The Vital Role of Chartered Accountants under the RERA Act, 2016

Table of Contents

1. Introduction
2. Certification
3. Auditing
4. Representation
5. Due Diligence
6. Legal Practice
7. Documentation
8. Conclusion

1. Introduction

Real Estate Regulation and Development (RERA) Act, 2016, was introduced to safeguard public interest with regard to real estate sector. As a part of the same, a lot of faith and trust has been put on the professionals like Architects, Chartered Accountants (CAs) and Engineers, thereby assigning different roles to them. Every section under this Act has some role to play, especially for a CA. Infact, this Act itself has been developed and prepared in consultation with many Chartered Accountants. A gist of some of those roles played by a CA under this Act has been provided herewith.

2. Certification

The first step to be followed by any developer before initiation of a real estate project is the registration of the project with the Regulatory Authority. Whether it is an ongoing or a new project, a certificate from the CA is mandatory. Without a CA certificate, the promoter cannot proceed.

Once the project is registered, the developer gets money from the customers and the same is deposited in a separate account known as RERA Designated Account in which at least 70% money needs to be maintained. Now, if the developer needs to withdraw this money from the said account to meet project related expenses, a CA certificate is required for the same.

3. Auditing

The core activity of a CA being accounts and audit, another CA is required for auditing under RERA. It would include verifying the accounts and also the money withdrawn from a designated account which has been certified by other CA, whether it is in terms of the Act or Rules and Regulations as prescribed. Thus, one project would need two separate CAs, one for the certification of withdrawal and another for auditing purpose.

CA providing certification under RERA cannot perform the audit under RERA, as the CA providing certification becomes a representative of the management and thus, both need to be two distinct individuals.

4. Representation

A CA can represent his/her clients before the Real Estate Regulatory Authority, the Adjudicating Officer and the Appellate Tribunal for any issues arising at any stage of the Real Estate Project.

5. Due Diligence

Any client who is going to a CA for filing his/her return of income and he/she wants to take a housing loan, wants to work out the capital gain, wants to check up the details regarding a property can take the advice from a CA. The due diligence report of the promoter/project can be given by a CA. Earlier, this role could be performed only by the Advocates. Now, since all the records regarding a project shall be kept online, a CA can guide the customer regarding the due diligence of the whole project.

6. Legal Practice

Having purchased a property with the builder, there are chances of various litigations in the whole process. Accordingly, a CA can file a petition on behalf of customer/real estate agent/builder/land-owner/contractor/financer or anybody who has a grievance related to the real estate project, before RERA in case of any discrepancy.

7. Documentation

Various documentation is required to be done under RERA viz, Agreement for Sale, Development Agreement, Stamp Duty, Registration, Project Report, Sale Deed, Withdrawal Certificate and these documents can be prepared by a CA.

8. Conclusion

Thus, RERA has offered many opportunities of work for Chartered Accountants owing to the extensive compliances required under this Act. Compliance being the most lucrative exercise for young CAs, RERA Consultancy is seen as an attractive field to be pursued as a career.