What Is RERA: Here Are The Most Important Things Homebuyers Should Know

The advent of the RERA Act in 2016 streamlined the real estate market. This has mainly benefited the property buyers in a number of ways. 

But, let’s first understand why there was a need for the centralized Real Estate Regulatory Authority (RERA). And whether it has been effective in safeguarding the interest of the homebuyers. 

Before RERA, the Real Estate market was unorganized. Meaning, there was no authority that governed the different stakeholders in the real estate sector. The absence of a registry and regulations for the builders, developers, agents, and projects often leads to unprofessional practices and fraud. Delays in the project completions, misleading promotions, and non-transparency in the cost structure were some of the prevailing problems before the RERA Act. 

And above all, there was no robust framework for the homebuyers to register and resolve their complaints. 

So to protect homebuyers and ensure professional practices in the real estate sector, the Real Estate Regulatory Authority (RERA) was established under the RERA Act 2016. Understanding some of the key points of the RERA Act is important for you as a homebuyer. This will help you to be more alert and make smart decisions in the homebuying process.

What Is RERA?

The Real Estate Regulation And Development Act 2016, established the Real Estate Regulatory Authority  (RERA) to regulate and promote efficient and transparent real estate transactions. 

RERA protects the interest of the property buyers by establishing a speedy dispute redressal mechanism. And ensures that sales of a plot, apartment, building, real estate projects, etc are done according to the standard centralized guidelines. 

RERA clearly outlines the responsibilities of the Real Estate Promoters (Builders or Developers), Real Estate Agents, and Buyers. Non-compliance with any of the RERA provisions can be subject to the stringent penalties stated in the RERA Act. 

The rules and regulations under the RERA 2016, can be regulated by the respective state governments. Currently, 34 States and Union Territories have notified the RERA guidelines. Since its enactment, the RERA has addressed more than 65,000 complaints. 

RERA has proved beneficial for homebuyers because of its structured and assuring framework.

Responsibilities Of The Builder Under RERA

Without the RERA registration, the Builder or promoter cannot sell, promote, or book any apartment or building. Therefore the prime responsibility of the builder or promoter is to have an official RERA registration.

Also, for every real estate project, the promoter has to make an application to the RERA with the important details and documentation regarding the project. 

 List of Responsibilities of the Builder or Promoter Under RERA

RERA Registration

It is compulsory for the promoter to have the RERA registration. Except where the area of the proposed land of project is not more than 500sq ft or the number of units/apartments are less than 8.

RERA Details

The promoter should have a webpage on the official RERA website with the following important information:

• RERA registration details of the promoter
• The updated list of bookings on plots and apartments
• Updated list pending and in-process approvals with the RERA
• Quarterly Status of The Projects

The advertisements or promotions should include all the important details related to the RERA registration.

Providing Important Information  

At the time of booking, the Builder should issue an allotment letter to the buyers with the following key details.

• Important specifications, Sanctioned building plans, and approved layouts. 
• Project completion time schedule and stages of construction.
• Details of the basic infrastructure such as water, electricity, and gas connections.

Get The Approvals From The Authorities

The promoter is responsible for getting the completion and the occupancy certificate from the local governing bodies.

Maintenance

It is the responsibility of the developer to provide the essential services until the association of the allottees takes over the maintenance of the building. This also includes Paying the taxes, water, electricity charges, maintenance charges, etc until the transfer of the physical possession of the properties other the buyers.

Executing The Conveyance Deed

Executing the registration of conveyance deed of the apartment, building, or plot in favor of allottees. Also, Facilitate the formation of a society or cooperative society. 

10% Advance Payments

Promer should not accept advance payments of more than 10% of the cost of the property without entering into the agreement of sale. The promoter should mention all the important particulars in the agreement such as Internal Developments, External developments, and the Cost of the apartment, building, or plot.

Adherence to the Sanctioned Plans

The project should be completed within a given time frame by adhering to the sanctioned plans, and layouts approved by the local authorities. 

