Consumer Connect: ‘The MOFA Amendment Deserves To Be Scrapped,’ Says Expert

Consumer Connect: ‘The MOFA Amendment Deserves To Be Scrapped,’ Says Expert

Advocate Shirish Deshpande is chairman, Mumbai Grahak Panchayat. Queries may be sent to shirish50@yahoo.com

FPJ News ServiceUpdated: Monday, July 08, 2024, 10:02 AM IST
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Consumer Connect | FPJ

Q. Is it true that the government has proposed to amend MOFA to provide protection to real estate projects not registered with MahaRERA? Why is MahaRERA not entertaining complaints from buyers of unregistered projects?

Abhay Datar, Girgaon

A. It is true that the government has proposed to amend the Maharashtra Ownership of Flats Act (MOFA) with a view to provide protection to homebuyers in projects not registered with MahaRERA. The intention behind such an amendment appears to be to protect interest of homebuyers from small projects that are exempted from registration with MahaRERA.

As per Sec 3(2)(a) of RERA, projects with plot not exceeding 500 square metres, or the number of apartments not exceeding eight, are exempted from registration. However, these small projects are not exempted from the purview of the RERA Act. Although the intention behind proposing such amendments appears to be good, it is based on misinterpretation of certain RERA provisions.

The government and MahaRERA authorities are under the wrong impression that small projects that are exempted from RERA registration are also exempted from the purview of the RERA Act. This, in my opinion, is not true. There’s no provision in RERA that expressly or even by remote implication indicates that projects that are exempted from RERA registration are also exempted from the purview of the RERA Act. Hence, any amendment in MOFA based on misconception of RERA provisions will be bad in law and would be liable to be struck down by the court.

In my opinion, the government’s action to amend MOFA would be highly discriminatory. To give a few examples: A homebuyer in RERAregistered project would be entitled to get five years’ defect liability guarantee from the developer, whereas homebuyers who are proposed to be covered under MOFA would be entitled to only three years’ defect liability guarantee. Developers under RERA-registered projects cannot charge interest to homebuyers at the rate more than MCLR + 2%, whereas MOFA has not prescribed any such cap on interest to be charged to buyers for late payments. Hence developers under MOFA will now be free to start charging 18% to 24% interest for delayed payment, if this proposed amendment is approved by the legislature.

RERA mandates the developer to pay interest to the homebuyers at MCLR + 2% pa on the amounts paid by the homebuyer in case there is a delay in giving possession and the homebuyer still wanting to continue in the project. MOFA does not have such provision. There are many such salutary provisions in RERA which are not found in MOFA. And the government has not proposed to incorporate any such provisions in MOFA in the proposed amendment. Thus, the proposed amendment is going to be highly discriminatory and I have my own good doubts if such a discriminatory amendment will stand scrutiny in a court of law. Mere exemption from mandatory registration does not mean that such projects are exempted from purview of RERA itself, unless such provision is expressly provided in the Act. RERA does not have any such provision. However, it is also true that MahaRERA SOP for complaints specifically provides that MahaRERA will not provide complaints from projects not registered with RERA.

The Mumbai Grahak Panchayat has recently written to the MahaRERA chairman to modify these SOPs and entertain complaints even from projects that are exempted from RERA registration. I, therefore, do hope that the government will reconsider its decision and drop the proposal to amend MOFA to apply for projects not registered with RERA. And even MahaRERA will amend its SOP to entertain complaints from small projects exempted from registration.

Advocate Shirish V Deshpande, chairman, Mumbai Grahak Panchayat Email: shirish50@yahoo.com

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