Know Everything About Rera Act

Real estate is one of the largest sectors in the country. With hundreds of thousands of builders, there is no dearth of fraudsters. Project abandonments and delays are common issues property buyers may have to undergo. To eradicate such problems, the Government of India passed the Real Estate Regulatory Authority (RERA) Act in 2016. The act protects not only the property buyers but also the property providers. As a potential property owner, you should familiarise yourself with RERA guidelines. Keep reading to know more.

The full form of RERA is Real Estate Regulatory Authority. The RERA Act was passed to increase transparency and eliminate problems arising amidst selling plots, flats or real estate projects. RERA is also responsible for speedy dispute redressal and establishing Appellate Tribunals to hear appeals.
Every real estate developer, builder and agent is required to register their upcoming projects with RERA. Only after registering for RERA can the builder advertise and market a real estate project and allow bookings from customers. Any project that spans over 500 square kilometres or includes more than eight flats is required to be registered with the RERA of the respective state.
Every state has their own Real Estate Regulatory Authority. You can view the upcoming RERA-registered projects on the state's RERA website. If you cannot find a project on the website, then that project's developer has not registered with RERA, and chances are they are selling flats or plots illegally. 

RERA offers apparent benefits to property buyers. However, it also protects the rights of the builder and real estate agent.

Carpet area standardisation

Before RERA, there was no defined standard by which builders calculated the project's price. Instances of builders inflating the carpet area to increase the prices were prevalent. However, RERA has standardised how builders measure the carpet area.
Per RERA, carpet area is defined as a flat's net usable floor area. This area excludes the area covered by the external walls, exclusive balcony or verandah area, exclusive open terrace area and areas under service shafts. However, the carpet area includes the area covered by the flat's internal partition walls.

Using buyer's funds for intended purposes

During RERA registration, the developer must support the application with an affidavit. One point in the affidavit states that the developer should deposit 70% of the funds collected from property buyers in a separate account maintained at a scheduled bank.
The amount should cover only construction and land costs. The project engineer, architect and chartered accountant must verify the necessity of such costs. The developer must have the accounts audited within six months after the end of the financial year. The utilised funds should comply with the percentage above. This ensures that there is no embezzlement of buyer's funds.

Establishment of the Real Estate Appellate Tribunal

Every state and union territory that has enforced the RERA Act should have its own Appellate Tribunal to resolve real estate issues. The Appellate Tribunal is a committee responsible for dealing with appeals made by the builders, agents, or buyers that are not resolved by the RERA authorities.

Compensation for structural defects

After purchasing the property, if you find any structural defect or service quality issues, you are entitled to inform the builder within five years of possession. The builder must repair any such damages within 30 days of receiving the report from the buyer. Also, repairs must be carried out at no cost. You will be entitled to appropriate compensation if the builder does not address the damages within the specified timeframe.

Advance payment rules

The builder or developer can only take your advance or deposit after entering into a contract. After forming an agreement, the builder cannot accept an advance over 10% of the property cost. The sale agreement should specify details such as project development specifications, property possession date, the interest rate payable by the builder in case of defaults and so on.

Interest paid for defaulting by both parties

Suppose the builder fails to complete the property construction or cannot give possession. In that case, the builder is liable to return the amount received by the property buyer with interest. If the property buyer does not withdraw from the project, the builder must pay interest for every month of delay until possession.
Moreover, as the property buyer, if you fail to make payments to the builder within the agreed-upon timeframes, you must also pay interest. Payments can include registration charges, municipal taxes, utility charges, etc. 

As a property buyer, the RERA Act has enlisted your rights and the duties you must undertake. They are as follows:

• You are entitled to obtain information about sanctioned plans, property layout plans and their specifications and any alterations. You can get this information in your sale agreement, provided the builder signs the same.
• You have the right to know what stage your property is at and whether provisions for everyday utility have been made as promised by the developer.  
• You are entitled to claim the refund amount with interest from the developer in case of project delays or abandonment.
• You are liable to pay interest if you fail to make the agreed-upon payments to the builder.
• You should take physical possession of the flat or plot within two months of the occupancy certificate issuance for the property.
• You are to participate in the formation of the society or cooperative society. 

All parties involved in a real estate transaction are liable for penalties if they fail to comply with RERA:

For the builder/developer

• If the builder fails to register for RERA before commencing the project, a penalty of 10% of the estimated project cost shall be applicable.
• Upon refusal to pay the penalty, imprisonment of up to three years shall be applicable.
• A 5% penalty applies if the builder has provided false information while registering.

For the buyer

• Failure to comply with RERA rules can incur a penalty of 5% of the property cost.
• A one-year imprisonment and penalty of 10% of the property cost shall be applicable for contravening the Appellate Tribunal.

For the agent

• The real estate agent has to pay a 5% penalty for the property in question upon failing to comply with RERA.
• The agent must also accept a one-year imprisonment or 10% of the property for not abiding by the Appellate Tribunal's rules. 

The real estate industry was plagued with fraudulent activities during the non-RERA period. Further, the complexity of real estate baffled the common folk that they would give in to the builder's demands. RERA was established to protect the rights of such people.
You can check whether or not the builder and your real estate agent are registered with RERA. The information is freely available on the state's RERA website. Buyers will have little to no reservations while purchasing properties since all information about the project shall be available online.
RERA rules out fraudulent developers as people would refuse to associate with them in the first place. Legitimate projects will have no trouble sustaining the present-day real estate scenario.
With establishing a dedicated committee to resolve real estate issues, buyers, builders and agents can avail of a seamless grievance redressal experience. 

Section 31 of the RERA Act states that builders, real estate agents and buyers can file complaints against one another. The following are the steps:

• Step 1: Every registered state has their own RERA website, wherein the complainant can file grievances against another party. Visit your state's official website and select the appropriate option to file a complaint.
• Step 2: Provide the project details and a brief complaint description.
• Step 3: Pay the fee. Note that the fee will differ across states.
   

If RERA's response is unsatisfactory, you can file a complaint with your state's Appellate Tribunal. If you are not satisfied with the Appellate Tribunal's hearing, you can move to the High Court.

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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Home Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification per the Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.