The RERA Act: Safeguarding Buyers in the Indian Real Estate Market
Among the numerous laws governing real estate in India, the Real Estate (Regulation and Development) Act, RERA, stands out as a vital amendment aimed at protecting property buyers from exploitation and ensuring transparency in real estate transactions. Often misunderstood, RERA's primary objective is to safeguard buyers by regulating the real estate market and preventing unscrupulous practices by developers.
Understanding RERA: Its Purpose and Background
Contrary to popular belief, the RERA Act was not enacted to deter promoters from entering the market but to ensure that small developers do not become victims of large corporations seeking to monopolize the industry with their heavy lobbying. Over the past decade, with the rising value of properties and the increasing availability of land, many non-traditional small players entered the real estate market, reaping substantial profits. To protect the interests of these small players and mitigate risks for buyers, the RERA Act was introduced.
Despite India's corrupt administrative and political systems, the RERA Act is a significant step toward ensuring fair practices in the real estate sector. If India were to have a truly democratic administration that was efficient and less corrupt, existing laws would suffice to protect buyers. However, the current state of affairs necessitates additional regulatory measures to curb unethical practices and protect the vulnerable.
Main Features of the RERA Act
The RERA Act includes several key features designed to enhance transparency, accountability, and buyer protection. Here’s an overview of the main points:
Registration Requirements
RERA registration is mandatory for any project that meets certain criteria, such as:
Total land area exceeding 500 square meters. Total number of apartments exceeding 8 in the entire project, including all phases.RERA registration is also required for the marketing and selling of such projects. Every phase of the project is considered a standalone project.
Documentation and Transparency
To ensure that buyers are fully aware of the project and its details, the promoter must provide the following:
The authenticated copy of all approvals and commencement certificates. Past project details as sanctioned, including specifications, and layout plans. Details of development works and facilities. Geographic location details. Proforma of allotment letters and agreement for sale documents. Conveyance deed details for different types, numbers, and carpet areas of apartments. Details of any balcony, verandah, or garage.Financial and Project Management
Another key feature of the RERA Act is its stringent financial management rules. Seventy percent of the proceeds from buyers must be deposited in a separate bank account. The promoter can only withdraw this amount in proportion to the percentage of project completion, with verifications done by a Chartered Accountant (CA).
Promoter's Responsibilities
The RERA Act outlines several responsibilities of the promoter, including:
Creating a webpage on the RERA website and entering quarterly information. Displaying advertisements with the RERA registration number and website details. Showing plans at the office site and providing stage-wise schedules when booking. Handling structural defects post-titling transfer. Providing completion and leasehold certificates to allottees. Paying all charges, including municipality charges, until the project is transferred to the association or cooperative society. Restricting the taking of more than 10% advance without a formal agreement for sale. Limited alterations on plans, fixtures, and amenities, except structural changes, require approval from the person who agreed to take the property.Consequences for Non-Compliance
In cases where the project is not completed by the due date, buyers have the right to get their full amount back, along with compensation and interest.
The RERA Act, therefore, serves as a comprehensive framework for regulating the real estate market, ensuring that buyers are protected and promoting ethical practices in the industry.