The new legislation Real Estate (Regulation and Development) Act, 2016 (known as RERA) was enacted with the aim of protecting the interest of the Real Estate sector and specially the buyers. Before this law was enacted real estate buyers were exploited by builder mafia in many ways like (a) property was never handed over to the buyers, (b) handed over very late without any compensation for the delay (c) delivery of the property was not as promised (d) money was taken from home buyers but even construction never commenced, etc.
The whole real sector industry will immensely benefit because of this game changing law. Homebuyers were the main victims and they will benefit the most. Following are the benefits to buyers:-
- It is mandatory for the Promoter/Builder to register the project with RERA and the completion time of the project is to be specified in the RERA application form for registration along with several other details like no of units, specifications, utilities, carpet area, etc.
- Before applying for the registration with RERA, Promoter/Builder has to obtain all approvals required for the project.
- Promoter/Builder is bound to deliver the unit within the agreed time otherwise huge penalty will be levied (upto 10% of the project cost).
- Only after registration of the project the Promoter/Builder can start advertising, booking ,allotting , entering into agreement, etc.
- The Promoter/Builder is required to take only upto 10% of the total consideration of the flat/plot/apartment/shop from the buyer as booking amount. The act prohibits the promoter from taking more than 10% of the total consideration without entering into the agreement to sale.
- All the documents filed by the Promoter/Builder is available online to the general public so prospective buyers can download all the documents for due diligence before taking a decision to buy.
- It is compulsory for the Promoter/Builder to upload the progress in the project every 3 months. So at any time anyone can check the development/construction status online.
- The Promoter/Builder has to compulsorily form and register a society of Allottees within three months from the date of the booking by the Allottees of the project.
- The Promoters/Builders have been indulging in fraudulent practices of fooling the buyers by selling on the basis of super built up area to include some portion of common area to extract more money. Now after RERA buyers will only pay for the actual carpet area.
- If the Promoter/Builder wants to leave the project mid-way by selling to another Promoter or party, then the Promoter is required to take written approval of 2/3rd of allottees along with prior approval of the RERA Authority.
- If the Promoter/Builder wants to amend or change any Plans and layouts, then the Promoter/Builder has to take the permission from at least 2/3rd buyers.
- The Promoter/Builder will be responsible to repair any structural defects in the construction even after 5 years of handover of the project.
- Earlier, the disputes between builders and buyers were heard and decided in the consumer courts. These consumer courts take few years to decide a case as they are overloaded with disputes of all types of consumers. RERA provides for disposing of a complaint within 60 days of filing of the Complaint.