The Real Estate ( Regulation and Development ) Act, 2016 or RERA brought some much necessary changes and relief to the existing real estate transactions market of India. Here are the top 10 highlights of the act.
1. Why was RERA Act passed?
The act was passed to established with the primary focus to establish a REAL ESTATE REGULATORY AUTHORITY in India. This authority would overlook -
Regulation & promotion of real estate sector.
To ensure the sale of real estate is done in a transparent and efficient manner.
To protect the interest of real estate buyers by establishing an adjudicating authority for speedy dispute resolution.
2. No building / real estate can be advertised or sold without RERA registration.
As per section 3, article 1 of RERA act, No builder or real estate promoter, can sell or advertise to sell any property, plot, apartment or building without registering it with RERA under the act.
If the property was already in construction before March 2016, when the act came into force. The builder or promoter must secure a RERA registration within 3 months from the date of commencement of the act.
Unless, the builder has a completion certificate issued or the project is strictly re-development with no sale to new occupiers.
3. RERA registration of the builder or real estate promoter can be revoked upon complaint.
The RERA authority can revoke any RERA registration upon receiving a complaint from any aggrieved person or on its own or own suggestion of another authority, if they are satisfied that -
the builder or real estate promoter is defaulting on any of the conditions required to be followed under the act. Or
the builder or real estate promoter is involved in any kind of unfair practice like misrepresentation of building standard or information, fraudulent practices and false advertising.
What happens once RERA registration is revoked ?
The builder is debarred and the project is displayed with builder's photograph on RERA website under list of defaulters.
RERA can order to freeze the project's bank account and un freeze to resume development without the builder. If required, RERA will facilitate the remaining development work of the said building.
4. The builder is not allowed to accept more than 10 percent of the apartment value as ADVANCE without entering into a written agreement for sale.
No advance deposit in excess of 10 percent of property value to be taken by the builder without first entering into agreement for sale and registering such written agreement for sale with the buyer of the property. Section 13 (1) of RERA Act 2016.
5. The builder has to refund the amount and additional compensation, if he fails to give possession on the date specified.
Section 18 (1) says if the promoter fails to deliver possession of the apartment on promised date or doesn't deliver possession in accordance of the terms agreed.
If the buyer wants to withdraw from the project - The builder is liable return the amount received from the buyer including compensation in form of interest as agreed by the court.
If the buyer doesn't want to withdraw from the project - The builder is liable to pay the buyer interest for every month of delay till actual possession is handed over.
6. Introduction of Rights of Property Buyers, which can be enforced.
The property buyer is rightfully entitled to
Obtain information about all sanctioned plans along with specifications for the project.
Have complete stage-wise time schedule of completion of the project, including time schedule for water, sanitation & electricity provisions.
Claim possession of apartment and claim refund with compensation if promoter is unable to give possession on the date agreed.
7. The establishment of a REAL ESTATE APPELLATE TRIBUNAL in EVERY STATE aiming at 60 days settlement.
Any aggrieved person can submit an appeal to their state's Appellate tribunal within 60 days ( or longer if appropriate cause for delay shown ).
The appellate tribunal will give both parties a chance to be heard and furnish a decision expeditiously with an aim to dispose the said appeal within 60 days.
If any party is unhappy with the tribunal's decision, they can resort to appeal to high court after the decision is delivered by the tribunal.
8. RIGHT of LEGAL REPRESENTATION updated. Charted accountants, tribunal officers or legal practitioner can appeal on your behalf.
The applicant who decides to appeal can authorise his CA, company secretary, legal practitioner or tribunal officer to present his case in front of the tribunal or he could appear himself in person.
9. Defined - Punishments for Non Registration and other penalties.
Non registration of project - makes the promoter liable to a penalty extending upto 10 percent of the estimated cost of the entire real estate project or imprisonment extending upto 3 years.
Real Estate agents who are not registered and try to sell a RERA registered project - are liable to a penalty of ten thousand rupees everyday during the time such default continues or 5 percent of the apartment cost.
Similarly, if the property buyer fails to comply with orders of the tribunal - he is liable to be punished with imprisonment for a term upto 1 year or fine upto 10 percent of the apartment cost.
10. Defined - Functions of Real Estate Agents
Every real estate agent must register themselves under RERA, or might face consequences and liability of Ten thousand rupees per day during period or default or 5 percent of the apartment value. Other functions defined are -
They must not facilitate sale of apartments in any project not registered under RERA
They must maintain and preserve books of accounts and documents as prescribed
They must not involve any unfair trade practices like false representation of information or permitting publication of misleading service advertisement.