– RERA ACT, 2016 Summary
RERA Act safeguards buyers from builders and developers
The real estate sector plays a catalytic role in fulfilling the needs and demand for housing and infrastructure in the country and is an important pillar of the economy. While this sector has grown significantly in recent years, it has been largely unregulated, with the absence of professionalism and standardization and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector.
RERA Act has made into law by parliament
Given the above, Parliament enacted the Real Estate (Regulation and Development) Act, 2016 which aims at protecting the rights and interests of consumers and promotion of uniformity and standardization of business practices and transactions in the real estate sector. It attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability, and a fast-track dispute resolution mechanism.
RERA Act is implemented by their own respective state govt rules
Accordingly, every State Government and UT are required to promulgate their own Real Estate Rules which would be based on the lines of the central Real Estate (Regulation and Development) Act 2016 and establish a Real Estate Regulatory Authority (“RERA”) according to the Rules, which will administer the respective Real Estate Rules of the State or UT
The objects and reasons for which the Act has been framed are:
• ensure accountability towards allottees and protect their interest
• infuse transparency, ensure fair play and reduce frauds & delays
• introduce professionalism and pan India standardization
• establish symmetry of information between the promoter and allottee
• imposing certain responsibilities on both promoter and allottees
• establish a regulatory oversight mechanism to enforce contracts
• establish fast- track dispute resolution mechanism
• promote good governance in the sector which in turn would create investor confidence
*On 15 April 2016 59 Sections of the Act were notified making them effective from May 1, 2016, enabling the preparation of Real Estate Rules, setting up of Regulatory Authorities, and other infrastructure.
Salient Features of the Real Estate (Regulation and Development) Act, 2016
• Establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector
• Ensure sale of plot, apartment, or building, as the case may be, or sale of real estate project, in an efficient and transparent manner
• Ensure protect the interest of consumers in the real estate sector
• Establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions, or orders of the Real Estate Regulatory Authority (RERA)
• Regulates transactions between buyers and promoters of residential real estate projects
• Establishes state-level regulatory authorities called Real Estate Regulatory Authorities (RERAs)
• Residential real estate projects, with some exceptions, need to be registered with RERAs
• Promoters cannot book or offer these projects for sale without registering them. Real estate agents dealing in these projects also need to register with RERAs
• Registration, the promoter must upload details of the project on the website of the RERA. These include the site and layout plan, and schedule for completion of the real estate project
• Amount collected from buyers for a project must be maintained in a separate bank account and must only be used for the construction of that project. The state government can alter this amount
• Right to Legal Representation on behalf of Client by Company Secretaries or chartered accountants or cost accountants or legal practitioners
• Imposes a stringent penalty on promoter, real estate agent and also prescribes imprisonment.
RERA Act enhances the nation-building process
Advantages of RERA (Real Estate Development and Regulation Act)
- Increase FDI.
- Customer management.
- Timely completion of projects.
- Project planning.
- Reduction of litigation.
RERA Act has brought uniformity in real estate definitions
redefined RERA has brought in uniformity in definitions for important components of real estate, like, “carpet area”, “common areas” etc which will prevent malpractices like changes in the area, specifications, etc. Some of the important definitions are reproduced below:
“Advertisement” means any document described or issued as advertisement through any medium and includes any notice, circular, or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes;
“Agreement for sale” means an agreement entered into between the promoter and the allottee;
“Allottee” concerning a real estate project, means the person to whom a plot, apartment, or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfers or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent;
“Apartment” whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit, or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified;
“Building” includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial, or for any business, occupation, profession or trade, or any other related purposes;
“Carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area, and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
Explanation— the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee.
Really informative content.
Well placed information
Pretty much informative. It should be read by every individual owner and developers or properties i especially advice to the people who do not have knowledge on sales and purchase of properties. Thanks for writting such details information and sharing.
Very good information