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Benefits and Advantages of RERA Act for Property Buyers

Updated: May 22

What is RERA?

RERA, or the Real Estate Regulatory Authority, has become a crucial component of the real estate landscape in numerous countries, notably India. It was introduced to tackle long standing challenges encountered by homebuyers and investors in this sector. RERA's primary goals are to foster transparency, accountability, and efficiency within the real estate industry, thereby safeguarding the interests of buyers and promoting fair practices. This article will explore the advantages of RERA registration, the necessary documentation, and the step-by-step process for obtaining RERA registration.


RERA, which stands for the Real Estate (Regulation and Development) Act, is a significant legislative measure in India designed to oversee the real estate domain. Enacted in 2016, RERA aims to introduce transparency, accountability, and efficiency into the real estate market, thereby safeguarding the interests of homebuyers. The core objectives of RERA include ensuring fair practices in the real estate sector, facilitating timely project completion, combating fraudulent activities, and establishing mechanisms for dispute resolution. One pivotal provision of RERA is the requirement for developers to register their projects with the regulatory authority, furnishing comprehensive information regarding project timelines, layouts, and financial aspects.


Furthermore, RERA mandates that developers allocate a specific percentage of funds collected from buyers into a separate escrow account, thereby ensuring projects are completed on time. This measure helps protect the financial interests of homebuyers and deters developers from diverting funds to other projects. Overall, RERA plays a crucial role in enhancing transparency and accountability within the real estate sector, fostering a more reliable and secure environment for developers and homebuyers alike.

Benefits and Advantages of RERA Act for Property Buyers

Objectives of the Real Estate (Regulation and Development) Act, 2016

  • Regulating the real estate sector by eliminating malpractices.

  • Safeguarding consumers from risks like delayed delivery, property title transfers, and ensuring quality amenities before purchase.

  • Establishing authorities to oversee the real estate sector and creating State Appellate Tribunals for dispute resolution. Enabling homebuyers to lodge complaints against builders or developers for misconduct.

  • Contributing significantly to India's GDP.

  • Establishing accountability and responsibility for appointed authorities.

  • Strengthening security measures on investments made by homebuyers or investors.

  • Granting supreme authority over project registration.

  • Ensuring quality project delivery to buyers and providing avenues for complaints to authorities regarding structural defects.


Significance of the Real Estate (Regulation and Development) Act, 2016

Previously, the real estate sector operated without regulation. The implementation of RERA aims to safeguard buyers and investors, thereby enhancing their confidence. RERA necessitates transparency and oversight to monitor the functioning of the real estate sector. It serves as a dependable platform for buyers and mitigates risks for those who invested before the Act's enforcement.

The Act clarifies the dynamics between property buyers and developers, fostering trust between them and establishing a state agency to oversee real estate and business transactions. RERA is instrumental in ensuring timely delivery of real estate projects to homebuyers, providing substantial relief to Indian consumers.

Key Features of the Real Estate (Regulation and Development) Act, 2016

  • Establishment of the Real Estate Regulatory Authority to regulate and promote the real estate sector.

  • Transparent and efficient conduct of real estate projects, including the sale of plots, buildings, or apartments.

  • Protection of consumer interests and prevention of malpractices.

  • Establishment of dispute redressal mechanisms and Appellate Tribunals for swift resolution of appeals.

  • Creation of state-level regulatory authorities (RERA) to oversee residential real estate projects and mandate registration of all projects.

  • Requirements for promoters to upload project details, including layout and site plans, on the website.

  • Mandatory consent from two-thirds of allottees for any changes in project layout or structure.

  • Imposition of equal penalty on defaulters and compensation for losses incurred by buyers due to defective property titles.

  • Enforcement of strict guidelines for the utilization of funds collected from project buyers and maintenance of separate bank accounts.

  • Provision for legal representation by professionals such as Chartered Accountants, Company Secretaries, or legal practitioners.

  • Imposition of stringent penalties, including imprisonment, on promoters and real estate agents.


Advantages of RERA (Real Estate Regulatory Authority) from the perspective of buyers include:

1. Transparency: RERA mandates developers to disclose project details, ensuring transparency in transactions.

2. Accountability: Developers are required to adhere to project timelines and quality standards, holding them accountable for delays or defects.

3. Consumer Protection: Buyers are protected from unfair practices and fraudulent activities, with provisions for grievance redressal.

4. Quality Assurance: RERA enforces standards for construction quality, ensuring buyers receive what they pay for.

5. Financial Security: Escrow accounts for project funds offer financial security, reducing the risk of diversion of funds by developers.

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How to Check if a a Property has RERA Compliance:

1. Check the RERA Registration Number: Every real estate project that falls under the purview of RERA should have a unique registration number provided by the respective state's RERA authority. This number should be prominently displayed in all advertisements, brochures, and documents related to the project. You can verify this number on the official website of the state's RERA authority.

