To curb rampant malpractices by builders, the Real Estate Regulation (and Development) Act, allows states and union territories to set up a Real Estate Regulatory Authority (RERA), safeguarding the interests of homeowners. Here's what you need to know about it, in 12 easy points:
1) RERA allows the states and union territories to set up a Real Estate Regulatory Authority for a particular state or union territory as the competent body to be approached for grievances against any builder or developer. States and union territories must validate the Act and establish a state authority according to the law.
2) The law makes it compulsory to register all existing projects that have not yet received their completion certificates. The builder shall apply to the regulatory authority for registration of the project within a period of three months from the date of introduction of this Act.
3) Both residential and commercial real estate transactions come under the purview of the regulatory authority set up under the guidelines of RERA.
4) Seventy per cent of the project funds have to be stocked by the developer in a separate account to cover the cost of construction and land before commencing a project. This has been done to bar real estate developers from investing in multiple projects at the same time. Previously, developers would invest the proceeds from the booking money of one project into other projects, leading to shortage of funds and delay in handover.
5) In case of a delay, the developer does not suffer much and has to pay only a small portion as interest, compared to the interest paid by the buyers. RERA ensures that any delay in completion will make the developer pay the buyers the same interest that the buyers pay the bank.
6) The Act clearly defines carpet area, which means the net usable floor area of an apartment. It excludes the area covered by external walls, areas under service shafts, any exclusive balcony or verandah area and exclusive open terrace areas. But it includes the area covered by internal partition walls of an apartment. This removes the ambiguity between super built-up area, built-up area and carpet area.
7) The developers must share all information regarding their projects, such as project plan, layouts, approvals from the competent authority, land details, the project’s sub-contractors, flats details and estimated time of completion (ETA), with the regulatory authority. The information is then made accessible to the consumers or buyers of a particular project.
8) Under the provisions of the Act, without buyers’ consent, the developer cannot make any changes to the layout and plan for flats that have already been sold. Any change in ongoing projects has to be approved by at least two-third of the buyers.
9) The authority may extend the registration granted to a project for a maximum period of one year upon application from the promoter.
10) Projects with an area exceeding 500 sq m — or with more than eight flats — will have to be registered with RERA.
11) Builders can no longer involve themselves in any unfair trade practices, such as false representation of services, presenting fake approvals or affiliations, publication of any advertisements that are inaccurate in nature and such like.
12) If any promoter does not comply with the orders, decisions or directions mentioned in the Act, he shall be punishable with imprisonment for a term which may extend up to three years, or with a fine which may amount to an additional 10 per cent to the estimated cost of the project, or with both. Application for adjudging compensation shall be dealt with by the adjudicating officer and will be disposed of within 60 days of receiving the complaint.