For decades, the Indian realty sector has been blighted by delays, misleading information and lack of accountability. Home-seekers had little option than to listen to the developers’ versions which often lacked clarity. More crucially, they hardly had access to any legal intervention or even advice.
It all changed dramatically with the introduction of the Real Estate (Regulation and Development) Act, 2016, popularly referred to as RERA. Designed to ensure transparency, accountability and a level playing field in the industry, RERA has been a gamechanger for the Indian real estate sector, giving the homebuyers a comprehensive umbrella of protection.
The RERA pathway to transparency
The RERA endorses transparency in real estate transactions by making it mandatory for developers to register their projects, spell out all the details and provide periodic updates on progress of the project. This makes sure that homebuyers have access to precise and trustworthy data, thus promoting accountability and assisting in informed decision-making.
- Compulsory registration of projects and agents: Section 3 of the RERA Act, 2016 mandates that all residential and commercial real estate projects, measuring over 500 sq m or more than eight units, have to be registered with the respective state RERA authority. This enables buyers to verify the authenticity of a project on the online portal before booking. Developers are barred from advertising, selling or offering any property without registration. All agents involved in the sale must also be registered.
- Compulsory disclosures by developers on RERA portals: Under Section 4(2) of the RERA Act, 2016, developers must submit and periodically update information like title deed, legal ownership documents, layout plan and sanctioned approvals, timetable of project development and quarterly financial progress.
- Need for escrow account to prevent diversion of funds: Section 4(2)(I)(D) of the RERA Act, 2016 mandates developers to deposit 70% of the funds collected from buyers into a separate escrow account. These funds must be used exclusively for the project for which they were collected.
- Standardized sale agreements and carpet area spelt out: Section 13 of the RERA Act, 2016 prohibits developers from collecting more than 10% of the flat cost without a registered agreement for sale. The Act also dictates clearly spelt out carpet area, payment milestones, possession date and penalty clauses.
- Defined timeline for possession and compensation for delays: Under Section 18, if the builder fails to hand over possession on time, the buyer can withdraw and claim a full refund with interest, or stay on and receive monthly interest compensation.
- Quick redressal through RERA adjudication: Under Sections 31 and 71 or the RERA Act, 2016, buyers can file complaints online with the state RERA or adjudicating officers for project delays, false promises or refund issues. This process is timebound and usually resolved within 60 days.
To sum up
RERA ensures that you have legal backing and power, and are no longer at the mercy of the builder’s claims. You are now empowered to verify approvals and land ownership, know what you are paying for, track construction progress and get timely possession or a refund, and file legal complaints independently if necessary.
