The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, was introduced to address longstanding issues in the real estate sector in India. It was designed to bring transparency, accountability, and efficiency to property transactions and safeguard the interests of homebuyers. Since its implementation, RERA has reshaped the real estate landscape, ensuring that disputes are resolved swiftly and fairly, while promoting greater trust between developers and consumers. This article provides an in-depth understanding of the RERA law, its key provisions, procedures, and its impact on real estate transactions in India.
What is RERA?
RERA was enacted by the Indian Parliament to regulate the real estate sector, enhance transparency, and establish a mechanism for quick dispute resolution. The Act applies to both commercial and residential projects and mandates that developers register their projects under RERA before advertising or selling properties. By implementing RERA, the government aims to create a transparent environment where homebuyers can invest without the fear of fraud or misrepresentation.
Key Provisions of RERA
The RERA law consists of several important provisions designed to protect homebuyers and ensure fair practices in the real estate sector. Some of the key provisions include:
- Mandatory Registration of Projects:
- All commercial and residential real estate projects with a plot area of more than 500 square meters or more than eight apartments must be registered with the RERA authority of the respective state.
- Builders cannot advertise, sell, or book properties until the project is registered under RERA. Failure to register attracts penalties, including fines or imprisonment.
- Standardized Sales Agreements:
- RERA mandates that developers follow a standardized format for sale agreements, which includes clauses related to project completion, quality of construction, and remedies in case of delays. This ensures transparency and fairness in dealings between developers and buyers.
- Escrow Account for Project Funds:
- Developers must maintain 70% of the project funds in a separate escrow account to ensure that the money collected from buyers is used for the intended project and not diverted elsewhere. This provision prevents fund mismanagement and ensures timely project completion.
- Project Timelines and Penalties:
- RERA emphasizes the importance of completing projects on time. If developers fail to deliver possession within the agreed time, they are liable to pay interest to the buyers for the period of delay.
- In case of structural defects or poor construction quality, developers are responsible for rectifying these issues within five years of handing over possession.
- Transparency and Disclosures:
- Developers must provide regular updates on project status, approvals, and progress through the RERA website. These details must include the size of apartments, approved layout plans, sanctioned project timelines, and names of contractors involved in the project.
- Grievance Redressal Mechanism:
- RERA has established a three-tier grievance redressal mechanism, including the Real Estate Regulatory Authority, Real Estate Appellate Tribunal, and regular courts. Buyers, developers, or agents can file complaints regarding any violations or delays, and the authority ensures that disputes are resolved swiftly.
Procedure for Filing Complaints Under RERA
If a buyer or developer believes that any provisions of RERA have been violated, they can file a complaint with the respective state’s Real Estate Regulatory Authority. Here’s the step-by-step process:
- Filing a Complaint:
- A buyer or developer can file a complaint under Section 31 of the RERA Act. The complaint must be filed in the prescribed format and submitted to the concerned RERA authority.
- The complaint can be filed online through the state’s RERA website, and it should include relevant details such as the project registration number, the nature of the grievance, and supporting documents.
- Hearing by RERA Authority:
- After the complaint is filed, the RERA authority issues a notice to the other party (developer or buyer) and schedules a hearing. Both parties are given an opportunity to present their arguments and evidence during the hearing.
- Decision and Penalty:
- Based on the evidence, the RERA authority delivers a decision, which could include directing the developer to pay compensation to the buyer, refunding the buyer, or imposing penalties for project delays or non-compliance.
- The RERA authority’s decision is binding, and non-compliance can lead to severe penalties or imprisonment.
- Appeal to Real Estate Appellate Tribunal:
- If any party is dissatisfied with the decision of the RERA authority, they can appeal to the Real Estate Appellate Tribunal (REAT) within 60 days from the date of the order. The tribunal provides a faster resolution process compared to traditional courts.
Role of Courts in RERA
While RERA establishes its own regulatory authority and appellate tribunal, courts still play an important role in ensuring compliance with RERA and addressing broader legal challenges related to the real estate sector. In cases where a party is dissatisfied with the ruling of the Appellate Tribunal, they can approach the High Court and, if needed, the Supreme Court of India for further appeal.
However, RERA has been designed to reduce the burden on courts by providing a specialized forum for real estate disputes. By streamlining the dispute resolution process, RERA aims to ensure faster resolution of issues compared to the traditional court system.
Appointment of Adjudicating Officers and Real Estate Appellate Tribunal
Under the RERA Act, each state is required to appoint adjudicating officers and form an Appellate Tribunal to handle real estate disputes efficiently. These officers and tribunal members are tasked with delivering speedy justice and resolving disputes between homebuyers, developers, and real estate agents.
- Adjudicating Officers:
- Appointed under Section 71 of the RERA Act, adjudicating officers are empowered to determine the amount of compensation to be paid in case of violations or defaults by developers.
- They also handle cases related to the failure of delivering possession, refund claims, and compensation for delays.
- Real Estate Appellate Tribunal (REAT):
- This tribunal is the second level of appeal for any grievances under RERA. Buyers, developers, and agents can approach the tribunal if they are not satisfied with the decision made by the RERA authority.
- The REAT functions like a court, ensuring that justice is delivered swiftly and disputes are resolved in an efficient manner.
Common Disputes Under RERA
RERA provides relief to homebuyers and developers in a variety of disputes. Some common issues resolved under RERA include:
- Project Delays: Buyers can file complaints for delayed possession or failure to meet the agreed timeline. Developers must pay interest or compensation for such delays.
- Construction Quality: Structural defects, poor workmanship, or violations of approved building plans are issues commonly raised by buyers. Developers are mandated to rectify defects within five years.
- Misrepresentation of Project Details: If developers fail to deliver projects as advertised or approved (in terms of layout, size, or amenities), buyers can approach RERA for redressal.
- Refund and Compensation: In cases of non-completion of projects or failure to deliver as promised, buyers can seek refunds or compensation through RERA.
RERA has been instrumental in bringing greater transparency and accountability to the real estate sector in India. By creating a structured regulatory framework, RERA ensures that buyers are protected from fraudulent practices and delays while encouraging developers to maintain timelines and quality standards.
Whether you’re a homebuyer or a developer, navigating the intricacies of RERA requires expert legal assistance. Our law firm specializes in RERA compliance, dispute resolution, and representation before RERA authorities and tribunals. With years of experience, we help ensure that your rights are protected and your transactions are conducted within the framework of the law.