Are you planning to buy a home in the near future? RERA (Real Estate (Regulation and Development) Act, 2016), an Act, that has been hailed as a boon for the real estate industry in India, help you in bringing transparency and accountability in the transaction with your Developer. Here are a few key insights that you need to know about the RERA Act.
- DEVELOPER WHO CAN’T COMPLY WITH RERA WILL BE PUSHED OUT OF MARKET
Developers cannot invite, advertise, sell, offer, market or book any plot, apartment, or building (Project) in favour of a Customer, without first registering their Project with the Regulatory Authority. And Registration will be granted only if the project has received all the approvals and have clear and marketable title. Furthermore, after registration, all the advertisements/brochure of Developer will have to carry the unique RERA registration number. This registration number will be provided project-wise. This ensures that project is genuine one as well as removes fly-by-night Developers who falsely take money from innocent buyers in the name of developing Project.
RERA requires Developer to submit all documents relating to their Project to the Authority to be published in its Web-Site. Developer has to update the timeline for construction, completion, and delivery which is required to be certified by an Engineer/Architect/practicing Chartered Accountant.
- SINGLE POINT INFORMATION WINDOW
After enrollment with the Regulatory Authority (RA), the Developer will be given a login-id and password to make a page on the RERA's website to upload the venture related data. It will demonstrate, among other things, quarterly update, the rundown of number and sorts of apartments or plots, by and large, reserved; quarterly progressive status of the venture. This straight forward information will guarantee the buyer on their projects with no space for carelessness. The site will be supervised by the Authorities too.
- BOOKING AMOUNT
Some builders may ask for more than 10 per cent of the total cost of the property as a booking amount and the 'agreement of sale' is prepared at a later date. However, now as per RERA, a Developer cannot accept more than 10% of the cost of the property as an advance payment, AND in the event of accepting more than 10% as booking amount or an application fee; Developer is required to execute an agreement (in the model contract suggested by RERA) in writing and registering the same under the provisions of the Registration Act, 1908. The registration of the agreement of sale safeguards the buyers in cases (a) where the buyer pays but the Developer does not handover the apartment on time; (b) buyer defaults and the Developer terminates unilaterally, causing a loss for the buyer. The termination has to be in terms of the agreement of sale only.
- BUYER INVESTMENT IS SAFE:
RERA ensures that the investment made by buyers are in safe hands viz., Developer has to keep 70% of the amount received from Buyer to be kept in escrow with Scheduled Bank. This promises buyers that in the event of non-completion of project by Developer for any reasons whatsoever, the Authority can either take over the project or assign the same to any other person to complete the project and handover possession of the apartment/plot/building to the buyer.
- BUYER IS ASSUED OF ON-TIME DELIVERY OF PROJECTS OR REFUND OF ENTIRE INVESTMENT:
In case Developer makes delay in delivering the Project, the buyer can (1) seek withdrawal of booking, in which event the Developer is liable to pay refund the Entire Investment along with interest as fixed by the Authority (presently State Bank of India Prime Lending Rate + 2%); (2) continue with the project, subject to Developer paying interest (at rate fixed by the authority) for each month delay till handing over of possession of the project. The timeline fixed for refund is 45 days from the date on which such refund falls due. The hesitation due to negative image of bogged down projects will be cleared due to this segment.
- YOU GET WHAT YOU SEE:
For selling purposes, many a times, Developers give the overall area and later the carpet area/undivided share in the land turns out to be considerably smaller. Now, as per RERA, the selling can be done only ethically. Under this, it specifically states that only carpet area that can be used by the buyer should be mentioned. Moreover, the Developer is barred from making any addition and alteration to the said plans/specifications, without the consent of 2/3rd of the allottees in the project.
- STRONG REDRESSAL MECHANISM/PENALTY:
The State Regulatory Authority will have power to impose Penalty or Interest for any breach of obligation on the part of Developer/Buyer/Real Estate Agent. A buyer for any violation by the Developer can file complaint with the Authority which is required to be resolved within a period of sixty (60) days from the date of receipt of such complaint.
- DEFECT LIABILITY PERIOD IS EXTENDED TO FIVE (5) YEARS:
One of the major issues faced by home buyers is that the quality of the flat or villa is not as promised. Sometimes, the residents face issues like low quality paint being used or inefficient plumbing or seeing cracks in the structures. If the buyer of the property faces any such issue in the first 5 years of moving in, then the Developer of such project will have to rectify such defects within a time frame of 30 days. If Developer fails to rectify, the buyer is entitled to receive appropriate compensation.
Mr. Viswa Prathap Desu, Sr. Vice President – Sales & Marketing, Brigade Group, says “We welcome the new regulation – RERA. It will help regularize the real estate business and for big Developers like Brigade, it will ensure that good practices followed by us will become a rule and also provide comfort to the end buyer. This will also ensure fly by night operators will vanish and only the structured players will remain in force”.
Overall, RERA is completely in favor of home buyers and quality real estate developers like Brigade Group. Due to this Act, real estate developers will also profit due to the sense of increased security among the potential customers.