2. Verify Project Details: On the official website of the state's RERA authority, you can search for the project using its name or the developer's name. This will provide you with detailed information about the project, including its status, developer details, sanctioned plans, approvals, timeline, and any complaints filed against it.

3. Check for Compliance Documents: RERA mandates developers to submit various documents such as project plans, approvals, commencement certificates, land title documents, and quarterly progress reports to the RERA authority. Ensure that the developer has submitted all necessary documents and that they are in compliance with RERA regulations.

4. Look for RERA Clause in Agreement: If you're buying a property, ensure that the sale agreement includes a clause stating that the project is RERA compliant. This provides you with legal recourse in case of any disputes or non-compliance issues.

5. Visit the RERA Office: If feasible, you can visit the local RERA office to gather more information about the project and seek clarification on any doubts you may have regarding its compliance.


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Penalties Applicable under the RERA Act

Failure to Register: Developers who fail to register their real estate projects under RERA may face penalties of up to 10% of the estimated project cost or imprisonment for up to 3 years, or both.

Non-Compliance with Orders: If a promoter fails to comply with any direction or order of the Regulatory Authority or the Appellate Tribunal, they may face a penalty of up to 5% of the estimated project cost or imprisonment for up to 1 year, or both.


Misrepresentation: Promoters who provide false information or make misrepresentations in the documents filed under RERA may face penalties of up to 5% of the estimated project cost or imprisonment for up to 1 year, or both.


Delayed Projects: Promoters who delay the completion of projects beyond the agreed-upon timeline may be liable to pay interest to the allottees for every month of delay, as prescribed under the Act.

Other Violations: There are various other violations under RERA for which penalties may be imposed, such as failure to maintain project accounts, failure to rectify structural defects, or failure to comply with other obligations imposed under the Act.


Exemptions from RERA Registration

Projects exempt from RERA registration include those with land areas or apartment limits below specified thresholds, projects limited to renovation, repair, or redevelopment without marketing or new allotments, and projects with completion certificates obtained before the commencement of the RERA Act. However, exemptions may vary among states, so it's essential to refer to specific state regulations for clarity.


Provisions safeguarding individuals against fraudulent advertisements in RERA:

Under Section 12 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), promoters are obligated to ensure the accuracy of their advertisements and prospectuses. If someone suffers financial loss due to incorrect or false statements in these materials, the promoter must compensate them as per the Act. Additionally, individuals affected by fraudulent statements in advertisements or prospectuses have the right to withdraw from the project and receive a full refund of their investment, including prescribed interest and compensation outlined in the Act.


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Frequently Asked Questions (FAQs) about RERA:

1. What is RERA?

RERA stands for the Real Estate (Regulation and Development) Act, 2016. It is an act passed by the Indian Parliament to regulate and promote transparency, accountability, and efficiency in the real estate sector.


2. When did RERA come into effect?

RERA was enacted by the Indian Parliament on May 1, 2016. It came into effect on May 1, 2017, after all the states and Union territories had notified their respective RERA rules.


3. What is the objective of RERA?

The main objective of RERA is to protect the interests of homebuyers and promote fair play in the real estate sector. It aims to establish a regulatory authority for the real estate sector, ensure transparency in project dealings, and impose penalties for non-compliance.


4. Who does RERA apply to?

RERA applies to both residential and commercial real estate projects. It covers developers, builders, real estate agents, and individual buyers or investors.


5. What are the key provisions of RERA for developers?

RERA mandates that developers must register their projects with the respective state RERA authority before advertising or selling them. They are required to provide accurate project details, adhere to timelines, and deposit a certain percentage of project funds in a designated bank account.


6. What are the penalties for non-compliance with RERA?

Non-compliance with RERA regulations can result in severe penalties for developers, including monetary fines, imprisonment, or revocation of project registration. These penalties are designed to ensure compliance and protect the interests of homebuyers.


7. How does RERA benefit homebuyers?

RERA provides several benefits to homebuyers, including increased transparency, access to accurate project information, timely delivery of projects, and recourse in case of disputes or delays. It also helps in reducing fraudulent practices and ensures the quality of construction.


8. Does RERA cover ongoing projects?

Yes, RERA covers both new and ongoing real estate projects. Developers of ongoing projects were required to register them with the respective state RERA authority within a specified timeframe after RERA came into effect.


9. Can homebuyers file complaints under RERA?

Yes, homebuyers can file complaints with the state RERA authority against developers for any violations of RERA provisions, such as delays in project delivery, misleading advertisements, or failure to provide promised amenities. The authority has the power to investigate complaints and take appropriate action.


10. How can one verify RERA registration of a project?

Homebuyers can verify the RERA registration status of a project by visiting the official website of the respective state RERA authority. They can search for the project using its name or registration number to access detailed information about its status, approvals, and developer details.

 

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