 as amended
  • Forest Conservation Act 1980
  • Air (Prevention & Control of Pollution) Act 1974 as amended
  • Water (Prevention & Control of Pollution) Act 1981 amended
  • Noise Pollution (Regulation & Control) Rules 2000
  • The Real Estate (Regulation and Development) Act, 2016 (RERA)
  • The Registration Act, 1908
  • The Transfer of Property Act, 1882
  • Land Acquisition Act, 2013
  • The Indian Contract Act, 1872 2.
  • The Transfer of Property Act, 1882
  • The Indian Easements Act, 1882
  • The Indian Stamp Act, 1899
  • The Income tax Act 1961
  • Local body laws relating to Property Tax

One should not forget to adhere to the applicable Labour Laws, Provident Fund and Employees State Insurance Acts as well.

There is a plethora of approvals, clearances and sanctions required according to above mentioned Acts, depending on the area/built-up area of the project. On an average 50 to 60 approvals/NOCs/clearances are to be obtained. In addition, terms and conditions mentioned therein have to be adhered to.

Environment Impact Assessment:

The Environment Protection Act 1986 as amended states that the EIA Clearance is mandatory for various projects which impact the nature and its surroundings. The Real Estate construction projects and townships with certain area/built-up area are required to take permission from the Ministry of Environment and Forests before commencement of any construction. In this case one must take advice of a reputed environment consultant.

To apply for an EIA Clearance, the project proponent has to duly fill the prescribed form and obtain several NOCs and Clearances.

Note: Most of the NOCs that are mandatory for EIA Clearance, are also binding for all other construction projects that do not come under the ambit of Environment Protection Act 1986.

In most of the cases the compliance process involves a lot of visits to various departments, although many of them have started online application process.

The name of the concerned Central, State and other authorities along-with the required NOCs, clearances are as follows:

1) State Pollution Control Board

NOC “Consent to Establish” and subsequently “Consent to Operate” under Air & Water Acts and all the conditions laid down

2) Local Government Office/Development Authority of the concerned Area

‘NOC’ for Starting the Project in the concerned area/locality from Local Municipal Committee/Panchayat.

3) State Fire Department

NOC Fire Safety

4) Ministry of Defense Airports Authority of India

‘NOC’ Height Clearance

5) Survey of Ind

Obtain Coordinates of the Project Site

6) Regional Office MoEF Forest Department

Approval from the Regional Office of the Union Ministry of Environment & Forests, Govt. of India for the right of way for approach road to the Construction Project in question under the Forest (Conservation) Act, 1980, if any forest land is involved in the approach road to the Project.

7) Chief Controller of Explosives

Approval from Chief Controller of Explosive for keeping the diesel in storage during construction stage and operational phase, if applicable.

8) State Mining Department

Approval from Mining Department of the State Govt. for excavation of basements in the Project, if applicable.

9) National Highway Authority of India

Approval from the National Highway Authority of India (NHAI) for the approach road to the Project, if applicable.

10) State PWD Department

Approval from the State PWD department for the approach road to the Project if project abutting the State highway.

11) Central Ground Water Control Board
As per the Ground water (Management and Regulation) Act 2019 NOC from the Central Ground Water Board for running of bore wells in the project.

12) Local Bodies Office Water connection
If the developer plans to dig his own bore well, he needs to take the permission from the central ground water authority, especially so, in coastal areas.

13) Local Bodies Department/Urban Development Authority of the State

  • Layout & Zoning Plan Approval
  • Building Plan Approval
  • Developer Registration Certificate
  • Site Office Approval
  • Lift installationOperation
  • Completion Certificate
  • Occupancy certificate (OC)

14) Revenue Department/Sub Registrar Office
Authentic land ownership documents showing ownership of the land in the name of applicant.

Latest Revenue Documents i.e., Tatima, Latest Jamabandi, Non-Encumbrances Certificate and Shajra Plan

15) Real Estate Regulatory Authority

After getting required approvals, to obtain RERA registration in mandatory if the project exceeding 500 sq. meters or having more than eight apartments.

The authority ensures that a developer delivers what he promised to buyers as mentioned in the sale agreement, including adherence to the completion schedule.

  • RERA Registration Number

Please note:  Non-compliance of RERA Act attracts huge penalty and imprisonment.

16) Coastal Zone Management Authority

If the developer’s project is in close proximity to the sea, he has to take approval from Coastal Zone Management Authority because construction is not allowed up to 500 meters from the coast

 

Compliance with the Terms and Conditions:

Generally, with each approval a list of terms and conditions are mentioned. A developer has to fulfil them within the prescribed period before, during or after the construction.

Renewals and extensions:

Normally the approvals and Licenses are valid for a prescribed period. Timely renewal is advised to save late fee or penalty therefore one must start renewal process well in advance.

Suggestions to Speed up and streamlining the approvals Process:

The Real Estate approval process involves a lot of documentation, from Central, State and Local government departments. This makes the process cumbersome, especially because of complicated and at times bewildering processes necessitated. In this era of information technology, one should leverage technology and expedite the approvals process:

  • IT enabled Single Window System and introduction of UAN (Unique Account Number). This can link multiple departments i.e. Central, State and Local body office. A project should be allotted a UAN (Universal Account Number) so that any government department can check the related project file online, and assess the case. It will reduce a lot of paperwork, spare the visits to the departments and speed up the case.
  • Improve transparency by uploading policies and procedures on the Website.
  • Mandatory e-payment calculation system to prevent the corrupt practices and manual fee calculation errors.

The CREDAI and representatives of other Real Estate associations have been demanding a Single Window System for the last 15 years. But due to technical challenges and vested interests this has been not implemented.

The Real Estate Sector is one of the main contributors to India’s GDP. If developer friendly systems are introduced, this sector is bound to attract huge investments and contribute to direct and indirect employment, as well as generate revenue for the Central and State governments.

On a concluding note, I would like to convey that, a developer/builder should adhere to the necessary compliances, and should not indulge in illegal practices to increase profits. The cases of Campa Cola Towers, Adarsh Housing Society, Mumbai are well-known to us. They flouted every rule and ignored necessary compliances.

But in the end, they had to adhere to the rules strictly.

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