ABOUT RERA

What is Real Estate Regulation Act (RERA), 2016?

The Real Estate Regulation and Development Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force on 1 May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1 May 2017.

Here’s what you need to know about RERA

The Real Estate Regulation and Development (RERA) Act, 2016 is considered as one of the landmark legislations passed by the Government of India. Its objective is to reform the real estate sector in India, encouraging greater transparency, citizen centricity, accountability and financial discipline. This is in line with the vast and growing economy of India as in future many people will be investing in real estate sector.

  • Establishment of Real Estate Regulatory Authority (RERA).
  • Establishment of one or more 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
  • To appoint one or more adjudicating officers to settle disputes and impose interest and computation;

  • The Authority to enforce the provisions of the Act.
  • To act as the nodal agency to co-ordinate 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 Settlement Mechanism through adjudicating officers (Joint Secretary to State Government);
  • Establishment of 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;

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

Mandatory public disclosure norms for all registered projects like details of the promoters, layout plan, plan of development works, land status, status of the statutory approvals, disclosure of pro-forma agreements, disclosure of names and addresses of real estate agents, contractors, architect, structural engineer etc.

Provision of RERA

  • The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square meters, or more than eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution.
  • For ongoing projects, which have not received completion certificate on the date of commencement of the Act, will have to seek registration within 3 months.
  • Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA.
  • On successful registration, the promoter of the project will be provided with a registration number, a login id, and password for the applicants to fill up essential details on the website of the RERA. For failure to register, a penalty of up to 10 percent of the project cost or three years' imprisonment may be imposed.
  • Real estate agents who facilitate selling or purchase of properties must take prior registration from RERA. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.

  • The Act prohibits unaccounted money from being pumped into the sector and the promoter of a real estate development firm has to maintain a separate escrow account for each of their projects. As of now 70 per cent of the money has to be deposited in bank accounts through cheques.
  • A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area not super built-up area, while carpet area has been clearly defined in the Act to include usable spaces like kitchen and toilets

  • It will help to establish state-level Real Estate Regulatory Authorities (RERAs) to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover.
  • Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time-frame was indicated in earlier Bill

RERA for Promoters/Builders/Developers

  • All the real estate projects, whether commercial, residential or under construction projects have to be registered with RERA under three months of its implementation. While applying for the registration, the promoter shall give a copy of ownership of land, every small detail of the project that has been planned, schedule of the construction, status of land, pro forma agreements and the information of all the real estate agents, contractors, engineers etc.
  • If a plan has been registered under RERA, it can only be changed with the consent of two-third buyers of that project. This guideline will prevent builders from making consistent changes in the layout of the project.
  • Once the project is registered, then the builders will be provided a login ID and password so that they can provide all the details of the project along with his photograph on the website. This will help buyers in getting the necessary details before signing the agreement
  • The Builders have to maintain a separate escrow account for each of their projects. A minimum 70 per cent of the money from investors and buyers will have to be deposited in this account and this money can only be utilized for the construction of the project.
  • RERA requires builders to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilized, and the timeline for construction, completion, and delivery that will need to be certified by an Engineer or an Architect.
  • Builders are not entitled to advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Furthermore, after registration, all the advertisement inviting investment will have to bear the unique RERA registration number. The registration no. will be provided project-wise.
  • If the Builder defaults on delivery of the project within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract based on the model contract given by RERA.
  • The Builders are also entitled to provide a 5-year warranty to the buyer for any structural defect in the building or in case of any quality adherence in the projects.

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; and where 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;
  • 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 project is proposed along with legally valid documents for chain of the title
  • 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, and 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.

Within a period of three months of the application for registration of the project with the Authority, the Promoters are to deposit in a separate bank account, 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. If the receivable of the ongoing project is less than the estimated cost of balance construction, then the promoter shall deposit 100% of the amounts to be realized in the separate account.

Here the Ongoing Projects means a project where development is going on and for which completion certificate has not been issued but exempts such projects which fulfill any of the following criteria on the date of notification of these rules, namely.

In respect of layouts where the streets and civic amenities sites and other services have been handed over to the Local Authority and Planning Authority.

In respect of apartments where common areas and facilities have been handed over to the registered Association consisting of majority of allottees; the provision facilitating is as per provision of the Karnataka Ownership Act, 1972.

Where all development works have been completed as per the Act and certified by the competent agency and sales/ lease deeds of 60% of the apartments/ houses/ plots have been registered and executed.

Where all development works have been completed as per the Act and certified by the competent agency and application has been filed with the competent authority for issue of completion certificate /occupation certificate

Where Partial occupancy certificate is obtained to the extent of the portion for which the partial Occupancy Certificate is obtained.

RERA for Real Estate Agents

A Real estate agent is basically an intermediary between the Builders and the buyers. They have a strong presence in real estate sector as they have the marketing skills to profitably buy or sell a property. A buyer does not know all the property details and a Builder does not sell his properties himself, thus, a real estate agents’ role is of paramount importance. RERA has set certain guidelines for the real estate agents in order to prevent any wrongdoing by them.

  • A person has to get registered with RERA in order to be eligible to sell or purchase a plot, flat or anything related to the real estate sector. For the registration, an agent must be in possession of all his documents and the required fee.
  • It will be the duty of the Authority to grant a person the registration that will be applicable in the entire state. If the Authority finds any discrepancies in the documents, the application made by the person to become an agent will be rejected. However, the applicant will be given full details of his incorrect documents so that he gets another chance to apply.
  • The agent should keep and maintain all the records, accounts and documents of a real estate project he has been indulged with. He should also keep a background check of a builder in order to make a buyer safe.
  • An agent should abandon any fraudulent activity related to buying or selling of a real estate project and should not give any false or misleading information to a buyer .The Authority has the power to cancel the registration with proper remarks in case of any wrongdoing by the agents.

Under this 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 and 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/ALLOTTEES

  • RERA seeks to bring clarity and fair practices that would protect the interests of buyers and also impose penalties on errant builders .If the promoter defaults on delivery within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract based on the model contract given by RERA.
  • If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery.
  • A buyer is entitled to know all the plans of a real estate project in detail. He has the right to know the stage-wise completion of the project which includes the amenities as well.
  • Buyers are also entitled to know about the other ongoing projects of the builders.
  • A buyer is entitled to claim a written possession of his house and the common areas which he is entitled to as a member of the project. He has the right to get all the documents regarding the project.
  • A buyer has to pay the amount he has signed the agreement in the court. He will have to pay interests if he delays the payment. However, the builder will have to pay the same interest to the buyer if he delays his project or if he has not been able to provide what was said in the agreement.
  • This act also ensures protection to buyers in terms of quality of construction of projects. In case the buyer reports any issue in terms of poor quality or provision of services in a period of 5 years from the date of possession, the builder will have to rectify the same within 30 days