RERA Matters

Legal Framework of the Real Estate Act in India

• The RERA (Real Estate Regulatory Authority) addresses vital matters in the Indian real estate industry, including the lack of transparency, delays in project completion, and consumer exploitation. Before the establishment of RERA, the sector often operated under minimal statutory requirements, resulting in difficulties such as illusory practices and inadequate construction quality. The industry experienced rapid expansion during the early 21st century, which exacerbated these issues. Hence, the demand for improvement increased. In response to these challenges, the Real Estate (Regulation and Development) Bill was proposed in 2013, and the Act was enacted in 2016..
• Key Features and Objectives
  • Regulation: The Act has been enacted to regulate the real estate sector, which has faced various irregularities and unethical practices. It applies to both residential and commercial real estate projects. The Act provides for the establishment of the Real Estate Regulatory Authority (RERA), which the appropriate government establishes under Section 20(1) of the Real Estate (Regulation and Development) Act, 2016. The aim is to enhance transparency, accountability, and efficiency within the real estate industry.
  • Project Registration: One of the primary objectives of this  Act 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. The registration process involves providing comprehensive project details, financial information, and legal documents. Section 3(2) of the Act outlines that 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).
  • Advertisement and Sale: According to Section 3(1) of the Act, developers are prohibited from advertising, offering, or selling any part of a project before registering the project with the Real Estate Regulatory Authority (RERA). This prevents fraudulent practices such as collecting money from buyers without delivering the promised property.
  • Advance Payment: Section 13 of the Act outlines that the promoters can only demand up to 10% of the property's cost as an advance payment before signing a sale agreement.
  • Delays and Compensation: Section 18 of the Act requires developers to adhere to the promised timelines for project completion. If there are delays, they are required to compensate buyers with interest payments. This provision protects homebuyers from long delays in obtaining possession. If the allottee withdraws their booking, the promoter must refund the amount with interest and compensation; otherwise, the promoter is liable to pay interest for every month of delay. 
  • Quality Control: Section 14 of the Act stipulates that promoters are responsible for the quality of construction and must rectify any structural defects within a specified period after possession, i.e., 5 years. This ensures that buyers receive a high-quality property.
  • Escrow Accounts: Section 4(2)(l)(D) of the Act specifies that the promoters are required to deposit a significant portion of the funds received from buyers into an escrow account, i.e., 70% of the amount realised from the allottees. However, he can withdraw that amount only for the construction after obtaining the necessary permission. This ensures that the funds are utilized for the specific project and not diverted to other purposes.
  • Dispute Resolution: Section 31 of the Act provides a provision for aggrieved persons to file a complaint with the Adjudicating Officer or the Authority, as the case may be. Under Section 44, a person aggrieved by any decision or order made by the Authority or by an Adjudicating Officer may prefer an appeal before the Appellate Tribunal within a period of sixty days from the date on which the aggrieved person receives a copy of the decision. The Act established a fast-track dispute resolution mechanism to address grievances and disputes between promoters and homebuyers. This provides an efficient way to resolve conflicts without lengthy legal battles.
  • Real Estate Agents: Section 9 of the Act outlines that real estate agents or brokers must register with the Real Estate Regulatory Authority and comply with its regulations under the Act. This helps eliminate unscrupulous agents and ensures that buyers and sellers receive professional and transparent services.
  • State-wise Regulation: Each state has its regulatory authority responsible for overseeing and enforcing the provisions of the Act. Section 84 of the Act empowers the appropriate government to make rules for carrying out the provisions of the Act. 

Non-Compliance with the Orders of RERA

• Offences, Penalties and Adjudication: Chapter VIII of the Act, Section 59 to 72, outlines the offences, penalties, and adjudication in RERA matters. 
  
