RERA (The Real Estate Regulation and Development Act) is aimed at protecting homeowners’ interests and enhancing transparency within the real estate sector. Apart from the various provisions that protect the interests of homeowners, there are a few other provisions and penalties prescribed by the act that will have a bearing on the various other players in the real estate sector, including builders and brokers.
Let us explore some of the salient features of the Act and its provisions:
What it is?
RERA is an Act (a set of laws) that was passed by the Government of India to protect the interests of people who invest in real estate – homebuyers and homeowners. It is also aimed at boosting investments in the sector by encouraging developers, builders and other parties through various provisions. The laws have been in place since 2016, and requires the state governments to form their own set of rules using the central Act as a model, and to notify the public of these provisions.
Why was it enacted?
For a long time, home buyers have complained that the transactions in the real estate sector heavily favor the developers and builders. Therefore, the primary aim of this Act is the create a platform for equitable transactions between the buyers and sellers of the properties, especially within the primary market.
The Act will also make real estate transactions more transparent, by ensuring accountability. But these will only hold if the spirit of the law is followed as individual states and union territories model their own versions on the central Act.
Key highlights of the act
There are many positive aspects of this act. One of the more significant ones is the provision of the unified legal regime for apartments and flats purchase which will serve to standardize various practices. Some of the other key highlights include:
Regulatory authority establishment: Previously, there was no proper regulation in the sector. The act has come in to establish an authority at the state and union territory level. Its functions include protecting the interests of different stakeholders, creating a redressal system for grievances, and to serve as the repository of data. To prevent delays and time lags, the law also stipulates that applications are to be disposed of within 60 days.
Compulsory registration: According to the act, each and every project needs to be registered in the state where it is undertaken. Projects already underway or in existence should also comply with the requirements of registration in accordance with the law. Promoters have to give detailed information regarding the project – including land status, promoter details, schedules, approvals and so on. The project can only be marketed when all approvals have been sought and registration is complete.
Reserve accounts: When projects are delayed as a result of funds being directed into new projects. According to the act, the promoters will have to set aside 70 percent of the receivables into a reserve account. Such an account can be used to aid in the expenses.
Title representation: Promoters will have to make a warranty that is positive on the title and the interest in the land that can be used against him by a homebuyer if the title has any defects. Insurance has to be acquired too.
Resource: You can find more information on how RERA has impacted real-estate industry here. Different aspects of the real estate industry are put into consideration and this ultimately will protect all the players in the industry.