RERA or the Real Estate (Regulation and Development) Act has been a major game changer for the Indian real estate sector and with good reason! While being considered by many as a major disruptor, RERA has effectively cleaned up the hitherto messy property landscape, ushering in more transparency and accountability at the same time.
As a homebuyer, you must be well aware of RERA and how it gives you more protection, particularly if you are purchasing an under-construction property and are anxious about delays. Coming to the core principles of RERA, there are quite a few things that you must keep in mind. This will help you stay aware of your own rights and the developer’s need to adhere to the rules.
Key principles you need to be aware of while buying a home
RERA mandates several things which you should be clued into while buying your home. Some of these include the following:
- The developer will now have to submit a written and legal affidavit with a declaration which clearly states the time frame within which the housing project or a particular phase will be delivered.
- Possession date has to be specifically mentioned in the agreement of sale and the interest rate which will be charged in case of defaults.
- The land should have a clear title and this should be mentioned in a legal affidavit by the developer guaranteeing the same along with providing legally valid papers for the same.
- A written affidavit also has to be given by the developer that there are no encumbrances on the land in question.
- Developers now have to deposit 70% of amounts taken from buyers in a separate escrow account for covering construction and land costs. Withdrawals will be based on the work that has been completed post certification by an architect, chartered accountant and engineer and audits have to be done every 6 months for this purpose.
- For not following these regulations, developers may lose project registration along with facing penalties and imprisonment up to 3 years. Fines may go up to another 10% of the cost estimated for the realty project.
- RERA mandates that developers will have to pay compensation and penalties to buyers in case of possession delays.
- The buyer can claim a full refund of the amount paid with interest in case possession is delayed up to a year or more.
- In case buyers will now withdraw from any housing project and do not desire any refund, developers will have to shell out interest for every month of the delay until possession is handed over.
- In case of any defaults, both buyers and builders have to charge similar interest rates. In case the builder does not give delivery of the project on time, he/she will pay the same interest as paid by the homebuyer in case the latter defaults on any payment.
- Delay in possession will lead to buyers complaining to the registered authority in the State. The compensation will be granted based on the process of adjudication by the regulatory authority. There will be an adjudicating officer appointed by the State Government who will take the decision in this case.
- Developers have to compulsorily get their projects registered with RERA under their state authorities and get the RERA registration number accordingly for each project.
- Developers cannot sell projects without the RERA registration number.
- They should make available all project details, sales information regulatory approvals, occupation information, commencement details, certificates, amenities, etc. on the RERA portal periodically.
- Homebuyers should only go for projects from developers with a good track record who have adhered to RERA guidelines and have ample financial stability. This should be verified by homebuyers.
- Builders can promote projects only after they are registered under RERA and they have to publish the registration number in their advertisements as well.
Other aspects to be kept in mind
The carpet area has to be clearly disclosed by developers. The price quoted has to be based on the carpet area for better transparency. 2/3rd of buyers in a particular project have to provide their consent if the developer wishes to alter the layout plan or building plan of the project. Homebuyers should verify the payment plans offered by developers prior to buying.
Only 10% of the entire cost of the property can be taken from a buyer as the booking amount. Developers charging more than 10% will have to face penalties including imprisonment up to 3 years. Brokers/realtors also have to register themselves with RERA. The Act has also laid down a strong framework for grievance redressal as far as buyers are concerned. There are penalties for developers/builders/brokers in case any provision is violated.
Buyers can file their complaints which will be resolved compulsorily within 60 days from the complaint date. In case of any structural defects with the project in the first 5 years post possession, developers have to fix this within 30 days or provide compensation to the homebuyer. RERA has put paid to pre-launches, soft launches and other such exercises for projects which do not even exist as of yet.
