The Real Estate Regulatory Authority (RERA) was established as part of the Real Estate (Regulation and Development) Act, passed by the Indian Parliament on 10th March 2016. This act became partially operational on 1st May 2016, with only 59 sections notified initially. The remaining provisions were made effective on 1st May 2017.
Objective of RERA
RERA aims to foster accountability and transparency in the real estate sector, ensuring equitable transactions between buyers and sellers, particularly in the primary market. It strives to protect the interests of homebuyers and boost investment in the real estate industry.
Meaning of RERA-Approved
A RERA-approved project signifies that it is registered under RERA. Builders must adhere to specific guidelines, including clearances, land titles, and other statutory regulations, to receive RERA approval.
Key Features of RERA
1. Security: Safeguards buyers' interests by regulating project funds.
2. Transparency: Mandates the disclosure of project details, plans, and timelines.
3. Fairness: Enforces equal terms for both buyers and builders in case of delays or defaults.
4. Quality: Ensures builders address structural or workmanship defects within five years.
5. Authorization: Requires proper registration before advertising or selling projects.
Benefits of RERA Approval
RERA approval guarantees that a project complies with legal and quality standards, offering buyers confidence and legal protection. Key benefits include:
1. Standardized Carpet Area: RERA mandates a uniform formula for calculating the carpet area, eliminating inflated measurements and preventing overpricing.
2. Reduced Insolvency Risk: Developers must deposit 70% of project funds in a dedicated bank account. These funds can only be withdrawn with the approval of certified professionals, ensuring proper utilization.
3. Limited Advance Payment: Builders are restricted from charging more than 10% of the project’s cost as an advance or application fee.
4. Protection Against Defects: Buyers are entitled to free rectification of any structural defects identified within five years of possession.
5. Interest for Delays: In case of possession delays, buyers are compensated with higher interest rates as specified under RERA.
6. Protection Against False Promises: Regulatory authorities oversee builders’ commitments. If promises are not met, buyers are entitled to a full refund, often with interest.
7. Compensation for Title Defects: Buyers can claim compensation for defects in the property’s title discovered during or after possession, with no cap on the amount.
8. Right to Project Information: Buyers have the right to access detailed information about the project, including its status, layout, and progress.
These provisions ensure that RERA acts as a robust framework to protect buyers’ interests and foster trust in real estate transactions.
Buyer Rights Under RER
1. Right to withdraw: Buyers can seek a refund with compensation if commitments are unmet.
2. Right to possession: Compensation or withdrawal options are available in case of project delays.
3. Right to information: Access to project plans, layout, and completion status.
4. Grievance redressal: Buyers can file complaints with RERA or approach an appellate tribunal if dissatisfied.
Applicability of RERA
RERA applies to:
-Promoters and agents: Builders, developers, contractors, or public bodies developing land or buildings for sale.
-Property types: Residential and commercial buildings, as well as plots for sale.
-Project size: Real estate projects exceeding 500 sq. meters or involving more than 8 apartments.
Documents Required for RERA Registration
The following documents required for RERA Registration:
For Promoters:
-PAN card and title deeds.
-Commencement certificate and layout plan.
-Details of development works, previous project experience, and financial reports.
For Agents:
-PAN card, address proof, and photographs.
-Details of the enterprise, if applicable.
Registration Benefits for Buyers
-Timely possession: Ensures adherence to project timelines.
-Accurate project details: Prevents changes in project specifications post-sale.
-Mandatory approvals: Promoters must secure all licenses before sales.
-Defect resolution: Promoters are accountable for repairs post-possession.
-Controlled advertisements: Promotions are restricted to registered projects only.
RERA has revolutionized the real estate sector by introducing accountability, reducing fraud, and empowering buyers with legal safeguards and transparent processes.
RERA Act Penalties
Under the RERA Act, penalties are imposed on all parties involved in a real estate transaction for non-compliance:
For Builders/Developers:
1. Non-Registration: Builders who fail to register their project under RERA before starting construction face a penalty of 10% of the estimated project cost.
