RERA Act

Legal Framework of RERA in India

• RERA (Real Estate Regulatory Authority) represents a pivotal enterprise launched by the government of India through the Real Estate (Regulation and Development) Act, 2016, outlined to intensify translucency, responsibility, and efficiency within the real estate industry.
• Founder are mandated to register their designs before promoting or selling them, making sure they provide clear information concerning the timeline of project, demand approvals, and structure.
• Real estate agents are also required to be registered and are expected to comply with the ethical guidelines.
• RERA protects consumers by making sure that developers finish projects/designs on time and as promised, imposing penalties for the delays or non-compliance. It generates an virtual reservoir for project verification and smoothening the dispute solving process, hence improving confidence of consumer.
• Historical Context: The historical context of RERA (Real Estate Regulatory Authority) arises from vital matters in the Indian real estate industry, like lack of transparency, delays in completion of project and consumer exploitation. Before the introduction of RERA, the industry used to work with slightest statute, resulting in difficulties like illusory practices and inadequate quality of construction. The sector experienced express expansion during the 2000s, which strengthen these matters. The demand for improvement increased, especially following 2008 global financial crisis, which underlines the mandates for improved fault. In response to these challenges, the Real Estate (Regulation and Development) Bill was proposed in the year 2013, submitting the motion of RERA Act in 2016. 
• The Real Estate (Regulation and Development) Act, 2016 (RERA) is a significant piece of legislation introduced in India to address various issues and challenges in the real estate sector. Here is an explanation of its key features and objectives:
  • Regulation of the Real Estate Sector: RERA was enacted to regulate the real estate sector, which had been characterized by various irregularities and unethical practices. It applies to both residential and commercial real estate projects.
  • Transparency and Accountability: One of the primary goals of RERA is to promote transparency and accountability in the real estate market. Builders and developers are required to provide detailed information about their projects, including project plans, approvals, layout details, and completion timelines. This information is made available to the public through an online portal.
  • Project Registration: Builders and developers must register their projects with the appropriate state-level regulatory authority before advertising or selling any properties. This registration process involves providing comprehensive project details, financial information, and legal documents.
  • Advance Booking and Sales: Developers are prohibited from advertising or selling any part of a project before obtaining all the necessary approvals and registering it under RERA. This prevents fraudulent practices such as collecting money from buyers without delivering the promised property.
  • Project Delays and Compensation: RERA mandates that developers adhere to the promised project completion timelines. If there are delays, they are required to compensate buyers with interest payments. This provision protects homebuyers from long delays in possession.
  • Quality Control: Developers are accountable for the quality of construction and must rectify any structural defects within a specified period after possession. This ensures that buyers receive a high-quality property.
  • Escrow Accounts: Developers are required to deposit a significant portion of the funds received from buyers into an escrow account. This ensures that the funds are utilized for the specific project and not diverted to other purposes.
  • Dispute Resolution: RERA establishes a fast-track dispute resolution mechanism to address grievances and disputes between developers and homebuyers. This provides an efficient way to resolve conflicts without lengthy legal battles.
  • Real Estate Agents: Real estate agents or brokers must also register under RERA and comply with its regulations. This helps eliminate unscrupulous agents and ensures that buyers and sellers receive professional and transparent services.
  • Promoting Investment: RERA aims to boost investor confidence in the real estate sector by providing a regulated and transparent environment. This, in turn, attracts more investment into the industry.
  • RERA varies slightly from state to state in India, as it is implemented at the state level. Each state has its own regulatory authority responsible for overseeing and enforcing the provisions of RERA. The Act has significantly improved the real estate sector in India by enhancing transparency, protecting the rights of homebuyers, and promoting ethical practices among developers and real estate agents.

Key Objectives of RERA

• Consumer Protection: RERA's primary objective is to safeguard the interests of homebuyers by ensuring that builders deliver projects on time and as per the promised specifications. It also establishes a grievance redressal mechanism for disputes between buyers and developers.
• Transparency: RERA mandates that developers register their projects with the regulatory authority. Detailed project information, including project plans, layout, and financial details, must be disclosed to the public. This transparency helps buyers make informed decisions.
• Accountability: Developers are required to deposit a significant portion of the project funds in a separate escrow account. This ensures that the funds are used exclusively for the development of the registered project, reducing the risk of diversion.
• Promoting Fair Play: RERA encourages fair competition among builders, preventing unfair trade practices and ensuring a level playing field for developers.

Key Provisions of RERA

• Project Registration: All real estate projects with an area exceeding 500 square meters or more than 8 apartments must be registered with the respective state's Real Estate Regulatory Authority (RERA).
• Project Delays: RERA holds developers accountable for project delays and imposes penalties for the same. It ensures that developers adhere to the project's timeline and deliver possession on time.
• Advance Payment: Builders can only demand up to 10% of the property's cost as an advance payment before signing a sale agreement.
• Quality Assurance: Developers are responsible for the quality of construction and are obligated to rectify any structural defects within five years.
• Escrow Account: A minimum of 70% of the project funds collected from buyers must be deposited in a separate escrow account and utilized exclusively for the construction of the project.
• Title of the Property: Builders are required to guarantee the title of the property, providing more security to buyers against disputes.

Central Objectives of Global Framework

• Consumer Protection: Laws are made to safeguard buyers and investors from fraud, falsehood and dangerous practices.
• Transparency: The larger part of these system mandates that developers, agents and brokers should furnish mandatory information concerning ownership of property, market values, and the status of projects, for enhancing clarity in market.
• Licensing and Professional Standards: Licensing conditions warranty that only qualified professionals are allowed to operate in the real estate sector, endorsing ethical standard and safeguards for consumer.
• Disputes Resolution: Several Countries offer mechanism for settling clashes among buyers and developers, making sure fast and more favourable resolutions than traditional legal proceedings.

