What is RERA Act:
RERA, or the Real Estate (Regulation and Development) Act, is a key legislative measure in India introduced in 2016 to address challenges in the real estate sector. Its main goals are to promote transparency, accountability, and efficiency, thereby protecting buyers and ensuring fair practices. RERA requires developers to register their projects with the regulatory authority, providing detailed information about project timelines, layouts, and finances. It also mandates that a portion of funds from buyers be placed in an escrow account to ensure timely project completion and prevent fund diversion. Overall, RERA enhances transparency and accountability, creating a more secure environment for both developers and homebuyers.
Significance of the Real Estate (Regulation and Development) Act, 2016
Previously, the real estate sector operated without regulation. The implementation of RERA aims to safeguard buyers and investors, thereby enhancing their confidence. RERA necessitates transparency and oversight to monitor the functioning of the real estate sector. It serves as a dependable platform for buyers and mitigates risks for those who invested before the Act's enforcement.
The Act clarifies the dynamics between property buyers and developers, fostering trust between them and establishing a state agency to oversee real estate and business transactions. RERA is instrumental in ensuring timely delivery of real estate projects to homebuyers, providing substantial relief to Indian consumers.
Advantages of RERA (Real Estate Regulatory Authority) from the perspective of buyers include:
1. Transparency: RERA mandates developers to disclose project details, ensuring transparency in transactions.
2. Accountability: Developers are required to adhere to project timelines and quality standards, holding them accountable for delays or defects.
3. Consumer Protection: Buyers are protected from unfair practices and fraudulent activities, with provisions for grievance redressal.
4. Quality Assurance: RERA enforces standards for construction quality, ensuring buyers receive what they pay for.
5. Financial Security: Escrow accounts for project funds offer financial security, reducing the risk of diversion of funds by developers.
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How to Check if a a Property has RERA Compliance:
1. Check the RERA Registration Number: Every real estate project that falls under the purview of RERA should have a unique registration number provided by the respective state's RERA authority. This number should be prominently displayed in all advertisements, brochures, and documents related to the project. You can verify this number on the official website of the state's RERA authority.
2. Verify Project Details: On the official website of the state's RERA authority, you can search for the project using its name or the developer's name. This will provide you with detailed information about the project, including its status, developer details, sanctioned plans, approvals, timeline, and any complaints filed against it.
3. Check for Compliance Documents: RERA mandates developers to submit various documents such as project plans, approvals, commencement certificates, land title documents, and quarterly progress reports to the RERA authority. Ensure that the developer has submitted all necessary documents and that they are in compliance with RERA regulations.
4. Look for RERA Clause in Agreement: If you're buying a property, ensure that the sale agreement includes a clause stating that the project is RERA compliant. This provides you with legal recourse in case of any disputes or non-compliance issues.
5. Visit the RERA Office: If feasible, you can visit the local RERA office to gather more information about the project and seek clarification on any doubts you may have regarding its compliance.
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Provisions safeguarding individuals against fraudulent advertisements in RERA:
Under Section 12 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), promoters are obligated to ensure the accuracy of their advertisements and prospectuses. If someone suffers financial loss due to incorrect or false statements in these materials, the promoter must compensate them as per the Act. Additionally, individuals affected by fraudulent statements in advertisements or prospectuses have the right to withdraw from the project and receive a full refund of their investment, including prescribed interest and compensation outlined in the Act.
Penalties Applicable under the RERA Act
Failure to Register: Developers who fail to register their real estate projects under RERA may face penalties of up to 10% of the estimated project cost or imprisonment for up to 3 years, or both.
Non-Compliance with Orders: If a promoter fails to comply with any direction or order of the Regulatory Authority or the Appellate Tribunal, they may face a penalty of up to 5% of the estimated project cost or imprisonment for up to 1 year, or both.
Misrepresentation: Promoters who provide false information or make misrepresentations in the documents filed under RERA may face penalties of up to 5% of the estimated project cost or imprisonment for up to 1 year, or both.
Delayed Projects: Promoters who delay the completion of projects beyond the agreed-upon timeline may be liable to pay interest to the allottees for every month of delay, as prescribed under the Act.
Other Violations: There are various other violations under RERA for which penalties may be imposed, such as failure to maintain project accounts, failure to rectify structural defects, or failure to comply with other obligations imposed under the Act.