Alterations and Structural Changes

The promoters should not make any alterations in the structure, fixtures, fittings, and amenities without the consent of the buyers. However, some minor alterations or changes are allowed for architectural & structural reasons on the authorization of the engineers. Also, the changes can be made if two-thirds of the allottees give consent. 

Repairs and Maintenance

Promoters should make the necessary maintenance in case of structural defects or inferior structure quality within thirty days. If the promoter fails, the buyers are entitled to get the right compensation. Provided that the property buyers should notify about the defects within the first five years after the possession of the property. 

No Transfer of Liabilities

The promoter can’t transfer the liabilities or the rights to the third party without the consent of two-thirds of the allotted. Such transfer should not affect the sales of the apartment, plot, or buildings. In case if the allotted agree to the third party’s right transfer then that party should be completely responsible for the pending obligations.

Insurance Of The Real Estate Project

The promoter should obtain all the necessary insurances notified by the government. Also, the promoters must pay the insurance premium before transferring the properties to the association of the buyers. 

Transfer Of the Title

The promoters should execute the transfer of the registered conveyance deed in favor of the property buyers. And it is the responsibility of the promoter to hand over the necessary documents, plans along with the common areas to the housing society after obtaining the occupancy certificate. 

Refund Amount And Compensation

If the builder fails to complete the project as per the specifications and the time frame cited in the agreement due to various reasons such as financial loss, revocation of the approvals, etc then the promoter should-

• Allow the property buyers to withdraw from the list of the allottees.
• Should refund the amount paid by the property buyers
• All the compensation should also be paid along with the refund. 

Important Things Buyers Should Check As Per RERA

Rights Of The Home Buyers Under RERA 

Get the Right Information

Under RERA the property buyers are entitled to get information on the plans, layouts, and approval status of the project. The builder therefore should provide all the details demanded by the buyer. 

Get The Schedule Of The Construction

RERA empowers the homebuyers to know the detailed schedule plan of the project construction. This also includes the dates for the various construction stages. 

On-Time Possession

RERA gives the right to home buyers to get possession of the house within the prescribed time. Failing which the buyer is entitled to get compensation and refunds. 

Get the Refund & Compensation

If the builder fails to deliver the project with predefined specifications and on the scheduled time then the buyers can choose to cancel the contract and get a refund of the amount paid along with the compensation. 

Documents

After the possession of the document, the property buyers should get all the important documents and plans. This includes all the approvals, Noc certificates, sales deeds, etc.  

The Benefits Of RERA For Home Buyers

RERA safeguards the interest of the property buyers. RERA has framed its guidelines in such a way that it adds key benefits to the property buyers. 

Here are some benefits RERA offers to The Home Buyers:  

Accurate Information 

With RERA the buyers get the right information to make the buying decision. This is important because, before RERA, the buyers were misled by fraud promoters. To avoid this RERA brought strict guidelines for the builders which enable the buyers to get the right information. 

Under RERA, important information such as property specifications, prices, terms and conditions, payment modes, building plan approvals, layouts, etc is provided to the buyers. 

Transparency 

RERA has made it mandatory for the developers to disclose the carpet area to the buyers. In fact, the promoters can advertise and sell the properties only on the basis of the carpet area. This has provided great transparency to the buyers. Before RERA the developers used to quote on the basis of Super-Built-up area. This was confusing for the buyers and had many loopholes. 

By making it mandatory to disclose the carpet area, RERA has ensured that buyers get what they pay for. There is no hidden factor and no fraud. 

In-Time Project Completion

Before RERA, delayed projects were the biggest challenge in buying under-construction properties. Because of the delays, buyers had to bear the monetary losses. 

To avoid this RERA brought strict guidelines to complete the project in time. 