Non-Compliance with the Orders of RERA

• Penalties for Non-Compliance
  • Promoters/Developers: If a developer not complying to RERA’s directions they may come across fines of up to 5% of the project’s complete cost, imprisonment upto 3 years or both.
  • Agents of Real Estate: Agents of Real Estate who neglects RERA orders may be imposed with fines up to 1 lakh for the first time breach, which will increase upto 5 lakh for the Subsequent breaches.
  • Builders: Builders who neglects or failed to adhere with compulsory concerning quality or construction delay may come across monetary penalties and/or detention as well.
  • Offences, Penalties and Adjudication: Chapter VIII of the act, section 59 to 72 mentions about the offences, penalties and adjudication in RERA matters. 
• Repayment of Amount with Interest: In circumstances where RERA compulsion a developer to refund the funds paid by a homebuyer due to delays in projects, defects, or another , failure or neglecting to adhere with this order may lead to a further legal consequence, inclusive of measures for enforcement or additional fines. Developers are mandated to pay interest on the amount they are refunding, and non-compliance can lead to bigger penalties or actions from the statute.
• Legal Implementation of RERA Orders: RERA is entitle to approach Civil Court for the enforcement of its compulsory, furnishing the orders legally enforceable. If a developer or agent fails to adhere with the orders of RERA, they can be coerce into the judicial process. The National Consumer Disputes Redressal Commission (NCDRC) or state consumer forums might also get connected in the matters where orders of RERA are neglected, especially in matters authorizing rights of consumer.
• Suspension of Registration: If developers or agents or builders continuously neglect orders of RERA, their registration may be revoked or suspended. This action is to avert them from doing business in the real. Estate sector until they attain compliance. In utmost scenarios, a project may be blacklisted it may also be removed from RERA’s official lists. Non-compliance with the Directives of RERA might Result in the suspension or revocation of their license operating.
• Fines for Contempt: Neglecting Orders of RERA might result in a Contempt of Court, where the parties involved might be considered in contempt of the regulatory body’s lawful authority. This circumstance might lead to additional fines, lawful actions, and undoubtedly imprisonment in severe cases.
• Criminal Liability: In situations of major non-compliance, particularly when it results in exploitation of consumer, frauds, or betrayal, RERA take over the power to bring criminal charges against the offending party. This may involve criminal proceedings that might result in imprisonment.
• Further Consequences:
  • Damage to the Reputation: Builders, developers, or agents who do not adhere with the orders of RERA risk experiencing reputational harm, making it difficult to operate within the industry.
  • Loss of Consumer’s Trust: Developers who usually disregard with the orders of RERA will likely see a reduce in trust of consumer, leading to decreased demand for their future projects and negatively crashing into their financial stability.

Procedure for Filing of Lawsuit 

• For Lodging a Complaint under RERA (Real Estate Regulatory Authority)
  • Eligibility: Decide if you qualify to file a complaint- real estate, developers, agents, or homebuyers dealing with the issues such as delays in projects, defects in construction, or non-compliance with the statute.
  • Visit Portal of RERA: Access the official website of RERA for your concerned state or the central portal.  Then Login and register set up an account on the portal then sign in to reach the section for complaints filing. Select the concerned category such as delays in projects, construction defects, or non-compliance.
  • Fill the Complaint Form: complete the form with the required information about your injustice, the involved parties, and also include supporting documents like contracts, receipts, registration number of RERA etc. pay the fees through the online payment system. Then lastly submit your completed form. You will get a confirmation with a reference number by which you can track your complaint.
  • RERA Review: RERA will evaluate your complaint, by sending a notice to the opposing party, and may arrange a hearing.
  • Hearing and Solution: Both the parties will be presenting their arguments, and RERA may deliver a judgement for compensation, completion of project or by imposing penalties.
  • Appeal: If needed there will be appeal if you are unsatisfied with the decision, you can contest the ruling at the RERA Appellate Tribunal within the time period of two months. 

How Can Seasoned Advocates Help You? 

• Grabbing Provisions of RERA: They break down difficult RERA laws and highlights rights and liabilities.
• Lodging Complaints: They help in the lodging and submissions of complaints, making sure all the mandatory documents are completed and deadlines are compiled to.
• Hearings and Representations: Seasoned Advocates for clients during hearings of RERA effectively presenting evidences and arguments.
• Conflicts Solution: They guide you in negotiating settlement or considering options of mediation to solve the issues without stepping into the litigation.
• Safeguarding Developers: They do advocacy for developers experiencing complaints, allegations of disputes and minimising penalties.
• Appeals: If clients are unsatisfied with a decision of RERA, Advocate can file appeal with the Appellate Tribunal and handle the process of appeals.
• Enforcement: They help in executing orders of RERA, like as compensation securing or completion of projects.
• Legal Updates: They keep clients updated on amendments in laws of RERA and guidelines, by giving advice on compliance.

Conclusion 

To Conclude, RERA initiate a clear and systematic approach for addressing clashes within the industry of real estates, encouraging safeguards for consumers and making sure that developers, agents and promoters are held liable. The lawsuit or complaint filing process under the RERA is made to be effective, authorizing consumers to pursue remedies for difficulties like delays in projects, defects, and non-compliance matters. With the guidance from legal experts, involved parties can handle the complexities of RERA laws, submission of complaints, arguments in their cases, and execute rulings successfully. The structure provided by RERA not only intensify the resolution of disputes it also amplify trust and integrity in the real estate sector, delivering advantages for both the consumers and developers. To know more, contact us.