Real estate regulation and development rera act 2016 is an Act of the Parliament of India which seeks to protect home-buyer as well as help boost investments in the real estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal.
The bill was passed by Rajya Sabha on 10 March 2016 and by Lok Sabha on 15 March 2016. The Act came into force on 1 May 2016 with 59 of 92 sections notified. The remaining provisions came into force on 1 May 2017. The Central and State governments are liable to notify the rules under the Act within a statutory period of six months.
PROVISIONS AND THEIR IMPLICATIONS
REAL ESTATE REGULATION AND DEVELOPMENT ACT 2016 AND AUTHORITY ON BUYERS, BUILDERS, AGENTS
1. Each state sets up Real Estate Regulatory Authority to regulate real estate development.
2. Provisions applicable to both residential and commercial properties.
3. Standardization of norms to protect the interests of buyers and developers.
4. Expected to bring in transparency and accountability in the real estate sector.
5. Aims to minimize rampant project delays and mis-spelling.
RERA STANDS FOR REAL ESTATE REGULATORY AUTHORITY
1. RERA is an act for regulation and promotion of the real estate sector to ensure the sale of apartments, plots or buildings is an efficient and transparent manner.
2. The Act aims to protect the interest of consumers.
3. It was enacted by the Parliament in May 2016.
4. The Act has come into force with all its 92 sections from 1st May 2017 across India.
5. The implementation of RERA is expected to bring relief to the home buyers as the building will be accountable
for the timely delivery of the projects and to protect buyers from fraudulent sellers.
6. The developers would also gain from the increased confidence of the consumers in a regulated environment.
7. It is mandatory for the developers to get all approvals from various government agencies before launching a project.
8. Developers disclose all the information on the website that’s the respective state RERA regulatory will set up.
9. Real estate agents will be provided a registration number by the regulator which they have to mention in every property sale.
10. This will help in eliminating the possibility of misleading the purchaser.
11. The authority has wide-ranging powers to impose penalties and imprisonment of agents in case of violation of the law.
RERA का सब कुछ आसान भाषा में – Real Estate Regulation & Development Act 2017
BENEFITS OF RERA FOR HOME BUYERS
1. Builders have to disclose every detail of the project on the website of authority and update these on a regular basis.
2. The buyers will have to pay only on the basis of carpet area (area within walls).
3. The builders cannot charge them for the super built-up area (lift, balcony, stairs, and lobby).
4. 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 projects.
5. Any delay in completion of the project will require the developers to pay an interest rate of 2% above SBI’s marginal cost leading rate to the buyer for the delayed period.
6. Any defect in the building will be the responsibility of builders for a period of 5 years.
7. Any disputes with the buyers need to be resolved within 120 days.
KEY PROVISIONS OF RERA
1. RERA will be followed in every State of India and this regulation applies to both residential and commercial properties.
2. The sale of the property will be based on a carpet area and not on a super-built-up area.
3. Builders are required to deposit 70% of the funds collected from buyers is a separate bank account for the construction of the project.
4. Developers have to disclose the project details (financial statement, a legal title deed, and others) on the website and update it quarterly basis related to the construction progress.
5. Project with a plot size of minimizing 500 sq. mt. or 8 apartments need to the registered with the RERA authority.
6. Builders are required to submit the original approved plans for their project and the alterations made to RERA,
7. Developers and buyers both have to pay the same interest rate of 2% above SBI’s MCLR in case of any delay.
8. Imprisonment of up to 3 years for the developers and up to 1 year for agents and buyers for violation of the law.
9. Any structural or workmanship defects in the building during the period of 5 years must be rectified within 30 days of the promoter without any further charges. If he fails to do so, the buyer is entitled to receive the compensation under RERA.
10. Developers cannot demand more than 10% of the property cost as an advanced payment booking amount before signing a registered sale agreement.
11. Developers are not allowed to advertise, sell, offer the market, or book any plot or apartment without registering to the authority.
12. The buyer can contact the developers in writing within 1 year of taking possession to demand the shortcomings in the project.
REGISTRATION OF PROJECTS UNDER THE RERA ACT
All commercial and residential real estate projects will have to register except in projects where:
1. The promoter has received a completion certificate of the project prior to commencement of the Act.
2. The area of land proposed to be developed does not exceed 500 sq, mts.
3. The number of apartments is not more than 8.
4. Any repair or renovation of an existing building or structure that does not require marketing, advertising, and selling of any apartment or plot.
DOCUMENTS REQUIRED FOR REGISTRATION UNDER RERA ACT
The following document should be enclosed in a hard copy with the application.
1. PAN card of the builder.
2. ITR of the last 3 years and the balance sheet of the builder.
3. Builder must clarify about the apartment (carpet area, number of floors, parking space)
4. Declaration by the builders of having the legal title of the land with proof.
5. Details of the land (rights, title, mortgage).
6. If the builder is not the owner of the land, the consent letter of the actual owner with the document will be required.
7. Details of the project (location, sanctioned plan, layout plan).
8. Ownership documents (proforma of allotment letter, agreement of sale).
9. Information of the persons involved (Architects, Engineers, and others).
REGISTRATION PROCESS FOR REAL ESTATE AGENTS
1. Fill an application form along free and document to get registered with RERA.
2. You will receive a registration number from the regulator. This needs to be mentioned in every property sale.
3. On a quarterly basis, you are required to maintain the book of accounts, records, and documents related to the transactions.
