Implications of RERA on buyers, builders, agents
- Provisions applicable to both residential and commercial properties
- Expected to bring in transparency and accountability in real estate sector
- Each state to set up Real Estate Regulatory Authority to regulate real estate development
- Standardization of norms to protect interests of buyers and developers
- Aims to minimize rampant project delays and mis-selling
Real Estate Regulatory Authority:-
RERA is an Act for regulation and promotion of the real estate sector to ensure the sale of apartment, plot or building in an efficient and transparent manner. The Act aims to protect the interest of consumers. It was enacted by the Parliament in May 2016 and the Act has come into force with all its 92 sections from 1st May, 2017 across India. So far, 14 states and union territories such as Uttar Pradesh, Gujarat, Bihar, Madhya Pradesh, Odisha, Andhra Pradesh and Maharashtra have notified their rules with RERA and the others are expected to follow suit.
The implementation of RERA is expected to bring relief to the homebuyers as builders will be accountable for the timely delivery of the projects and to protect buyers from fraud sellers. The developers would also gain from the increased confidence of the consumers in a regulated environment.
It is mandatory for the developers to get all approvals from various government agencies before launching a project and disclose all the information on the website that the respective state RERA regulatory authority will set up.
Real estate agents will be provided a registration number by the regulator which they have to mention in every property sale. This will help in eliminating the possibility of misleading the purchaser. The authority has wide ranging powers to impose penalties and imprisonment of agents in case of violation of law.
Advantages of RERA for homebuyers
- Builders have to disclose every detail of the project on the website of authority and update these on a regular basis
- The buyer will have to pay only on the basis of carpet area (area within walls). The builder cannot charge them for the super built-up area (lift, balcony, stairs and lobby)
- Timely completion of projects as 70% of the money collected from the customer has to be transferred in a separate bank account and can be used only for the purpose of completing the construction of the project
- Any delay in completion of the project will require the developer to pay an interest rate of 2% above SBI’s Marginal cost of leading rate to the buyer for delayed period
- Any defect in the building will be the responsibility of builder for a period of 5 years
- Any disputes with the buyers need to be resolved within 120 days
Provisions of RERA:-
- RERA will be followed in every state of India and this regulation applies to both residential and commercial properties.
- Builders are required to deposit 70% of the funds collected from buyers in a separate bank account for the construction of the project
- Developers have to disclose the project details (financial statements, legal title deed and others) on the website and update it on quarterly basis related to the construction progress
- The sale of property will be based on carpet area and not on super built-up area.
- Builders require submitting the original approved plans for their project and the alterations made to RERA
- Developers and buyers both have to pay the same interest rate of 2% above SBI’s MCLR in case of any delay.
- Projects with plot size of minimum 500 sq. mt or 8 apartments need to be registered with the RERA Authority
- Imprisonment of up to 3 years for the developers and up to 1 year for agents and buyers for violation of law
- Developers are not allowed to advertise, sell, offer, market or book any plot or apartment without registering to the authority
- Any structural or workmanship defects in the building during the period of 5 years must be rectified within 30 days by the promoter without any further charges. If he fails to do so, the buyer is entitled to receive the compensation under RERA
- Developers cannot demand for more than 10% of the property cost as an advanced payment booking amount before signing a registered sale agreement
All commercial and residential projects will have to register except in projects where:-
- The area of land proposed to be developed does not exceed 500 sq. mt
- The number of apartments is not more than 8
- Any repair or renovation of an existing building or structure that does not require marketing, advertising and selling of any apartment or plot
Registration process for Real Estate Agents
- Fill an application form along with fee and documents to get registered with RERA
- You will receive a registration number from the regulator. This need to be mentioned in every property sale
- On a quarterly basis, you are required to maintain the books of account, records and documents related to the transactions
- Share all the information and documents about the project with the buyer
- Agent may be suspended for the misrepresentation or fraud during the registration process
Documents required for registration under RERA
Following documents should be enclosed in hardcopy with the application:-
- PAN Card of the builder.
- ITR of last 3 years and the balance sheet of the builder.
- Builder must clarify about the apartment (carpet area, number of floors, parking space)
- Declaration by the builder of having legal title of the land with proof
- Details of the land (rights, title, mortgage)
- If the builder is not the owner of the land, the consent letter of the actual owner with documents will be required.
- Details of the project (location, sanctioned plan, layout plan)
- Ownership documents (proforma of allotment letter, agreement of sale)
- Information of the persons involved (Architects, Engineers and others)
Filling of complaints under RERA
- Any aggrieved person may file a complaint with RERA for any violation of the provisions of the Act.
- In case the person is not satisfied with the decision made by RERA or its officer, he may file an appeal before the RERA Appellate Tribunal within a period of 60 days
- From the date of decision made by Appellate Tribunal, person can file appeal to High Court within 60 days
FOR MORE DETAILS CALL:
VED LEGAL,
Adv. Gajanan Rahate
Mob: 9763040088
E_mail: [email protected]
