RERA - Regulations that saves your hard earned money :-)
Aimed at protecting homebuyers, the ruling brings a major relief for the buyers, speeds up the resolution process, and makes it difficult for state governments to dilute the intent of the law.
The main aim of RERA is to provide relief to the buyers from the malpractices of unfair builders. RERA specifies certain norms for building and development of real estate which will enhance the transparency in transactions in the real estate sector.
The Karnataka government has told the Supreme Court that it has already adopted the model-builder and agent-buyer agreements prescribed by the Central government to all states.
Affirmation by Supreme Court
Last week, the Supreme Court affirmed that the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA) are applicable to projects that were ongoing and for whom completion certificates were not obtained at the time of the enactment of the law, in effect interpreting that the law is retroactive.
The RERA Act was effective on and from 1 May 2016. At that time, out of 92 sections only 52 were notified. All the other provisions were effective on and from 1 May 2017.
hear it from a advocate how rera safeguards:
RERA Act and Rules
The Real Estate (Regulation and Development) Act, 2016 under Section 84 envisions that within a period of six months from its commencement date, State Governments will set the rules to carry out the provisions associated with the Act.
On 31 October 2016, the centre, through HUPA (Housing & Urban Poverty Alleviation) Ministry, released the general rules of the Real Estate (Regulation and Development) Act, 2016.
All these rules are applicable to the Union Territories like Chandigarh, Lakshadweep, Daman & Diu, Dadra & Nagar Haveli and Andaman & Nicobar Islands.
Regulation and Development (RERA)
Security: Under the RERA act, a minimum of 70% of the buyers’ and investors’ money will be kept in a separate account. This money will then be allotted to the builders only for construction and land related costs. Developers and builders cannot ask for more than 10% of the property’s cost as an advance payment before the sale agreement is signed.
Transparency: Builders are supposed to submit the original documents for all projects they undertake. Builders are not supposed to make any changes to the plans without the consent of the buyer.
Fairness: RERA has now instructed developers to sell properties based on carpet area and not super built up area. In the event that the project has been delayed, buyers are entitled to get back the entire money invested or they can choose to be invested and receive monthly investment on their money.
Quality: The builder must rectify any issue faced by the buyer within 5 years of purchase. This issue must be rectified within 30 days of the complaint.
Authorisation: A regulator cannot advertise, sell, build, invest, or book a plot without registering with the regulator. After registration, all the advertisement for investments should bear a unique project wise registration number provided by RERA.
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 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.
MUST KNOW14 RERA rules for investors
Watch the video to know about all these 14 points on RERA
Registering project with RERA
Quarterly updates on Construction progress
Escrow Account
Sale agreement standardization
Maximum 10% of cost of project as advance payment
Five years of defect liability period
Carpet Area
Title Representation
False information to home buyers
Failure to complete possession on time
Approval for alteration in sanctioned plans
Obligations of the promoter in case of transfer of real estate project to a 3rd party
Agent registration is mandatory
Grievance Redressal