RERA – A Ray Of Hope For Buyers?

The following article written by AkullrajLeekkha and Chetan Dhingra, law students from Amity University Noida, highlights the impact that the implementation of RERA has had on buyers. India is emerging as one of the most important business locations globally. It is on the brink of becoming one of the most flourishing economies worldwide, guided by many factors such as hospitality, retail, commercial, housing – “Real estate being one of the most influential sectors of all”. Real estate is a cardinal and developing sector in Indian economy, which has continually been witnessed and plotted as a positive rise on the graph of Indian economy. It is a broad term, which includes the availability of land and constructed properties under the Real Estate Market. However, with the advancement of society, the sector has been engulfed by sub standard practices by the promoters, corruption and unfair practices becoming the pivotal point of consideration leading to a situation where customers have to bear the long-lasting consequences of prolonged delays with their depreciating money trapped. The current prospects and outlook of the Real Estate sector interpreted an urgent and substantive need of a regulatory authority that could construct a framework to supervise and discipline the ongoing immoral activities and systemize its functioning and so “The Real Estate (Regulation and Development) Act, 2016” (also referred to as RERA) was introduced, which came into force on 1^st May 2016. The RERA seeks to remove impartiality and establish an environment that encourages transparency between buyers and aberrant builders and real estate agents and intends to remove the gap between buyer and seller by eradicating factors such as lack of uniform regulatory environment, absence of transparency in real estate transactions and lack of assistance to buyers. The significant provisions introduced under RERA targets to provide transparency, safeguard the interests of the buyers and most importantly it focuses to monitor the financial transactions being carried out in the Real Estate sector, which has no accountability as yet. The provisions are examined as follows:  

1. Certification Of Real Estate Projects and Real Estate Agents:The RERA has notified a provision, which states that all commercial and residential properties exceeding 500 square meters of land area or 8 apartments inclusive of all phases shall be compulsorily registered with the Real Estate Regulatory Authority. It also makes obligatory for every real estate agent to register under the Real Estate Regulatory Authority to be eligible to advertise, market, book or sell/purchase in any manner any plot/apartment/building in any real estate project.
2. Financial Governance: The Act has introduced provisions regarding opening and maintaining an Escrow Account in a scheduled bank by the Promoter before starting a project. A promoter is restrained from accepting more than 10% of the cost of the plot, apartment or building as an advance payment from the buyer out of which 70% of the total amountreceived by the promoter as advance payment shall be kept and he shall not have any direct access to this fund.

The promoter shall be eligible to withdraw the funds from the escrow account to cover the cost of project, in proportion to the completion of the project with the permission of a certified engineer, an architect and a chartered accountant in practice. They shall verify the progress for the completion of the project and shall certify the amount demanded by the promoter for further completion of the project. The state Real Estate Regulatory Authority has the capacity to freeze the escrow account upon non-compliance with the provisions.

3. Transparency Between Buyers And Promoters/Builders:In the interim of the registration with Real Estate Regulatory Authority, the promoters have to hand over complete information about their project with the authority stating information like the number of buildings, number of phases of the project and publish all other information and documents as specified by the authority. Also, a written affidavit has to be submitted which stipulates information and undertaking regarding clear title of land and persuading that the project is free from every impediment. Entire information possessed by the authority shall be uploaded on the official website of RERA which makes everything accessible to the buyers which shall also be quarterly updated by the authority considering the progress of the project
4. Filing Of Complaints:The Act has been equitable and impartial in its provisions as it provides an opportunity to both the buyers and promoters to file a complaint about any issue regarding the registered real estate project with the concerned authority. The authority has complete power to act on such complaints and the decision taken by the Authority shall be binding. Further, an appeal can be filed with the Appellate Tribunal in case the buyer/promoter is unsatisfied with the judgment of the authority. If any party is still not convinced with the decision of the Appellate Tribunal they can approach the High Court within 60 days.
5. Real Estate Authority And Appellate Tribunal:As per the Act, appropriate state governments shall establish Real Estate Regulatory Authority to administer and stimulate the State’s/ Union Territory’s real estate sector. The Authority shall be a body corporate possessing a common seal and having the power to acquire, hold and dispose of the property both movable and immovable.

The above-mentioned provisions of RERA are expected to change the position of the buyers drastically and put them in the driving seat. The intention of RERA is to provide buyers value for their money and complete satisfaction. Every sport has a referee to monitor its fair play; consequently, a similar need was felt in the real estate sector, which led to the introduction of RERA. This will lead to consolidation in real estate sector as the bad and unscrupulous builders will be eliminated and will keep a check on diversion of funds. BUILDERS WILL NOW SELL ACTUAL HOMES AND NOT JUST DREAMS.