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EFFECTS OF REVOCATION OF PROJECT ON BUILDER / DEVELOPER


 

If RERA revokes  registration of a project, what effects will it have on the builder/ developer?

When the registration of a builder/developer is revoked by the Real Estate Regulatory Authority (RERA), it can have significant consequences for the builder/developer and their real estate projects. Here are some effects that revocation of registration can have:

1.    Inability to Sell or Market Units: Once the registration is revoked, the builder/developer loses the authority to advertise, market, or sell any units in the project. They are prohibited from engaging in any promotional activities related to the project.

2.    Legal Consequences: Revocation of registration may lead to legal proceedings against the builder/developer. Homebuyers or affected parties may initiate legal action seeking compensation, refunds, or other remedies for the violations or non-compliance that led to the revocation.

3.    Project Stagnation or Suspension: Revocation of registration can result in project stagnation or suspension. The builder/developer may be unable to continue construction or development activities until the registration is reinstated or until alternative measures are taken to address the situation.

4.    Loss of Trust and Reputation: Revocation of registration can severely impact the builder/developer's reputation and credibility in the real estate market. It can lead to a loss of trust among potential buyers, financiers, and other stakeholders, making it difficult for the builder/developer to secure future projects or investments.

5.    Penalties and Fines: Revocation of registration may be accompanied by penalties and fines imposed by the regulatory authority for the violations or non-compliance. The builder/developer may be required to pay these penalties, which can have a financial impact on their operations.

6.    Obligation to Refund Buyers: If the revocation is due to project non-completion or other violations affecting buyers' interests, the builder/developer may be obligated to refund the amounts paid by homebuyers along with appropriate interest as per the RERA regulations. This can create financial burdens and liabilities for the builder/developer.

It is important to note that the specific effects of revocation may vary depending on the circumstances, the state's RERA regulations, and any additional actions or measures taken by the regulatory authority. Each state has its own rules and procedures for handling revocation cases. Builders/developers should consult legal professionals and adhere to the regulatory authority's instructions in such situations to mitigate the consequences effectively.

ADV LEENA KAULGEKAR

 

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