THE RERA READY RECKONER
Kapil is planning to invest in a property soon. He is looking around various projects which fit his budget and also taking into account other factors like location, amenities, infrastructure, value for money, returns from the property etc. He is in consultation with his family and many friends who have previously purchased property or are in the process of.
All his family and friends have cautioned him to ensure the project he is planning to invest in is RERA compliant. Kapil vaguely knows what RERA is after reading about it here and there online or in the print media but he has no idea what safeguards RERA gives him when he invests in a property. Let us help Kapil understand what RERA is in detail and how it protects his interests as a home buyer.
1. Real Estate (Regulation and Development)Act, 2016 or RERA is one of its kind law which was enacted to ensure regulation and promotion of the real estate sector. Earlier the real estate sector was highly tilted towards the promoters/builders and left scope for home buyers. RERA has largely changed this and the interests of the home buyers have been protected and safeguarded under it.
2. Another highlight of RERA is that it provides for the setting up a real estate regulatory authority to ensure speedy settlement of disputes.
- RERA applies not only to apartments but also to plots and buildings. However RERA does not apply to any land not exceeding 500 sq mts and also to apartments where the number is not more than 8.
- Under RERA no builder/promoter can sell, advertise, market etc his real estate project till such project has been registered with the concerned State regulatory authority.
- The builder/promoter can now determine the cost of the project on the basis of carpet area only not on the basis of super built up area as was previously calculated.
- The builder/promoter now has to give an undertaking that he holds a valid title to the property and also the time period within which the project will be completed. This certainly ensures accountability on the part of the builder/promoter.
- The builder/promoter has to enter the details of the proposed project on the website of the regulatory authority for public view and update information regarding progress of the construction quarterly. This is to ensure transparency in all the dealings of the promoter/builder.
- Delay in delivering possession of property is a very common problem across the real estate sector. This problem has been duly addressed under RERA. The builder/promoter has to maintain a separate bank account in which 70% of the amount received from the allottees shall be deposited from time to time. This is to guarantee that money is not invested in any other project and to cover the cost of construction to ensure timely delivery of the project to the home buyer.
- Another aspect covered by RERA is that it stipulates the formation of an association or society of all the allottees in a particular project within 3 months of the majority allottees having booked their flats/plots.
- No builder/promoter can accept more than 10% of the total amount as advance without entering into an agreement of sale with the allottee.
- An important highlight of RERA has been that any aggrieved home buyer can now file a complaint with the concerned state regulatory authority for any violation committed by the builder/promoter like delay in handing over possession, refusal to hand over property related documents, shoddy construction work, incomplete construction work etc.
- Any builder/promoter who is found violating the provisions of RERA shall be liable to pay upto 10% of the total project amount and in some certain cases shall be liable for imprisonment also upto 3 years.
A brief reading of the provisions of RERA show that RERA has helped regulate the largely unregulated real estate sector by bringing in accountability and transparency on the part of builder/promoter community. This Act has largely helped in protecting the interests of the home buyers who invest a large amount of their savings and hard earned in real estate projects but only to be defaulted by the builder/promoter. Apart from the regular civil/criminal or consumer forums, no other forum was exclusively available for such harassed home buyers. RERA has changed this by making the regulatory authorities and the regulatory appellate tribunals has an exclusive forum for aggrieved home buyers.