The Real Estate (Regulation and Development) Act, (RERA) which came into force on May 1st 2016, is considered as one of the landmark legislation passed by the Government of India for the betterment of Indian Real Estate Market.
RERA stands for Real Estate Regulatory Authority. The authority which looks for the proper implementation of the Real Estate (Regulation and Development) Act in India.
The objective of Real Estate (Regulation and Development) Act (RERA) is to reform the real estate sector in India, by encouraging greater transparency, citizen centricity, accountability and financial discipline.
With its rapid growth, Indian real estate market in plays a significant role in the development graph of Indian economy. With more people migrating from rural parts of the country to the urban areas, the demand of real estate in all its forms – residential, commercial, for sale, for rent; has been on the rise.
Though the real estate sector was witnessing tremendous growth, it got its troubles too. Real Estate buyers in India were facing troubles due to unethical practices by some of the real estate developers and brokers.
Projects started getting delayed, customers were getting unnecessary demands, a lot of cases of customers getting cheated by developers or brokers in Indian real estate market came to light too.
One of the major reasons behind projects getting delayed was a delay in the project approvals and dispute resolution, the long-standing demand of the industry and consumers were not getting fulfilled.
With the purpose to help people in safeguarding their investments in real estate, Govt. of India realized the need for amendments in Real Estate Bill and RERA came into existence.
The Real Estate Regulation and Development act focuses on empowering all the stakeholders in the Indian real estate sector including consumers, investors, developers, and brokers by implementing much-needed accountability and transparency to place greater emphasis on planning and implementation of unambiguous deeds of doing business in the real estate sector of India.
The real estate regulation and development act covers a vast range of regularities of the Indian Real Estate Market; starting from the launch of a project, sale of property and all other post-sales issues which customers might experience.
However, the primary features of the Real Estate (Regulation and Development) Act, 2016 are as follows:
Functions of Real Estate Regulatory Authority in India
- To enforce the provisions of the Act.
- Establishment of Real Estate Regulatory Authority in each State/UT, or one Authority for two or more States/UTs, by the appropriate Government for oversight of real estate transactions; is the primary function of RERA.
- The Authority facilitates efficient, transparent and healthy modes of business deeds in the real estate sector while protecting the interest of buyers, promoters, and real estate agents.
- As per the Act, the authority shall also establish an adjudicating mechanism by appointing one or more adjudicating officers to speed up the disputes settlement process and impose interest and computation.
- Mandatory disclosures of real estate projects and project related information by promoters/developers, including –
- details of the promoters
- layout plan,
- plan of development works,
- land status,
- status of the statutory approvals,
- disclosure of proforma agreements,
- disclosure of names and addresses of real estate agents,
- contractors, architect, structural engineer etc.
- Mandatory registration of real estate projects and real estate agents who intend to sell any plot, apartment or building, with the Real Estate Regulatory Authority.
- Advising and recommending the state government in matters related to the development & promotion of real estate sector.
- Establish Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority.
- To act as the nodal agency to coordinate efforts regarding development of the real estate sector and to render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector.
- Fast track dispute resolution through adjudicating officers (Joint Secretary to State Government).
- Establishing Real Estate Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member.
- Punitive provisions including de-registration of the project and penalties in case of contravention of the provisions of the Act or the orders of the Authority or the Tribunal;
Ensuring functions and duties of the promoter and real estate developer under RERA:
- Disclosure of all relevant information relating to the project;
- Adherence to approved plans and project specifications as approved by competent authorities;
- Obligations regarding the veracity of the advertisement or prospectus;
- Rectification of structural defects within two years of possession;
- Refund of money in cases of default
- Compulsory deposit 70 percent (or such lesser percent as notified by the Appropriate Government) of the amounts realized for the real estate project from the allottees in a separate account in a scheduled bank within a period of 15 days to cover the cost of construction to be used for that purpose.
Real Estate Projects Registration
- All commercial and residential real estate projects will have to register with RERA having:
- Area of land proposed to be developed is more than five hundred square meters
- More than eight apartments inclusive of all phases.
