Large real estate companies have been scrutinized for failing to complete projects despite receiving over 80% of payment from house buyers still waiting for possession after several years. This has caused disappointment for many aspiring homeowners. Sometimes, properties advertised by builders in attractive real estate brochures are fraudulent schemes.
Law was established to address this issue and regulate builders to ensure that real estate projects are not scams. This law is known as the Real Estate Regulatory Authority (RERA) Act of 2016, which came into effect on May 1, 2016. Although some areas implemented the law later, lawmakers were informed of its importance by May 1, 2017. The RERA Act sets various standards for builders, promoters, agents, real estate tips, advocates, homebuyers, and others to promote transparency in buying and selling. The clear possession regulations under the RERA Act empower first-time homebuyers with the knowledge to safeguard their financial interests. The new RERA guidelines prioritize the interests of consumers, and states and Union Territories must have their own local legislation that complies with the RERA Act standards, which are available on a state/UT RERA website.
RERA Rules and Regulations –
- The RERA Act of 2016 outlines the payment provisions, which state that homebuyers must fulfill their obligations by making appropriate payments to the builder as agreed upon in the sale agreement. If there is any delay in revenue, the homebuyers may have to pay interest.
- The 2022 RERA regulations state that the home buyer can pay the builder up to 10% of the total amount unless the agreement for sale is completed.
- The new regulations under RERA in 2022 require the distribution of registration fees, municipal taxes, water and energy costs, maintenance fees, ground rent, and other fees as specified in the agreement.
- The builder is responsible for all expenses, such as water and electricity, until possession is handed over to the buyers.
Highlights of RERA:
- Suppose the builder fails to transfer control of the project as per the terms of the agreement to sell. In that case, buyers are eligible for a refund and interest, which is determined by the relevant new RERA laws of the respective state/UT.
- Alternatively, if homebuyers do not wish to cancel the agreement, they may request an increase in the interest rate for the property loan each month of delay.
- New investors are eligible for reimbursement with interest, even if the lack of possession is due to the builder’s RERA registration suspension or revocation.
- Once homebuyers receive the occupancy certificate, they are entitled to possession within two months.
- Allottees or homebuyers have the right to obtain all essential documents related to the property once they have physical ownership.
- Promoters or builders must hand over the title papers concerning common areas to the appropriate authorities or homeowner associations within 30 days of receiving the completion certificate.
RERA Renewal rules – Under real estate regulations, agents and advocates must register with their state or UT authorities for projects larger than 500 square meters or more than eight flats. The RERA new regulations of 2022 require registration applicants to complete a real estate document checklist. Once a promoter/agent is registered with the state or UT’s Real Estate Regulatory Authority (RERA), the central RERA Act 2016 does not provide for license renewal. However, if there is a violation, the registration may be suspended. The state or UT’s RERA new rules for 2022 may include requirements for compliance with RERA rules for renewal.
- In August 2021, MahaRERA and Goa RERA announced the extension of project completion deadlines. MahaRERA granted a 6-month extension for projects with completion deadlines on or after April 15, 2021, to support builders in the state adversely affected by the second wave of COVID-19. Similarly, the Department of Urban Development in Goa issued guidelines that provided an additional year for builders to complete their registered home projects.
- Mumbai High Court has recently ordered an allowance where homebuyers can file complaints against unregistered builders and projects with the Maharashtra Real Estate Regulatory Authority (MahaRERA), even though this goes against the central legislation of the RERA Act 2016. MahaRERA has created a form for such complaints under the “Source information” category, and a fee of Rs 5000 must be paid to submit a complaint against an unregistered project.
- Previously, it was assumed that the Real Estate (Regulation and Development) Act (RERA) 2016 only applied to properties that were being sold or purchased. However, the Mumbai High Court has declared that the law also applies to long-term leases or agreements to lease.
- The MahaRERA has issued a directive to builders in Mumbai, requiring them to obtain an Occupancy Certificate (OC) for their buildings within three months. Failure to do so would result in builders paying interest to the building’s occupants. This order is crucial in a city where more than 10,000 structures do not have an OC. Several violations of the Floor Space Index (FSI) and other construction regulations have been observed in the past two decades, and the local authority has denied them OCs.
While no law is perfect, the RERA Act 2016 has a significant advantage in that it allows states to formulate their own rules and regulations within the framework of the central legislation. Each state has identified specific issues and tailored its laws to benefit the aggrieved party. Mr. Subhash Goel, director of Goel Ganga Developments, says, “The law has given house purchasers and developers an equal playing field, increased openness in the industry and protected buyers’ rights. RERA has also improved building quality and decreased the number of conflicts between purchasers and developers. These amendments have resulted in fewer project launches, focusing more on completing existing ones.” Developers have become more cautious and compliant with the RERA Act’s regulations to avoid legal battles. All of these changes are aimed at bolstering the real estate sector.