Protection of Homebuyers under RERA

Contents

• Introduction

• RERA, a Regulatory Body

• Rights and Protection available to Homebuyers under RERA

• Obligations laid down by RERA on Promoters to protect buyers.

• The Real Estate Appellate Tribunal

Introduction

The Real Estate sector was struggling as there was no rigid laws governing the same. The Consumer Protection Act of 2019 provides a forum for the real estate buyers to present their concerns, however it has not been efficient in tackling the problems in this sector. The Real Estate (Regulation and Development Act) Act was passed on March 10, 2016, specifically to protect the consumers and control the malpractices by promoters and builders.

RERA, a Regulatory Body

Section 20 of Chapter V of the RERA Act, 2016 provides for the establishment and incorporation of Real Estate Regulatory Authority. RERA consists of a chairperson and not less than two whole time members appointed by the appropriate government on the recommendations of the Selection Committee.

The RERA is implemented in all the states to regulate real estate sector. The primary function of this body is to safeguard the real estate buyers by ensuring fair practices, maintaining transparency, providing timely information and resolving issues between buyers and developers.

Rights and Protection available to Homebuyers under RERA

1. Right to obtain Information: The buyer is entitled with the right to seek information regarding the sanctioned plans, layout plans along with the specifications, approved by the competent authority.

2. Right to be updated regarding the project: The buyer shall have the right to know the stage-wise time schedule of completion, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the buyer.

3. Right to claim possession: The buyer can claim the ownership of apartment, plot or building along with the common areas, as per the declaration given by the promoter.

4. Right to be refunded: In cases were the promoter fails to comply or is unable to give possession of the property due to his mismanagement or discontinuance, then the buyer shall be entitled to be reimbursed, the amount paid along with interest and compensation at such a rate as prescribed under the Act.

5. Immunity from False Promises: If there is any contradiction between the promises made by the builder and the property delivered, then the buyer can withdraw his interest of undertaking the property.

6. Defect or Delay in Possession: If there is a deformity in the building and if found within 5 years, then the aggrieved party is protected from spending further as the builder will be held responsible to repair and also to compensate the buyer for the same. Similarly, when there is a delay in giving the possession, the buyer can either claim a complete refund with 10% interest or monthly interest until the possession is given.

Obligations laid down by RERA on Promoters to Protect Buyers

Apart from the rights and protection provided by RERA to the buyers as discussed above, the Real Estate Regulatory Authority has also laid down certain rules and regulations that the promoters and builders are bound by. These regulations ensure the fair and timely completion of the project, transparency in management Chapter III of the RERA Act, 2016 provides for these duties of the promoters.

They are as follows:

1. The promoter should create a web page on the website of the RERA authority stating all the details of the proposed project as mentioned below:

• Details of the registration granted by the authority.

• Quarterly up to date the list of number and types of apartments or plots, as the case may be booked.

• Quarterly up to date list of approvals taken and the approvals which are pending subsequent to commencement certificate.

• Quarterly status of the project.

• Such other information and documents as may be prescribed by the regulations made by the Authority.

The advertisement or prospectus published by the promoter should have the website address so that the homebuyers can be aware of the information regarding the entire project.

2. The promoter is required to maintain a separate bank account for each and every project, and 70% of the funds must be deposited in this bank account. This ensures that each project is allocated with the sufficient funds for the timely completion and prevents diversion of funds.

3. The promoter shall not collect a sum of more than 10% of the cost of the apartment, plot or building as an advance payment or an application fee from the buyer without first entering into a written agreement.

4. The builder cannot transfer the project to a third party without obtaining prior written consent from two-third buyers. This ensures that the builder is relieved from his responsibility only after the completion of the whole project in accordance with the sanction plan.

5. The transfer of the title to the buyer is performed by the promoter through a registered deed, also mentioning the undivided share of the buyer in the common areas. Later occurs the physical possession of the plot, apartment or building.

6. It is the responsibility of the builder to obtain the approvals for all the documents and hand over the occupancy certificate to the buyers within the prescribed date of completion.

The RERA has also laid down certain penalties to the promoters for violation of their obligations, as follows:

• Promoter has to pay 10% of the project’s estimated cost if it is not registered under RERA. Further if they are found guilty of providing false information of the project, they are liable to pay 5% of the project’s estimated cost.

• Violation of the laws by promoters can lead to awarding of imprisonment up to 3 years or 10% cost of the project.

• Similarly, severe non-compliance with the regulations of RERA can attract a daily penalty up to 5% of the project’s probable value.

• In cases where the order of the Appellate Tribunal is violated, the promoters shall be penalized with an imprisonment up to 1 year or 10% of the project’s cost.

The Real Estate Appellate Tribunal

The Real Estate Appellate Tribunal provides for an extended protection to the homebuyers and plays an important role in resolving disputes faster. The Real Estate Appellate Tribunal is a quasi-judicial body which has the power to check the legality of the order or decisions made by the RERA authority on an appeal made by the aggrieved party. When the party is not satisfied or fulfilled by the order of RERA, such a party can make an appeal to the Tribunal, which adjudicates the matter within 60 days of receiving the order. However, if the aggrieved party is not satisfied with the order of the Tribunal, he can further make an appeal to the High Court within 60 days.

The Real Estate Appellate Tribunal consists of a Chairperson and not less than two whole time members of which one shall be a judicial member and other shall be a technical or administrative member to be appointed by the appropriate government.

Section 57(1) of the RERA Act, 2016 states that every order made by the Tribunal shall be executable by the Appellate Tribunal as a decree of civil court.