4. Share all the information and document about the project with the buyer.
5. Agent may be suspended for misrepresentation or fraud during the registration process.
FILLING OF COMPLAINTS UNDER RERA ACT
1. Any aggrieved person may file a complaint with RERA in violation of the provisions of the Act.
2. 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.
3. From the date of the decision made by the appellate Tribunal, a person can file an appeal to High Court within 60 days.
MAJOR BENEFITS OF RERA ACT
STANDARDIZED CARPET AREA
Earlier the carpet area on which the builder calculates the prices of the property was not defined.
For the same flat, the builder would calculate the carpet area as 1500 sq. ft and the other would calculate the carpet area of 1400 sq. ft.
This used to happen as there was no standard formula for been clearly defined by the RERAAct and the same formula would be applied by all builders/developers for calculating the computation of the carpet area, However, this has now of the carpet area.
The definition of carpet area as given by the law is:-
‘Carpet area’ apartment, excluding the area covered by the external walls, areas under services shafts, exclusive, balcony or veranda area, and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. means the net usable floor area of a This has a direct impact on the real estate prices as most developers charge on the basis of carpet area.
Builders compute the price of a property as follows :
Cost of property = Carpet Area x Rate per sq. ft.
However, now this method for calculation of carpet area has been clearly defined by RERA and therefore the developers would not be able to manipulate the calculation of carpet area in order to increase the prices.
RATE OF INTEREST ON DEFAULT
In case of default in payment by the buyer or default is the completion of the project by the builder, the rate of interest to be paid shall be the same for both parties.
RATE OF INTEREST ON DEFAULT
Earlier what used to happen was that in case the builder| delays the possession of the property- the interest paid by builders to the home buyer was less whereas in case the buyer defaulted-the interest specified to be paid by the buyer to the builder was higher.
There was no parity in the interest to be paid by both the parties, The RERA act has now clearly specified that the interest rate shall be the same for both the parties.
REDUCES THE RISK OF BUILDER INSOLVENCY/BANKRUPTCY
A developer usually has several projects which are being constructed simultaneously. Earlier builders were free to divert the funds raised from the project to fund the construction of project B.
However, this would now not be possible as, after the introduction of RERA, the builder is liable to deposit 70% of the amount realized for the project in a separate bank account. He can withdraw from such account only on basis of completion of the project, which shall be certified by a civil law engineer, architects in pune, and a chartered accountant in practice.
As the funds can now not be diverted to other projects and used for other purposes this will ensure that the funds are used for the purpose only for which they are raised and not for other purposes.
Earlier, there have been certain cases wherein the builder raised the funds from home buyers for constructing their homes but used the funds for other purposes. They later become bankrupt and were not able to complete the construction of the property.
RIGHT OF THE BUYER IN CASE OF FALSE PROMISES
In case there is a mismatch in the commitments made by the builders and the actual project, the buyer has the option to withdraw from the project, where he is entitled to a full refund of the amount paid as advance or otherwise along with interest and claim compensation.
The builder can take not more than 10% of the cost of the apartment, villa, etc. as advance or application fees as the case may be, before entering into an agreement of sale.
RIGHT OF THE BUYER IN CASE OF DEFECT AFTER POSSESSION
In case of any structural defect or any defects in workmanship quality, provision or service is discovered within 5 years after the possession of the apartment, such defect will be rectified by the builder at no extra cost within 30 days.
If the builders fail to do so, the buyer shall be entitled to claim compensation for the same.
RIGHT OF THE BUYER DELAY IN POSSESSION
If the builder fails to complete the project on the due date of completion then the buyer has the option-
1. To withdraw from the project, where he shall be entitled to a full refund along with interest payable from the due date of competition till the amount is refunded.
2. To continue with the project till the completion, wherein he will be entitled to compensation along with interest payable from the due date of completion of the project till the project is actually completed.
For example/instance, say the project was due for completion on 31.3.2017 but it couldn’t be completed on that day. So on 1-4-2017, you have the option to withdraw from the project. If you decide to withdraw from the project then for the period from 1.4.2017 to till the payment is made, you will be entitled to interest.
In case you choose not to withdraw from the project then say the actual completion of the project takes place on 31.3.2019 then from 31-3-2017 to 31.3.2019 you will be entitled to interest every month.
RIGHTS OF THE BUYER IN CASE OF DEFECT IN TITLE
If at any time after the possession of the property you find that there is a defect in the title of the property then you can claim compensation from the builder. It is not barred by limitation, which means there is no time limit within which you have to discover the defect.
RIGHT TO INFORMATION
The buyer shall be entitled to all the information related to the project, the plan layout, execution plan, stage-wise completion status, etc.
ESTABLISHMENT OF AUTHORITY FOR GRIEVANCE REDRESSAL
Any grievance against the builder can be taken to the state authority set up under RERA, which shall have the power to redress all the grievances.
In case you are dissatisfied with the order, you can file an appeal with the Appellate Tribunal who will redress your case within 60 days, and in case of failure to do so, it should record the reasons of such failure.
If the builder wants to appeal to the Appellate Tribunal against the order of the authority, then he shall have to deposits at least 30% of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be before the said appeal is heard.
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