The Real Estate (Regulation and Development) Act, 2016 (RERA) will finally give India’s real estate sector its first regulator from May 1, 2017. The act was passed by parliament last year and the Union Ministry of Housing and Urban Poverty Alleviation had given time till May 1, 2017, to formulate and notify rules for the functioning of the regulator. The Real Estate (Regulation and Development) Act is expected to bring transparency and accountability in the realty sector and ensure consumers will not be cheated or taken for a ride by the developers. The act will also ensure that consumers won’t have to endure late deliveries
What is RERA?
According to RERA, each state and Union territory will have its own regulator and set of rules to govern the functioning of the regulator. Centre has drafted the rules for Union territories including the national Capital. While many states are still behind on schedule for notification of RERA rules, many have notified rules and a regulator will start functioning. Some of these states are Haryana, Uttar Pradesh, and Maharashtra.
Here are the most important ground rules of the RERA:
- The developer at the time of the booking and issuing the allotment letter shall be responsible for making available to the allottee, the following information:
- Sanctioned plans, layout plans, along with specifications, approved by the competent authority.
- The stage wise time schedule of completion of the project, including the provisions for civic infrastructure like water, sanitation, and electricity.
- Booking amount: Currently, most builders ask for 10 percent of the total cost of the property as a booking amount. The ‘agreement of sale’ is prepared at a later date. Now as per RERA, a promoter cannot accept more than 10 of the cost of the property, as an advance payment or an application fee, without first entering into a registered agreement for sale.
- Getting the Project Registered: Before a project gets advertised, a registration number has to be obtained against it. Few important documents that the promoter has to furnish to RA will include:
- Promoter’s background details
- A brief detail of the projects launched by the promoter, in the past five years including ones which are already completed or being developed. The current status of the said projects, any delay in its completion, details of cases pending, details of the type of land and payments pending, will also need to be shared.
- An authenticated copy of the approvals and commencement certificate from the competent authority. And, where the project proposed to be developed in phases, a copy of the approvals and commencement certificate from the competent authority for each of such phases, is also to be furnished.
- The sanctioned plan, layout plan and specifications of the proposed project or the phase and the whole project as sanctioned by the competent authority.
- Proforma of the allotment letter, an agreement for sale, and the conveyance deed proposed to be signed with the allottees.
- The number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas with the apartment if any
- The number and areas of a garage for sale in the project.
- Ongoing projects: RERA will not only cover the new launches but also the on-going the projects. Promoters have been given three months to get their ongoing projects registered with RERA i.e. until 31st July 2017.
- Registration of Projects: Make sure a property that you buy any time after May 1, 2017, is a project which is registered with the RA. Once the state has its RA established, builders will be required to register their projects with it by furnishing all the information including, financial statements, a copy of legal title deed and other documents. The builders will get a registration number project-wise i.e. tower wise.
- Online Information: After registration with RA, the builder will be given a login-id and password to create a page on RA’s website to upload the project related information on authority’s website. It will show quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; quarterly up-to-date status of the project; and amongst others.
- The quality of construction: The quality of the construction has also been a matter of concern with several builders. The RERA rules provide for protection against this up to 5 years after possession. 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 is brought to the notice of the promoter within a period of five years, it shall be the duty of the promoter to rectify such defects without further charge, within 30 days.
- Delayed delivery – compensation: Delayed possession has been the norm all these years. If the promoter fails to complete or is unable to give possession of the property within the agreed timed-period, he has to return the total amount with interest at such rate as mentioned in the agreement to sale. And, in case the buyer does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession.
So far, 13 states and Union territories that have notified that RERA has come into effect. The states include Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharashtra, Madhya Pradesh and Bihar, while the UTs include Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Dio and Lakshadweep. Delhi NCR has also been notified of RERA coming into effect.