- The promoter, who has not received a completion certificate for a real estate project/phase of the project prior to initiation of this Act.
- Failing to register will attract a penalty which may extend up to ten percent of the estimated cost of the real estate project and if the promoter violates the rules continuously then he shall be punishable with imprisonment up to three years or with fine which may extend up to a further ten percent of the estimated cost of the real estate project or both.
- Any alternation or deed in the real estate project which involves marketing, advertising, selling or new allotment of an apartment, and plot or building.
- Promoters or real estate developers cannot advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot or apartment or building in any real estate project or part of it, in any planning area within the state, without registering the real estate project with the state’s Real Estate Regulatory Authority(RERA).
- Promoters or real estate developers have to provide quarterly updates on the status of the project to the authority.
Real Estate Agents Registration and Functions
- The Real Estate (Regulation and Development) Act (RERA Act) mandates all real estate agents to register under this Act.
- It prohibits any real estate agent to facilitate any real estate business such as the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot or apartment or building in a real estate project or part of it, without obtaining registration under this section.
- Any real estate agent, who fails to register with the authority shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five percent of the cost of plot, apartment or buildings of the real estate project, for which the sale or purchase has been facilitated.
- Real estate agents registered under RERA cannot sell the properties which are not registered with the Authority.
- The registered agent has to maintain books of accounts, records, and documents for all transactions.
- The registered agent should not get involved in any unfair trade practices or promote it.
Management of Demands to be made to buyers and funds received from buyers against the purchase of the property.
- A promoter is prohibited from accepting more than ten percent of the cost of the plot, apartment, or building as an advance payment or an application fee, from a buyer that too without making a written agreement for sale with the person and register the said agreement for the sale.
- A promoter shall deposit seventy percent of the amounts realized for the real estate project from the allottees/buyers in a separate account (Escrow account) to be maintained in a scheduled bank to cover the cost of construction and the land cost.
- The funds withdrawn from escrow accounts shall be in proportion to the percentage of completion of the project and shall be certified by an authorized architect, an engineer or a chartered accountant in practice.
- The promoter shall compensate buyer if any false or incorrect statement is given in regards to the real estate project, plot, apartment or building with a full refund of property cost with interest.
- Project Accounts must be Audited / FY and a copy of the same is to be submitted to the state’s RERA authority.
- The state RERA shall freeze project bank account upon non-compliance.
Transparency in the real estate sector by providing:
- The promoter or real estate developer shall provide the details of all the registered projects online for citizens including:
- Sanctioned plans approved by the competent authority
- Proposed layout plan for the whole project and floor space index
- Proposed Number of the building(s) or wing(s) or phase(s) to be constructed and approved number of the building(s) or wing(s) or phase(s)
- Stage-wise time schedule of completion of the project, including the provisions for basic civic infrastructure like water, sanitation, and electricity
- Quarterly update of the list of booked apartments or plots, booked covered parking or garages and the list of approved and pending approval of commencement certificate.
- Disclosure of other information and documents as may be specified by the regulations made by the state’s RERA
Real Estate (Regulation and Development) Act 2016 is a step towards developing the real estate sector in India, infusing greater transparency, citizen centricity, accountability and financial discipline. For RERA India, the citizens come first. Here are the facilities, which citizens enjoy under RERA.
- Citizens have rights to view the state’s RERA website, all disclosures pertaining to registered projects
- The promoter is prohibited from making any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings, and amenities etc. without the previous consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building.
- The promoter shall pay interest on every month of delay if he/she fails to give possession of an apartment, plot or building, in accordance with the terms of the agreement for sale.
- The developer or promoter shall also return the full amount along with the interest taken from the allottee if in case the allottee wishes to withdraw from the project and if the promoter fails to provide any other remedy available.
