Real Estate was highly unorganised in India, because of which certain developers took undue advantage and failed to give investors’ and customers’ what was promised. RERA was established under the Real Estate (Regulation and Development) Act, 2016 to regulate the real estate sector and protect the interest of home buyers and also boost real estate investments. RERA is a central law but the implementation is on the shoulders of the States. This law greatly helps homebuyers in many ways and ensure a fair and transparent transaction.
All you need to know about Real Estate Regulatory Authority
Regulatory bodies are expected to be set up by each State so that disputes between buyers and builders can be settled within 120 days of the filing of the complaint.
70% of the money collected from buyers has to be set aside by the developer in a separate account just for the construction cost of the property and not for any other purpose. These figures need to be audited each year. In case of discrepancies, the developers are required to reimburse homebuyers in full with interest.
REGISTRATION WITH REGULATOR
The project has to be compulsorily registered with a regulator before the launch wherever the land is over 500 sq.m or where there are eight or more apartments in the building. Financial and legal details are required to be disclosed at this time.
Promoters will have several restrictions to ensure that the project is completed on time. In case of delays, the developer will be liable to pay an interest of State Bank of India’s highest marginal cost of lending rate plus 2% within 45 days of due.
The carpet area has to be clearly defined which will include usable spaces like kitchen and toilet. In case of more than a 5% decrease in the carpet area, the customer is entitled to a refund. Interestingly, in case of an increase in carpet area, the buyer will not have to pay any additional amount to the promoter. Buyers only have to pay for the carpet area and not for the super built-up area. False representations will incur a heavy penalty.
The liability period of developers has been increased to 5 years from 2 years and within this time, they are responsible for clearing all structural defects free of cost and within 30 days of the matter being brought to notice.
Only after all the necessary clearances have been obtained can the developers start selling the project and not before that.