Real Estate Regulatory Authority.
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The Parliament of India passed the Real Estate (Regulation and Development) Act, 2016 to establish an authority that can protect home buyers and ensure that the sale of real estate properties goes smoothly.
You can interpret RERA in two ways-
- Real Estate Regulatory Authority, and
- Real Estate (Regulation and Development) Act, 2016
The real Estate Regulatory Authority is the authority whose work is to:
⦁ Protect the interests of both the home buyers and the promoters and promoters
⦁ Regulation and promotion of the real estate sector.
⦁ Ensure that the sale of the plot, apartment, or building or sale of a real estate project proceeds efficiently and effectively.
⦁ Establish an adjudicating mechanism for speedy dispute redressal of the complaints raised by the home buyers.
Below are the salient features of the RERA Act, 2016 in brief
⦁ RERA was established to enhance accountability and transparency with respect to housing transactions and real estate. Here are the salient features of this Act.
⦁ Establishment of Real Estate Regulatory Authority in every Indian state in order to monitor as well as adjudicate and arbitrate any disputes with respect to real estate 1 projects in the concerned state.
⦁ Establishment of a fast-track mechanism for settlement of disputes. This will be done via an appellate tribunal and dedicated adjudicating officers.
⦁ All real estate projects must be registered with RERA so that the authority will have jurisdiction over the projects. The registration of a particular project can be rejected by the authority if guidelines have not been adhered to.
⦁ In case a promoter wishes to transfer or assign a majority of your rights and liabilities in a real estate project to a third party, written consent from two-thirds of the allottees will be needed in addition of the written approval of RERA.
⦁ If there is any default from the side of the buyer or promoter, both will be liable to pay an equal rate of interest.
⦁ If the promoter causes any losses to the buyer due to other people laying claim to property (defective title of land) which is under construction or has been constructed,
the promoter will have to compensate the buyer. There is no limitation provided by any law currently with respect to the compensation amount.
⦁ If a person has any problems regarding violation of the provisions or rules of this Act by a promoter, buyer, or an agent, they can file a complaint with RERA.
⦁ While an enquiry is taking place, RERA can stop an agent, promoter, or buyer from continuing any activity against which a complaint has been raised.
⦁ If any of RERA’s decisions regarding a complaint is not satisfactory, the aggrieved party can submit an appeal before the Appellate Tribunal.
⦁ If the promoter fails to follow RERA’s orders, they will have to pay a penalty. This amount could be up to 5% of the evaluated cost of the property.
⦁ If the Appellate Tribunal’s orders are not complied with, a penalty will have to be paid. This can either be imprisonment for up to 3 years or a fine (up to 10% of the approximate cost of the project), or both.
⦁ If a company commits an offence under this ACT, any person who was in charge of the business at the time of the offence being committed and the company will be held guilty and will be punished.
⦁ No civil court will have any jurisdiction with respect to any matter that comes under RERA or the Appellate Tribunal’s jurisdiction. As such, no court can grant an injunction 2 with regards to any action taken by RERA or the Tribunal.
Benefits of RERA
RERA has a number of benefits for the buyer, the promoter, and the real estate agent. These include:
Standardisation of carpet area: Before RERA the manner by which a builder calculated the price of a project wasn’t defined. However, with RERA there is now a standard formula that is used to calculate carpet area. This way, promoters cannot provide inflated carpet areas to increase prices.
Reducing the risk of insolvency of the builder: Most promoters and developers tend to have multiple projects being developed at the same time. Earlier, developers were allowed to move funds raised from one project to that of another. This is not possible with RERA since 70% of the
funds raised need to be deposited in a separate bank account. These funds can be withdrawn only after certification by an engineer, a chartered accountant, and an architect.
Advance payment: As per the rules, a builder cannot take more than 10% of the cost of the project from the buyer as advance or application fees. This saves the buyer from having to source funds fast and having to pay a large amount.
Rights to the buyer in case of any defects: Within 5 years of possession, if there is any structural defects or problems in quality, the builder has to rectify these damages within 30 days at no cost to the buyer.
Interest to be paid in case of default: Prior to RERA, if the promoter delayed possession of the property, the interest paid to the buyer was much lower than if the buyer delayed payments to the promoter. This has changed with RERA and both parties have to pay the same amount of interest.
Buyer’s rights in case of false promises: If there is a mismatch in terms of what was promised by the builder and what has been delivered, the buyer is entitled to a full refund of the amount that was paid as advance. At times, the builder may have to provide interest on the amount as well.
If defect in title: If at the time of possession, the buyer discovers that there is a defect in the title of the property, the buyer can claim compensation from the promotor. There is no limit to this amount.
Right to information: The buyer has the right to know all the information about the project. This includes plans related to layout, execution, and completion status.
Grievance Redressal: If the buyer, the promoter, or the agent has any complaints with respect 3 to the project, they can file a complaint with RERA. If they aren’t pleased with RERA’s decision, a complaint can also be filed with the Appellate Tribunal.