- The promoter shall form legal entity like cooperative society, association, federation etc. within three months from the date on which sixty percent of the total number of purchasers in such a building or a wing, have booked their apartment
- The promoter shall execute a registered conveyance deed in favor of the allottee within three months from the date of issue of occupancy certificate or sixty percent of the total numbers of purchasers in such a building or a wing have paid the full consideration to the promoter, whichever is earlier
Filing of complaints
- Any aggrieved person either he/she is a buyer, promoter or agent, may file a complaint with the respective state’s RERA or the adjudicating officer with respect to any registered real estate project, for any violation or breaching of the rules and regulations of the Real Estate (Regulation and Development) Act, (RERA Act).
- Aggrieved Consumer would file the complaint with the Adjudicating Officer.
- The consumer would have to provide a fee of INR 1,000 in form of DD.
- The consumers can file their complaint with Regulatory Authority or Adjudicating Officer.
- Any person, (buyer, developer or broker), who is not satisfied with any direction or decision or order made by the Authority or by an adjudicating officer may file an appeal before the Appellate Tribunal.
- The appeal shall dispose within a period of sixty days.
- Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court.
Rights and Duties of Allottees:
- Right to obtain stage-wise time schedule for the project.
- Claim possession as per promoter declaration.
- Obtain refund with interest for default by the promoter.
- Allottees to make payments and fulfill responsibilities as per the agreement.
RERA for Promoters
According to the Real Estate (Regulation and Development) Act, promoters will have to furnish the following information and documents for registration of a real estate project with the regulatory authority:
- Self-attested copy of the PAN card of the promoter.
- Annual report including audited profit and loss account, balance sheet, cash flow statement, director’s report and the auditor’s report of the promoter for the immediately preceding three financial years. If the annual report is not available, the audited profit and loss account, balance sheet, cash flow statement and the auditor report of the promoter for the immediately preceding three financial years.
- The number of parking slots available in the said real estate project.
- Authenticated copy of the of the legal title deed reflecting the title of the promoter to the land on which development of the project is proposed along with legally valid documents for the chain of the title.
- The details of encumbrances on the land for which permission is given, the Certified copy of the conversion order and permission of change in land use granted, if applicable on which development is proposed including any rights, title, interest or name of any party in or over such land along with details.
- Where the promoter is not the owner of the land on which development is proposed, details of the consent of the owner of the land along with self-attested collaboration agreement, development agreement, joint development agreement or any other agreement, as the case may be, entered into between the promoter and such owner and copies of title and other documents reflecting the title of such owner on the land proposed to be developed.
- Name, photograph, contact details and address of the promoter if it is an individual and the name.
- Photograph, contact details and address of the chairman, partners, directors, as the case may be.
- Photograph, contact details and address of the authorized person in case of other entities.
- In accordance to the Rules, the Promoters of ongoing projects which have not received completion certificate shall, within the times specified, make an application to the Regulatory Authority in the form and manner as specified in rules.
- The promoters have to deposit the 70% of the amounts already realized from the allottees; which have not been utilized for construction of the project or the land cost for the project; in a separate bank account, Within a period of three months of the application for registration of the project with the Authority.
- The promoter shall deposit 100% of the amounts to be realized in the separate account, if the receivable of the ongoing project is less than the estimated cost of balance construction.
RERA for Real Estate Agents
Under the Real Estate (Regulation and Development) Act (RERA Act), the Real Estate Agent shall furnish the following information and documents for registration along with the required forms with the regulatory authority:
- Brief details of his enterprise including its name, registered address, type of enterprise, proprietorship, societies, co-operative society, partnership, companies etc.;
- Particulars of registration including the bye-laws, memorandum of association, articles of association etc. as the case may be;
- Name, address, contact details and photograph of the real estate agent if it is an individual. The photograph of the partners, directors etc. in case of other entities
- Self-attested copy of the PAN card;
- Self-attested copy of the address proof of the place of business.
RERA for Buyers
- The enforcement of the rules by Real Estate (Regulation and Development) Act will ensure that the citizens can now get information and choose suitable apartments/houses/plots without having to worry about the project execution and with recourse to complaints and suitable action against defaulting developers/agents.
- Buyers will have a real-time view/update on the project status, litigations against any promoters etc.
- The Real Estate (Regulation and Development) Act now gives consumers a platform to voice their grievances and lodge complaints against a promoter/agent.