2. Refusal to Pay Penalty: If the builder refuses to pay the penalty, they may face imprisonment of up to three years.
3. False Information: Providing incorrect details during registration can lead to a penalty of 5% of the estimated project cost.
For Buyers:
1. Non-Compliance: Buyers violating RERA provisions may face a penalty of 5% of the property’s cost.
2. Tribunal Violation: Disobeying the Appellate Tribunal’s decision can result in a penalty of 10% of the property’s cost and/or imprisonment for up to one year.
For Agents:
1. Non-Compliance: Real estate agents failing to adhere to RERA rules are subject to a 5% penalty of the property’s cost.
2. Tribunal Violation: Agents who contravene the Tribunal’s decision may face imprisonment for up to one year or a penalty of 10% of the property’s cost.
Impact of RERA
Before RERA, the real estate industry was riddled with malpractice and exploitation, often leaving buyers at the mercy of builders. RERA has fundamentally changed this by prioritizing transparency and safeguarding buyers’ rights.
1. Verification of Registrations: Buyers can now verify whether a builder or agent is RERA-registered through their respective state’s RERA website.
2. Access to Information: Details of the project, including timelines and compliance, are readily available online, instilling confidence in buyers.
3. Elimination of Fraudulent Practices: RERA discourages dealings with unregistered developers, ensuring that only legitimate projects thrive.
4. Grievance Redressal: A dedicated mechanism has been established to address disputes efficiently, benefitting buyers, builders, and agents alike.
Filing a Complaint Under RERA
Section 31 of the RERA Act allows buyers, builders, or agents to file complaints against one another. The process involves:
1. Visit the State’s RERA Website: Each state has its own RERA portal where complaints can be filed.
2. Provide Details: Enter project information and a concise description of the complaint.
3. Pay the Fee: Submit the required fee, which varies across states.
If dissatisfied with RERA’s resolution, the complainant may escalate the issue to the state’s Appellate Tribunal. Further dissatisfaction can lead to an appeal in the High Court.
Conclusion
RERA has revolutionized the real estate industry in India by introducing transparency, accountability, and fairness. It serves to protect the interests of both homebuyers and developers, fostering trust and efficiency in the sector. For prospective buyers, understanding RERA registration and its significance is crucial for making informed decisions.
FAQs
1. What is the purpose of RERA?
Ans. RERA (Real Estate Regulatory Authority) was established under the Real Estate (Regulation and Development) Act, 2016. Its main objective is to protect homebuyers' interests, ensure transparency, and promote growth in the real estate sector by regulating developers and real estate agents.
2. What does it mean if a project is RERA approved?
Ans. A RERA-approved project means that the development has been thoroughly examined by the relevant state RERA authority. It complies with all legal requirements, including technical standards and obtaining necessary permits, such as clearances and No Objection Certificates (NOCs).
3. Is RERA beneficial or not?
Ans. RERA offers numerous advantages for homebuyers and investors, including greater transparency, assurance of timely project delivery, and more reliable information to make informed decisions regarding property purchases.
4. What happens if a property is not RERA registered?
Ans. Buying a property that is not registered with RERA could lead to potential disputes with the builder. RERA-registered projects provide clear, verified details of the development on the state's RERA portal, ensuring that what is promised by the developer matches the actual project.
5. What is a Completion Certificate (CC) in real estate?
Ans. A Completion Certificate (CC) is an official document issued by local authorities confirming that a building’s construction is complete and adheres to the approved plans. It is essential for legal occupancy, securing home loans, and ensuring the property’s compliance with regulations.
6. How will RERA affect builders?
Ans. RERA holds builders accountable for construction quality and the provision of promised amenities. Builders must address any issues raised by buyers within five years of possession, or face penalties for non-compliance.
7. Does RERA have an expiration date?
Ans. RERA registration is typically valid for three years. Developers must apply for a renewal at least three months before the registration expires to continue the project legally.