  • Promoters: According to Section 59, if a promoter fails to register their projects before initiating them or fails to comply with RERA's directions, they may face fines of up to 10% of the project's estimated cost, imprisonment for up to 3 years, or both. 
  • Agents: According to Section 62, agents of real estate may face a penalty for non-registration and contravention, which may be ₹10,000 per day, cumulatively extending up to 5% of the estimated project cost. The agent may face suspension or revocation of their registration under Section 9(7) if they have obtained the registration through illegal means, such as misrepresentation.
  • Allottees: Allottees may also be held liable for penalties if they fail to comply with or contravene any orders, decisions, or directions of the Authority, which may be cumulative up to 5% of the cost of the premises, as outlined under Section 67.
  • Companies: The directors, managers, secretary, and officers of the company will be held liable for any offense committed by the company, unless they can prove that they were not knowingly involved in such offense or that the act was beyond their control, as outlined under Section 69.
  • Disobedience: The Act provides that if any promoter, agent, or allottee disobeys the orders of the Appellate Tribunal, they may be liable to face additional penalties. Section 64 outlines the penalty for promoters, Section 66 outlines the penalty for agents, and Section 68 outlines the penalty for allottees in such cases. 

Procedure for Filing of Lawsuit 

• RERA Portal: Visit the official RERA website for your state or the central portal. Register and set up an account on the portal, then log in to access the complaint filing section. Select the concerned category, such as delays in projects, construction defects, or non-compliance.
  • Eligibility: Only eligible individuals, specifically real estate developers, agents, or homebuyers, can file complaints if they are experiencing issues such as project delays, construction defects, or non-compliance with the statute.
  • Complaint Form: Please fill out the form with the required information about your grievance, including the involved parties, and include supporting documents such as contracts, receipts, and your RERA registration number. Pay the fees through the online payment system. Lastly, submit your completed form. You will receive a confirmation with a reference number, which you can use to track your complaint.
• Procedure: The Authority will summon the opposing party. The party has a reasonable opportunity to present its defense. The matters related to the contravention or infringement of the provisions of the Real Estate (Regulation and Development) Act, 2016, will be tried before the Authority. The impugned judgments may be appealed before the Appellate Tribunal within 60 days from the date of the decision. As reasonably possible, the Appellate Tribunal will decide the said appeal within 60 days.
• Consumer Forum: It is noteworthy that the promoter/builder/agent and the buyer/allottee have a relationship that falls under the ambit of the definition of a 'consumer' as defined under Section 2(7) of the Consumer Protection Act, 1986. Consumer Forums may also try matters related to real estate if a complaint is presented to them for hearing.  

How Can Seasoned Advocates Help You? 

• Legal Advice: Advice on litigation and statutory compliance related to RERA, including registration of projects, agents, and promoters. Guide on your rights and obligations, whether you are a promoter, agent, or an allottee. Keep clients informed about amendments to RERA laws and guidelines, and advise on compliance to ensure they remain up to date.
• Representation: Represent clients before the RERA, Appellate Tribunals, and Consumer Forums. Advocate for clients with persuasive drafting and pleading, and ensure the best course of action in any legal proceedings, effectively and efficiently presenting evidence and arguments. 
• Negotiation: Guide you in negotiating a settlement or considering mediation options to resolve the issues without resorting to litigation in certain instances where the ADR mechanism can be employed. 
• Appeals: File an appeal with the Appellate Tribunal and follow the process for appeals if clients are dissatisfied with a decision made by RERA. 
• Enforcement: Assist in executing RERA orders, including securing compensation and completing projects in accordance with the regulations.

Conclusion 

To conclude, RERA has adopted a clear and systematic approach to addressing conflicts within the real estate industry, providing safeguards for consumers and ensuring that developers, agents, and promoters are held accountable for their actions. The lawsuit or complaint filing process under the RERA is designed to be effective, enabling consumers to pursue remedies for issues such as delays in projects, defects, and non-compliance matters. The structure provided by RERA not only enhances the resolution of disputes but also fosters trust and integrity in the real estate sector, delivering benefits for both consumers and developers. To know more, contact us.