What is RERA ACT? – RERA Objectives and Benefits towards Buyers.

By Abhay Harish Shah , Realty Quarter

RERA is an act for regulation and promotion of the real estate sector to ensure the closeout of apartment, plot or building in an effective and straightforward way. The Act intends to secure the enthusiasm of consumers. It was enacted by the Parliament in May 2016 and the Act has come into power with all its 92 sections from 1st May 2017 crosswise over India.

Introduction of Real Estate Development and Regulatory Act on 15th March 2016 has shaken the whole real estate market in India. It brought every single movement of the purchaser and developer carefully under its administrative body.

Objectives of RERA Act:

1) Ensures accountability towards buyers and protect their interest.

2) Infuse transparency, ensure fair-play and reduce frauds & delays.

3) Introduce professionalism and pan India standardization.

4) Establish symmetry of information between the builder and buyer.

5) Imposing certain responsibilities on both builder and buyer.

6) Establish a regulatory oversight mechanism to enforce contracts.

7) Establish a fast- track dispute resolution mechanism.

8) Promote good governance in the sector which in turn would create investor confidence.

Benefits of RERA Act for Buyers:

1) Standardization 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, builders cannot provide inflated carpet areas to increase prices.

2) Reducing the risk of insolvency of the builder: Most builders 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 These funds can be withdrawn only after certification by an engineer, a chartered accountant, and an architect.

3) Rules for 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.

4) Rights 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 rectify these damages within 30 days at no cost to the buyer.

5) Interest to be paid in case of default: Prior to RERA, if the developer 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.

6) 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.

7) If a defect in the 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 promoter. There is no limit to this amount.

8) Right to information: The buyer has a complete right to information about the project. This includes plans related to layout, execution, and completion status.

9) 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.