The real Estate (Regulation and Development) Act 2016 (RERA 2016) is passed by Parliament and same is now adapted by the most of the states and union territories. The Act is touted as a key reform measure in the massive real estate sector.
Highlights of the RERA 2016:
1. The property buyers need not approach Civil Courts or Consumer Forum for redressal of their grievances against the developer which was time consuming. All the disputes between buyer and the builder will be heard by the regulatory authority appointed under the act. The Regulatory Authorities shall dispose of the complaints within 60 days. The Real Estate Appellate Tribunal shall adjudicate cases within 60 days.
2. It is compulsory for all real estate projects (both for commercial and residential) of over 500 square meters or eight apartment to register with the regulator before launching the project. The registration has to come with sanctioned plan,layout plan and proposed development plan. The developer shall provide legal title to the land on which the development is proposed. Further, details of the promoter and the company, including details of the projects launched by him in the last five years and balance sheets have to be provided to the regulatory authority. The above measures will provide builder’s business health and provide greater assurance to the buyer.
3.Even real estate agents and brokers need to registered with regulatory authorities before facilitating a sale. They have to quote registration numbers while dealing with all the customers. Failure to comply with regulator’s ruling is punishable.
4. The developers will have to deposit 70% of the money collected from the customers in a separate escrow account in banks through cheques. States can further increase the above ceiling limit. The amount available in such escrow accounts can be utilized only for the cost of construction and land. The new rule expected to restrict the developers from diverting the funds collected from buyers of property to start new projects.
5. The new regulation defines carpet area and usable space and imposes strict regulation in the matter of completion of construction in time. The customer is entitled to know all the above information, including provision of water,sanitation,electricity and other amenities. The above rule is expected to provide a great respite to the buyers, as the new law would enable the buyers to get the property at assured time and specifications.
6.The project has to be completed on time unless interrupted by events such as flood,fire or other natural calamity termed as “Act of God”. If any loss is suffered by the customer based on information in prospectus or advertisement,entire investment along with the interest shall be refunded by the builder. Refunds have to be made within 60 days of it becoming due.
6. The RERA law stipulates that the buyers of property cannot be discriminated on the basis of their religion, region, caste, creed or gender.
7. A developer may also approach the Regulator in the case of any issue with the buyer. The new bill proposes penalty on the buyer for not paying the dues on time.
8. Developer is liable to repair structural defects up to 5 years.
9. Non-adherence of regulations attracts the penalty of 10% of the project cost and repeat violation may land the promoters in jail up to three years. The real estate agents and buyers may be sentenced to up to one-year imprisonment or monetary penalties or both in the case of violation of orders of Appellate Tribunals.