Real Estate (Regulation and Development) Act 2016 is an Act of Indian Parliament seeking protection for home buyers and improve the reliability and transparency in the industry.
Although the act is of 2016, it came into existence only from 1st May, 2017. The Central Act was to act as the set rules for the respective States to enact their own Act taking into consideration the local laws and geographical conditions without violating the principal points prescribed in the Central Act.
Authorities that come under the Act are,
Individual States promulgated their respective States Act at different times in the last 3 years. Latest among them is Kerala. The authority under K-RERA came into operation from 1st January, 2020 at Trivandrum. Their website address is rera.kerala.gov.in, wherein you shall find all that you need to know about its functions.
This Act as mentioned above, is primarily to protect the home buyers from false promises, delayed delivery of the property, non-compliance of statutory requirements, sale of disputed property, hidden charges, post handing over maintenance, bankruptcy claim by the Developer or Promoter, and etc.
On the Promoter or Developer front, it brings in responsibility, accountability, transparency, ensuring clear title deeds, and timely post handing over service.
Further the Act demands that the Promoter or Developer has to register their projects, either plotted development or an apartment project; with the respective State RERA Authority. A Promoter/Developer cannot market a project without registering their projects with the Authority. They should display the RERA registration number in all their promotional materials and advertisements.
Similarly, any real estate agent who wants to operate in the industry must register with the Authority without which they are termed as illegal and punishable under the Act.
When a buyer plans to buy a developed plot or a flat/apartment he/she can visit the website of the Authority and check for the RERA registered projects in the area of their interest or requirement. All the RERA approved projects are listed in their website.
In the RERA website for each project a micro website is created and all relevant documents, certificates, any legal issues pertaining to the project or the land in particular and regular progress updates of the project registered are to be posted by the Promoter/Developer. Further the antecedent of the Promoter/Developer, the number of projects completed, financial status, etc., too are posted there to know the rating of the Promoter/Developer.
Here the buyer can select the right project, right Promoter/Developer, and can ensure peace of mind that his hard-earned money shall not be lost.
The Act ensures that the buyer’s money shall not be diverted to some other needs by the Promoter/Developer. The Act demands that a separate bank account is opened for each project and 70% of the money deposited as advance or installments are to be maintained in the account. The release or withdrawal from this 70% has to be approved by an Authorized Chartered Civil Engineer and a Chartered Accountant based on the stage of construction. Periodical inspection and audit of accounts can be conducted by the Authority.
The Act has many more sections and clauses that protect a buyer by providing compensation for defaults, delay of delivery and so on. Post occupancy the defect liability on construction related issues are to be resolved by the Promoter/Developer for a period of 5 years.
Similarly, the Promoter/Developer can also demand justice from the default customers through the Authority.
Any such complaints filed to the Authority shall be dealt on priority basis and could be escalated to the Adjudicating Officer or to the Appellate Tribunal based on the need.
This Act thus has ensured that only organized and well-established Promoter/Developer can continue their operations and serve in the real estate and construction industry.
This Act, thus has created a win – win situation for the buyer and the Promoter and Developer.