RERA- a step closer to happy home-buying

By Nimisha Gupta, Editor-in-Chief

RERA the talk of Real Estate Industry at present definitely has brought an upside down between the fraternities. RBI Governor said, “We need action on real side also transparency on land acquisition, transparency on construction and on sales.”  Let us first understand the need and objective of coming up of Real Estate Regulatory Authority (RERA).

• Need of RERA- there is lack of professionalism, standardization and adequate consumer protection though the Consumer Protection Act 1986 is available as a forum for the buyers in Real Estate and resource is curative and does not addresses all the problems and concerns. Also there is lack of uniform regulatory environment, absence in transparency and transactions, risk level high of investors, static land laws, and consumers have to sign the dotted line.
• Objective of RERA- the main objective of RERA to come into action was getting clear transparency into real estate transactions, elimination of the asymmetric information, provide respite to buyers against the ill developers, and protect consumer interest, timely execution of the projects.

How the RERA Act was built up

• January 20, 2009 national conference of Ministers of Housing, UD and Municipal Affairs proposed the Real Estate Law.
• July 2011 Ministry of Law and Justice suggested some centre legislation for the RE under the specified entries and contracts
• June 2013 Union Cabinet passed the bill
• August 2014 bill was introduced in Rajya Sabha
• September 2013 it was referred to the standing committee
• Februaury 2014 Standing committee placed its report in front of Rajya Sabha & Lok Sabha
• Feb 2015 Attorney general held the bill
• April 2015 Union Cabinet again approved the official changes
• March 2015 the bill was placed before Select Committee of Rajya Sabha
• July 30 Select Committee made a report of the bill
• December 2015 Union Cabinet send it forward for approval in Rajya Sabha
• March 2016 the bill was passed in Rajya Sabha
• March 2016 the bill was passed in Lok Sabha
• March 25, 2016 the President of India accorded the bill
• March 2016 the bill was published in Gazette for public info
• April 27 2017 69 sections of the Act got notified bring the bill into Act from May 1 2016

RERA applies to whom?
RERA act implies to commercial projects which includes shops, offices, showrooms, godowns, all the residential apartments, plotted developments, ongoing project which have the Completion Certificate (CC) issues.  According to the Act the projects which are developing in phases would require the registration separately.

What is Real Estate Regulatory Act (RERA?)

• The real estate act provides establishment of the RERA in all states to regulate projects being developed which have powers by the Civil Court while trying any suit.
• RERA has to be set up by the State Governments within the span of 1 year from the date of Act.
• Any RE authority can be designated till the establishment of RERA
• It is an nodal agency to act transparent between the buyers and developers
• The most important is to clear single window clearance for project approvals

Impact of RERA on Developers /Promoters
1. The most important step to be taken for the promoter is to Register, no project promotions/advertisements /marketing can be disclosed before registration.  Legal title to the land proposed to the developed and detailed. The land is free from encumbrance, the time period has to be informed of project completion, and 70% of the amount should be used only for the construction. (Delaying of projects are due to diverting funds from one projects to another and hence now this won’t be possible).
2. Give proper information to the allotees about the sanctioned plan, layout plan stage wise schedule, civic infra information.
3.  The developer has to provide and maintain essential services, execute registered conveyance deed, CC, after completion no mortgage of plot, cancellation of allotment only in terms of agreement of sale
4.  Developer/promoter is solely responsible for loss caused due to incorrect sales, false statements, plot or building.
5.  Developers are prohibited under this Act to take more than 10% cost of apartment, plots without entering into registration
6.  Any structural changes can be made only with written consent of at least 2/3^rd of the allotees, minor addition or alterations permissible due to architectural and structural reasons.
7. Any transfer or assignments of major rights and liabilities in respect of RE projects with the written consent of the allotees.
8. Obtain insurance
9. Payment interest to all the allotees in case of defaults.
10. Any failure in allotments will empower the allotees to withdraw from the projects and demand value paid with interest.

Note- Under this Act developer can sell units on carpet area which means usable floor area of an apartment and buyers would be paying only for carpet area and not ‘’Super built-up area”

Duties & Penalties- (Promoter/ Real estate agents/ allotees)

Impact of RERA on Real Estate Agents

• Every real estate agents is required to be register with RERA for facilitating sale purchase of any RE project
• RE agent shall not facilitate purchase or sale of RE projects not register with RERA
• Maintain and preserve book of accounts, records and documents as many prescribed
• Not involve in unfair trade practices
• Facilitate the possession of all the information and documents to the allotee.

The RERA act is largely consumer friendly the penalty provisions would give the footing to both the parties bringing greater accountability into the sector. The law will give them additional benefits against the errant developers. It will definitely bridge the exploitation of current loopholes.