To ensure the on-time project completion, RERA has made the following guidelines,

• If the builder does not complete the project within the given timeline, then he has to pay the compensation to the buyers for the delayed time
• The builder has to pay up to 10% total cost of the project as a penalty 
• Buyers can cancel the agreement if the project is getting delayed
• Builder needs to pay the refund along with the interest

Cap On The Advance Payments

Before RERA there was o specific limit on the advance payments charged by the builders. To ensure affordability to the buyers, RERA imploded a cap on the advance payments collected by the builder. 

According to the RERA, the promoter cannot take more than a 10% advance without entering into the sales agreement. 

Complaints Redressal

RERA has fast track dispute redressal system. In case of any dispute, buyers can appeal to the Appellate Tribunal. Then the necessary action is taken on the builder in case of breach of conduct. 

The builder has to comply with the final decision taken by the tribunal and give the necessary refund and compensation to the buyer. 

Quality Of The Projects

Because of the RERA, the quality of the real estate projects has been improved. In case of any defect or poor construction, the builder is responsible for making the maintenance. 

Also, in the case of under-construction properties if the buyers find the specification is not as previously defined, then the buyers can demand compensation on the basis of what they have got.

The RERA asks the builder to recalculate the price on the basis of the actual carpet area property buyers are getting. However, if the carpet area is less than the area mentioned in the agreement then the builder has to repay the extra amount charged. On the other hand, if the final carpet area is more then the buyer is liable to pay the extra amount to the builder. 

No Frauds

This is one of the biggest impacts of the RERA. Every builder has to register the project with RERA and display all the details on the various mediums while selling. Also, there is no chance of hiding or spreading misleading information. If the promoter does not follow the guidelines then the RERA can impose the penalties on the buyer.

This has resulted in more transparency and no frauds in the real estate market. Even if cases of fraud arise, RERA ensures the fast-track redressal system. 

Compensation For Defaults

 RERA addresses the disputes between the buyers and the builders on a fast-track basis. If the builder has defaulted then is liable to pay the compensation to the buyers. 

Suppose, if the builder or developer delays the construction project and the buyer decides to cancel the agreement with the builder, then the builder has to pay all the amount paid by the buyer along with the applicable interest rate. 

Cancellations In Case of Defaults

RERA gives the right to the buyer to cancel the contract with the builder if he does not follow the standard guidelines. Provided that the reasons for the withdrawal from the contract are fair. 

The builder should allow the buyers to withdraw from the contract as per their wishes. 

Refund Policy With Interests

In case of any default, buyers get a refund along with the interest to avoid losses. This has not only safeguarded the buyers but has ensured no loss or fraud. 

Responsibility Of the Home Buyers Under RERA 

RERA has also highlighted some of the key responsibilities of home buyers. The buyers should ensure that they adhere to these important guidelines for successful real estate transactions. 

Timely Payments:  The property buyers are responsible for making timely payments as per the sale agreements. The buyers should know the payment schedule and ensure the payments are done as per the stages defined in the agreement. Also, the buyers need to pay the interest in case the payment gets delayed. 

Formation Of The Society: Once the buyers get possession of the property, they should participate and cooperate to form an association, cooperative society, or federation. 

Registration Of the Conveyance Deed: A conveyance deed is one of the most important documents in the home buying process. Therefore, the homebuyers should cooperate and participate in the registration of the conveyance deed. And should ensure that the process is completed successfully. 

Penalties For Builder Under RERA

For Not Registering The Project With RERA

Under RERA is mandatory for the builder to register the project. Without the RERA registration builder can’t promote or sell a single unit of the real estate project. If the builder does not follow the guidelines by not registering the project, a penalty of 10% of the total cost of the project may be imposed.

Further, if the builder does not pay the penalty and continues to violate the RERA provision then he can be punishable for up to 3 years imprisonment. And the fine can be extended beyond 10% of the total cost of the project. 

Spreading False Information

RERA has strict guidelines for providing accurate information to buyers. If the builders provide any false information through advertising or any medium they will be penalized by the RERA. The fine can be up to 5% of the total estimated cost of the project. 

