RERA is a noble step towards protecting and helping home buyers. To enjoy these benefits, you need to know about them.
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What is RERA Act?
Real Estate Regulatory Authority (RERA) Act was launched on the 1st of May 2017. It is an act passed by the cabinet to create a mechanism that effectively regulates and addresses issues like project delivery delays, property pricing, quality of construction, title and other changes in an efficient and transparent manner. It is aimed at protecting the interests of buyers in the real estate sector and to establish an arbitrating mechanism for speedy dispute redressal. The act makes it compulsory for all residential and commercial real estate projects (new or on-going) with a land coverage of over 500 sq.m. or eight apartments, to register with the regulatory authority. All on-going projects that have not received a completion certificate from the local municipal body on the date of commencement of the act will have to apply for registration within 3 months. These applications must be either approved or rejected by the regulatory authority within 30 days from the date of registration. Additionally, real estate agents who mediate real estate deals will also have to register with RERA. They will be issued a single registration number for each State or Union Territory and will be required to show this number during every sale. If the registration is successful, the promoter of the project will be provided with a registration number, login id and password. The applicants will have to login and complete the requested details on RERA's website.
How will RERA protect the buyers?
As real estate is a state subject, even though RERA is a central law, its implementation will be conducted by state governments. All the states and union territories will have their own Regulatory Authorities (RA). These RAs will frame all the regulations and rules according to the Act. That said, below mentioned is a list of some of the most important provisions in RERA to protect the rights of the buyers.
Affidavit: Along with all the required documents, the promoter will also have to give a written declaration supported by a legal affidavit, which will state all the information including the timeline of the project or the specific phase.
Final date of possession: The committed date of delivery is the choice of the developer, and has to be adhered to by both the parties. Since the time period for the delivery can be different amongst builders, the 'sale agreement' will specifically carry the date of possession and the rate of interest that will be charged in case of any default.
Clear title of land: The written legal affidavit must also include a title clearance confirmation of the land on which the development is proposed and all relevant documents are available. This is to avoid any land disputes leading to delay in construction and delivery.
Free from hindrances: The legal affidavit must also clearly state that the land is free from all encumbrances and is free to transfer. This is to avoid the delay in project delivery and transfer the title of the property.
Maintaining a separate escrow account: Builders will now be required to create a separate escrow account in which 70% of the amount received from the buyers will have to be deposited maintained by a scheduled bank. The withdrawals from the account will depend on the extent of completion of the work, and will only be allowed to cover the cost of construction and the cost of land. Furthermore, the project will be subject to certification from an engineer, an architect, a chartered accountant and a six-monthly audit. This is to avoid the diversion of the funds received from the buyers in other projects.
Making it a legal offence: If any builder or developer fails of adhere to the rules and regulations of RERA act – it will be considered as an unlawful activity, and will accordingly be dealt with. Some of the possible legal actions include:
Creation of RERA Appellate Tribunal: State-level courts or expert committees will have to be setup across the country and these tribunals will be required to pass a judgment on the cases in 60 days. These will further help establish state-level RERAs to regulate transactions and ensure their timely completion and handover.
What action will be taken against the defaulters?
RERA has taken steps to ensure that the promoter is accountable and appropriate action is taken against the defaulters. Here's a list of some of the steps that will be taken.
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