RERA ON LEASE AGREEMENTS

The Bombay High Court while deciding the case of Lavasa Corporation that is developed under the township project in the Pune stated that RERA needs to apply for the cases based on the long-term agreements.

The court has held that RERA applies to the said case wherein the citizens are seeking compensation due to the delay in having 3 flats in Lavasa Township as they have paid more than 80% of the purchase price to the builder and the project is yet to be completed.

Lavasa Corporation filed the appeals challenging the orders that have been passed by Maharashtra RERA Appellate Tribunal this year. Under the RERA Act, minimum of 70% of buyers’ money is kept in a separate account. Money is the said account is to be used by the builders to easily enable the construction on the land that is related.

The appeal of Lavasa Corporation was aimed at claiming relief on the ground that neither the provisions of RERA apply in the case of Lease Agreements nor does the definition of 'promoter' include the term 'lessor' under the Act.

The argument of Lavasa Corporation was regarding the relationship of the company with the persons that "lessor and lessee". Their main contention was that there has been no sale or transfer of title of Apartments.

The High Court stated that the legislative intent could not be excluded based on the argument on long-term lease as it would defeat the purpose of the law. The execution of Lease Agreements by the developers is an act to conveniently escape the clutches of the Act's provisions. 

The main objective of RERA is to ensure accountability and to provide comprehensive, speedy remedy and effectiveness to the aggrieved persons.

The HC considered the fact that 80% of the purchase price has already been paid which amounts to sale of the apartment. The Bombay High Court ultimately ruled that the provisions of Maharashtra Real Estate Regulatory Authority shall apply to the long-term lease agreements and that the Authority has its jurisdiction in such matters.

The court further held that 3 people in the particular cases can avail the remedy that is provided under section 18 of the Act to seek the refund alongwith interest and compensation.