Non-Compliance With RERA Orders

If the builders or developers do not follow the orders or the directions of the RERA then the builders have to pay the fines. These penalties are up to 5% of the estimated cost of the project and continue for the period of non-compliance. 

Non-Compliance With Appellate Tribunal Orders

The Appellate Tribunal gives the decisions on the disputes between the buyers and the promoters. If the builders do not follow the decisions and direction given by the tribunal then he is punishable with imprisonment for three years. Moreover, the penalty of up to 10% of the estimated cost of the project is charged for the default period.  

Penalties For Home Buyers Under RERA

RERA also imposes penalties on the buyers if they do not comply with the guidelines. This generally includes non-payment of the total amount or the interest.

Non-Compliance With RERA Orders

If the buyer does not follow the RERA guidelines then the penalty of 5% of the total cost of the property is imposed.  Therefore, the buyers should ensure timely payments. If the buyer continues to default, then the penalty is applied to the entire default period. 

Non-Compliance With Appellate Tribunal

If the buyers do not comply with the final decisions and instructions given by the Appellate tribunal then the buyer is punishable with imprisonment up to 1 year. Also, the buyers can be fined up to 10% of the total cost of the property. 

Cancellation and Refund Under RERA

A home buyer can cancel the agreement and withdraw from the contract. But provided that there is a valid reason for the cancellation. 

The cancellation could be because of the default of the builder or buyer. 

Let’s understand the different defaults between the builder and the buyer which can lead to the cancellation of the purchase agreement. 

Builder/Developer’s Default

The buyers can withdraw from the sales agreement for the following defaults by the builder. 

• The builder fails to complete the project within the given timeline
• The builder fails to provide the possessions of the property to the buyers

In such cases, the builder has to repay the entire amount paid by the buyers along with the interest as compensation. 

Moreover, for the defective land title, the builder has to pay compensation to the property buyers. Also, In case of delays in the completion of the project, the builder needs to pay the interest for the delayed period. 

Property Buyer’s Default

If the buyer fails to pay the amount then the builder has the right to terminate the contract. If the payment is delayed and the builder does not cancel the allotment of the buyers, then the buyer has to pay the interest for the delayed period to the builder.  

How Homebuyers Can File a Complaint Under RERA?

If the buyers want to complain against the builder, agent, or promoter they have two options.

They can register the complaint with the RERA or approach the Consumer Forums such as consumer court and National Company Law Tribunal. 

Since Consumer Forums already have a large number of pending cases, it is recommended to register the complaint with the dedicated authority RERA. Also, the cost of processing the complaint is comparatively lower with the RERA than the Consumer Forums.

As per the RERA Act, the Appellate Tribunal is set up for giving the decisions, orders, and directions of the Real Estate Authority and Adjudicating Officer.  

The property buyer can file a complaint with the adjudicating officer or  Real Estate Authority in case of any dispute with the real estate agent or builder. If the person is not satisfied with the decisions and orders were given by the Real Estate Authority or Adjudicating officer then they can further appeal to the  Appellate Tribunal. 

The appeal can be made in the Appellate Tribunal within the period of 60 days from the date of the decision from the adjudicating officer or the Rea Estate Authority. However, the Tribunal can accept the appeal for valid and satisfactory reasons.

 Now, Can the applicant have a legal representative or a lawyer to represent them in RERA Tribunal? 

Yes, as per the RERA act an applicant can either appear in person or choose the professionals to represent before the Real Estate Authority, Adjudicating Officer, and Appellate Tribunal.  This professional representative can be chartered accountants, company secretaries, cost accountants, or legal practitioners. 

Remember, the Appellate Tribunal gives the order and executes with all the powers of the civil court. In some cases, it can pass the case of the local civil courts. 

Further, if the applicant is not satisfied with the decisions made by the Appellate Tribunal then the complaint can be filed in the High Court within sixty days from the date of the communication.