Get to know all about RERA ACT.

Let us Discuss in Details on Following Points Each Given Below ?

What is RERA Act?

RERA means Real Estate Regulatory Authority which came in to existence as per the Real Estate Regulation and development Act, 2016, the main purpose of this act was to protect the home buyers against any fraud and Boost the Real Estate investment market.

All the Real Estate Project must be registered with RERA so that the authority will have jurisdiction over the projects.

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When it was Implemented?

The Bill for this act was passed on 10^th of March 2016 by the upper House known as ‘ Rajya Sabha‘. The RERA Act was effective on and from 1^st of May 2016. At that time, out of 92 sections only 52 sections were notified rest of the other provisions got effective on and from 1^st of May 2017.

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Why it was Implemented?

Before RERA, the builders used to take money from buyers for one project and invest those money in multiple other projects, due to this the projects gets delay and the buyers had to suffer.

In many cases, the project which was to delivered within 4 years took more than 10 years, and in other cases the projects are not yet delivered.

To avoid this, the government had introduced the RERA Act, under which a minimum of 70% of the buyer’s and investor’s money will be kept in a separate account.

This money will then be allotted to the builder’s 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.

Before RERA there was no proper transparency, but after RERA came in to existence there is a great transparency where Builders are supposed to submit the original documents for all projects they undertake, they are not supposed to make any changes to the plans without the consent of the buyers.

RERA has also instructed developers to sell the properties based on carpet area and not super built up area which they were earlier used to do.

Earlier before RERA when the project got delayed buyers had no option than to wait till the completion of the project but as the RERA came in to existence if the project get delayed the buyers get compensation on their money invested from the builders if they continue on the project or they are entitled to get back the entire money invested.

If there is any problem in the project or quality of the building the builder’s must rectify the issue faced by the buyers within 5 years of purchase and this issue must be rectified within 30 days of the complaint.

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What are the Benefits of RERA?

RERA has a multiple Benefits for its buyer’s, the promoters and the Real Estate Agents.

Right to Information:

The buyer has the right to know all the information about the project which includes the plans related to layout, execution and completion status.

Standardization of Carpet Area:

Before RERA the manner by which a builder calculated the price of a project or flat wasn’t defined. However with RERA there is now a standard formula that is used to calculate carpet area.

Reducing the risk on insolvency of the builder:

Most of the promoter’s 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 and 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 flat from the buyer as an advance or application fees.

This saves the buyer from having to source funds fast and having to pay a large amount.

Right to the buyer in case of any defects:

Within 5 years of possession, if there are any structural defects or problems in quality, the builder has to certify these damages within 30 days at no cost to the buyer.

Interest to be paid in case of any default:

Prior to RERA, if the promoter delays possession of the property, the interest paid to the buyer was much lower than the buyer delayed payments to the promoters.

This has changed with RERA, now both the 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.

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 satisfied with RERA’s decision, they can also filed a complaint with the Appellate Tribunal.

If defect in title:

If at the time of possession, the buyers discover that there is a defect in the title of the property, the buyer can claim compensation from the promoter, and there is no limit to this amount.

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Some important points about RERA Act?

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^st Oct 2016, the center 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

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What are the Impacts of RERA ACT?

Before RERA the unit registration was taking place without checking Occupancy Certificate & Completion Certificate, no one was bothered about the legal consequences but after the implementation of RERA act registration of sales deed of a project unit cannot be done in the office of the sub-registrar without obtaining Occupancy Certificate & Completion Certificate.

It will have positive impact on over all growth of the real estate industry, the Honest Builders will sustain and will have lesser competition in the market.

Dishonest Builders will disappear as they will fail to sustain in the market after the RERA Act is implemented.

Due to the transparency between builder and buyers provided by the RERA act, the buyer & Investors will have more trust and will invest more in the market which will boost the overall business of the real estate.

The 32 Sections that have been added to the Real Estate Act 2016 will encourage a financial discipline in this sector.