Section 59: Penalty for Non-Registration of Projects | Sub-section 1: If a promoter fails to register a project as required under RERA, they are liable to a penalty which may extend up to 10% of the estimated cost of the project. Sub-section 2: If the promoter continues to default after being penalized under sub-section 1, they may face imprisonment for up to three years or a further fine which may extend up to 10% of the estimated cost of the project, or both. |
Section 60: Penalty for Providing False Information | If a promoter provides false information or any other incorrect details during the application for registration, they are liable to a penalty which may extend up to 5% of the estimated cost of the project. |
Section 61: Penalty for Other Contraventions | For any other contraventions of the Act or the rules and regulations made thereunder, a promoter shall be liable to a penalty which may extend up to 5% of the estimated cost of the project. |
Section 62: Penalty for Real Estate Agents | If a real estate agent fails to comply with the provisions of the Act, they shall be liable to a penalty of ₹10,000 for every day during which such default continues, which may cumulatively extend up to 5% of the cost of the plot, apartment, or building, as the case may be, of the real estate project. |
Section 63: Penalty for Failure to Comply with Orders of the Authority | If a promoter, allottee, or real estate agent fails to comply with or contravenes any of the orders or directions of the Regulatory Authority, they shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to 5% of the estimated cost of the project. |
Section 64: Penalty for Failure to Comply with Orders of the Appellate Tribunal | If any promoter, allottee, or real estate agent fails to comply with or contravenes any of the orders or directions of the Appellate Tribunal, they shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to 10% of the estimated cost of the project, and in the case of a promoter, with imprisonment for a term which may extend up to three years, or with both. |
Sections 65 to 68: Penalties for offences by companies and promoters.
Sections 69 to 72: Offences and penalties for failure to comply with the Act’s provisions and for any fraudulent practices.
Exemptions from RERA Registration, Section 3(2)):
Registration of a real estate project is not required under the following conditions:
Small Projects: Projects where the land area is less than 500 square meters or the number of apartments is fewer than eight. The government may reduce this threshold if necessary.
Completed Projects: Projects with a completion certificate received before the Act's commencement.
Renovation/Repair: Projects involving renovation, repair, or redevelopment that do not include marketing, advertising, selling, or new allotment of any apartment, plot, or building.
For phased developments, each phase is treated as a separate project requiring individual registration.
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Frequently Asked Questions (FAQs) about RERA:
1. What is RERA?
RERA stands for the Real Estate (Regulation and Development) Act, 2016. It is an act passed by the Indian Parliament to regulate and promote transparency, accountability, and efficiency in the real estate sector.
2. When did RERA come into effect?
RERA was enacted by the Indian Parliament on May 1, 2016. It came into effect on May 1, 2017, after all the states and Union territories had notified their respective RERA rules.
3. What is the objective of RERA?
The main objective of RERA is to protect the interests of homebuyers and promote fair play in the real estate sector. It aims to establish a regulatory authority for the real estate sector, ensure transparency in project dealings, and impose penalties for non-compliance.
4. Who does RERA apply to?
RERA applies to both residential and commercial real estate projects. It covers developers, builders, real estate agents, and individual buyers or investors.
5. What are the key provisions of RERA for developers?
RERA mandates that developers must register their projects with the respective state RERA authority before advertising or selling them. They are required to provide accurate project details, adhere to timelines, and deposit a certain percentage of project funds in a designated bank account.
6. What are the penalties for non-compliance with RERA?
Non-compliance with RERA regulations can result in severe penalties for developers, including monetary fines, imprisonment, or revocation of project registration. These penalties are designed to ensure compliance and protect the interests of homebuyers.
7. How does RERA benefit homebuyers?
RERA provides several benefits to homebuyers, including increased transparency, access to accurate project information, timely delivery of projects, and recourse in case of disputes or delays. It also helps in reducing fraudulent practices and ensures the quality of construction.
8. Does RERA cover ongoing projects?
Yes, RERA covers both new and ongoing real estate projects. Developers of ongoing projects were required to register them with the respective state RERA authority within a specified timeframe after RERA came into effect.
9. Can homebuyers file complaints under RERA?
Yes, homebuyers can file complaints with the state RERA authority against developers for any violations of RERA provisions, such as delays in project delivery, misleading advertisements, or failure to provide promised amenities. The authority has the power to investigate complaints and take appropriate action.
10. How can one verify RERA registration of a project?
Homebuyers can verify the RERA registration status of a project by visiting the official website of the respective state RERA authority. They can search for the project using its name or registration number to access detailed information about its status, approvals, and developer details.
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