is RERA strong enough to save interests of Apartments owners?

While THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 commonly now knows as RERA is a comprehensive document, the objective of this article is to cover some of the key points to let readers determine if RERA can save interests of Apartments Owners or not. In case of any discrepancies/suggestions, please reach out to us.

What is “The Real Estate (Regulation and Development) Act, 2016″ (RERA)

“The Real Estate (Regulation and Development) Act, 2016” is mainly about:

1. Establishing “Real Estate Regulatory Authority” at State/UT level
2. Establishing “Real Estate Appellate Tribunal” at State/UT level
3. Establishing “Central Advisory Council” at Central Government

Is “The Real Estate (Regulation and Development) Act, 2016” already in force

THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 received the assent of the President on the 25th March, 2016.

As per the Gazette of India Extraordinary “The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification, establish an Authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act

This means that by 1st May 2017, there should be an Authority known as the Real Estate Regulatory Authority in every state of India

What are the key functions of “Real Estate Regulatory Authority”

1. Regulation & promotion of real estate sector
2. Protection of interest of consumers, promoters and real estate agents
3. Efficient and transparent sale of real estate projects
4. Speedy redressal of disputes
5. Register real estate project and real estate agents
No registration of the real estate project shall be required where the area of land proposed to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed 8 inclusive of all phases.
6. Regulate registered real estate project and real estate agents
7. Publish (on a website) records of registered real estate projects, promoters, real estate agents
8. Publish (on a website) records of defaulter, revoked, penalised promoters
9. Publish (on a website) records of real estate agents whose registration has been rejected or revoked on a website
10. Ensure adherence of compliance of The Real Estate (Regulation and Development) Act, 2016
11. Impose penalty or interest on real estate promoters, real estate agents and allottees (consumers) upon contravention of obligations cast upon them by the act

What are the key functions of “Real Estate Appellate Tribunal”

1. Hearing appeals for the decisions, directions or orders of the Real Estate Regulatory Authority

What are the key functions of “Central Advisory Council”

To give recommendations and advice to Central Government:

1. On the matter concerning the implementation of “The Real Estate (Regulation and Development) Act, 2016”
2. On protection of consumer interests
3. On overall growth and development of Real Estate Sector

What are the main consumer’s rights and duties/obligations

Consumer’s rights:

The allottee shall be entitled to:

1. Get the information regarding sanctioned plan, specifications approved by the competent authority
2. Get stage-wise time schedule of completion of the project (including amenities) as agreed in AoS (Agreement of Sale)
3. Claim the refund (along with interest) of the amount paid to builder/promoter in case
a. builder/promoter fails to give possession on time or fails to comply with AoS (Agreement of Sale)
b. builder/promoter discontinue it’s business on account of suspension or revocation of his registration as per this act
4. Any aggrieved person (or group of allottees) may file a complaint with the “Authority” or the adjudicating officer for any violation or contravention of the provisions of this Act
5. Any person aggrieved by any decision or order of the Authority or by an adjudicating officer under this Act may appeal before the “Appellate Tribunal” having jurisdiction over the matter
6. Any person aggrieved by any decision or order of the “Appellate Tribunal” may file an appeal to the “High Court”, within a period of 60 days from the date of communication of the decision or order of the Appellate Tribunal, to him
7. Get compensation if Allottee (within five years of getting possession) brings to the notice of promoters any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development, and promoter fails to rectify such defects within 30 days

Consumer’s duties/obligations:

1. The allottees should make timely payments to promoters as agreed
2. The allottees will be liable to pay interest for the delay in payments to promoters as agreed
3. Every allottee of the apartment, plot or building, shall participate towards the formation of an association or society or cooperative society of the allottees
4. Every allottee shall take physical possession of the apartment, plot or building, within a period of 2 months of the occupancy certificate issued
5. Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building

“Promoters” key points/duties/obligations

1. Promoters should park 70% of the amounts collected from Allottees in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
2. Promoters can withdraw from parked 70% amount from the schedule bank only after approved by an engineer, an architect and a chartered accountant
3. Promoters should get their accounts audited within 6 months after the end of every financial year by a chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project
4. Promoters, at the time of the booking and issue of allotment letter shall provide following information to the Allottees:
a. Sanctioned plans, layout plans, along with specifications, approved by the competent authority
b. The stage wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation and electricity
6. Promoters should obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws
7. Promoters should not accept a sum more than 10% of the cost of the apartment, plot, or building, as an advance payment or an application fee
8. In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act
9. Promoters shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from “two-third” allottees, except the promoter, and without the prior written approval of the Authority
10. Promoters shall return the amount with interest paid by Allottee, if Allottee wants to withdraw from project, in case promoters fail to give possession of an apartment, plot or building
11. Promoters shall pay interest for every month of delay to Allottee, if Allottee does not want to withdraw from project, in case promoters fail to give possession of an apartment, plot or building on time
12. Promoters shall also pay compensation to Allottee if Allottee is suffered by any loss due to defective title of the land, on which the project is being developed

Punishments for “Promoters”

1. If promoters advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building without registering the Real Estate Project with “Real Estate Regulatory Authority” then promoters shall be liable to a penalty which may extend up to “10%” of the estimated cost of the real estate project as determined by the Authority
2. If promoters do not comply with the directions, orders given by Authority or repeatedly violate the compliances norms then promoters can be imprisoned up to 3 years or can be fined with further “10%” of the estimated cost of the real estate project or both
3. If promoters give false information during registration of Real Estate Project then they shall be liable to a penalty which may extend up to 5% of the estimated cost of the real estate project, as determined by the Authority
4. Promoters shall return the amount with interest paid by Allottee, if Allottee wants to withdraw from project, in case promoters fail to give possession of an apartment, plot or building
5. Promoters shall pay interest for every month of delay to Allottee, if Allottee does not want to withdraw from project, in case promoters fail to give possession of an apartment, plot or building on time
6. Promoters shall also pay compensation to Allottee if Allottee is suffered by any loss due to defective title of the land, on which the project is being developed

“Real Estate Agents” key points/duties/obligations

1. No real estate agent shall facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building without obtaining registration from the Authority.
2. Every Real Estate Agent who is registered with the Authority shall quote the registration number granted by the Authority in every sale facilitated by him under this Act. The given registration number would be renewable.

Punishments for “Real Estate Agents”

If Real Estate Agents fails to comply with, or contravenes any of the orders or directions of the Authority as per Point1 and Point2 given above, then Real Estate Agents shall be liable to a penalty of Rs10000/- for every day during which such default continues, which may cumulatively extend up to 5% of the cost of plot, apartment or buildings

What happens to ongoing Legal suits at District Consumer Forum, State Commission, Nation Consumer Forums

If the cases related to “loss incurred by making advance payment due to false advertisement, notice, prospectus made by promoters”, “alteration in sanctioned plans, layout plans and specifications”, “delay in possessions”, “unable to complete the project”, and “Allottees Rights related issues” are pending in District Consumer Forum, State Commission, Nation Consumer Forums, Allottee may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this Act.

Our opinion

RERA seems to be consumers friendly Act provided all states implement the clauses of RERA Act 2016 without tweaking much.

Links for RERA Draft Rules

Karnataka RERA Draft Rules

Uttar Pradesh RERA Draft Rules

Madhya Pradesh RERA Draft Rules

Gujarat RERA Draft Rules

Odisha RERA Draft Rules

Disclaimer: If you find any discrepancies in this article then please contact us

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