Effective Date: [16/02/2016]
Company Name: [Kal Mass Media LLP]
Website: [fractional.kalmassmedia.com]
Registered Office: [Partap Nagar, Patiala=147001]
1. Purpose
The RERA Risk Evaluation Strategy defines the framework for assessing and mitigating regulatory risks associated with fractional ownership in real estate properties in India.
Objectives:
- Ensure compliance with the Real Estate (Regulation and Development) Act, 2016 (RERA)
- Identify potential regulatory, legal, and operational risks
- Protect investors and co-owners from unforeseen liabilities
- Provide a transparent risk communication mechanism
2. Scope
This strategy applies to all properties listed for fractional ownership under the LLP, including:
- Residential properties
- Commercial properties
- Mixed-use developments
- Projects under construction or ready-to-move
It covers:
- RERA registration compliance
- Legal documentation checks
- Developer / property ownership verification
- Marketing and sales risk assessment
- Investor communication and disclosures
3. Key Risk Areas Under RERA
The LLP evaluates the following risks for each property:
| Risk Area | Description | Mitigation Measures |
|---|---|---|
| RERA Registration | Check if the project is registered with the local RERA authority. | Only list projects with valid registration or verified exemptions. |
| Title & Ownership Risk | Verify legal ownership and absence of disputes. | Obtain certified legal opinion; verify chain of ownership; use SPA agreements. |
| Project Approval | Ensure building plans and permissions comply with local authorities. | Collect sanctioned drawings, NOCs, and government approvals. |
| Developer Credibility | Evaluate developer track record and financial stability. | Conduct due diligence on past projects, delivery history, litigation history. |
| Disclosures Compliance | Ensure all marketing materials align with RERA disclosure norms. | Mandatory disclaimers; avoid exaggerated claims; internal compliance review. |
| Delay in Possession | Potential for construction or possession delays. | Include risk disclosures in Co-Ownership Agreement; avoid guaranteed timelines. |
| Investor Reporting | Risk of non-transparent financial reporting or mismanagement. | Periodic investor updates; escrow of funds if applicable; independent audit. |
| Dispute & Grievance Handling | Investor complaints regarding property or fractional unit. | Establish grievance redressal and arbitration process. |
4. Risk Assessment Procedure
- Property Verification
- Legal title checks
- Encumbrance certificate verification
- RERA registration and compliance check
- Developer / Owner Due Diligence
- Background check
- Past project delivery performance
- Litigation review
- Documentation Review
- SPA and Co-Ownership Agreement validation
- Compliance with stamp duty, registration, and local laws
- Investor Communication
- Risk disclosures in website listing
- Mandatory Risk Disclosure Statement
- Investor Suitability Declaration
- Ongoing Monitoring
- Regulatory updates from RERA
- Notifications of legal changes
- Updates to investors in case of project delay or risk emergence
5. Risk Mitigation Measures
- Legal Documentation: SPA, Co-Ownership Agreements, and risk disclaimers to protect investors and LLP
- Transparency: Full disclosure of all known risks
- Investor Education: Blog posts, FAQ, and investor declarations
- Monitoring: Regular project audits, updates, and legal compliance verification
- Escrow / Controlled Fund Management: Funds held securely and only released on compliance milestones
6. Investor Communication Protocol
- Include a RERA compliance badge for each property listing
- Clearly indicate RERA registration number
- Provide summary of risks with each fractional unit
- Require acknowledgment via Investor Suitability Declaration before purchase
- Update investors periodically on project compliance status
7. Documentation & Records
Maintain digital and physical copies of:
- RERA registration certificates
- Title and ownership verification reports
- Approvals and NOCs
- Investor acknowledgments and declarations
- Internal compliance audit reports
Records must be retained for at least 10 years or as required by law.
8. Escalation & Compliance Reporting
- Any identified RERA risk must be escalated to the LLP’s Compliance Officer
- Material non-compliance must be reported to legal counsel
- Investor updates and corrective actions must be documented
9. Periodic Review
The RERA Risk Evaluation Strategy will be reviewed annually or whenever there is:
- Change in property law or RERA regulations
- New fractional property listing
- Investor complaint or dispute
- Legal update affecting existing co-ownership units
10. Investor Acknowledgment
Investors are required to acknowledge:
- They have reviewed property RERA compliance
- They understand associated regulatory risks
- They accept the co-ownership investment under disclosed conditions
This acknowledgment is included in the Investor Suitability Declaration.