So you got yourself into doing real estate dealings and you have either decided to buy or sell a property. But how will you avoid yourself from getting into trouble when making your real estate deals? The answer is simple. While there are several laws and regulations that protect the rights of the consumer in the real estate market, one of the important laws and regulations that you need to know as a buyer and a seller is the RERA act.

So let us see “What is the RERA act?” as well as how RERA benefits the buyers and regulates the sellers or promoters of the property in detail.

What is the RERA act?

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a central government legislation that regulates the real estate sector in India. The main objective of RERA is to protect the interests of home buyers and to ensure transparency and accountability in the real estate sector.

How does the RERA act regulate the Real estate industry?

The main purpose of the RERA act is to prevent property fraud and delays in project delivery to customers or buyers after making payments to their respective sellers or promoters. So let us see the set of rules and regulations the RERA act put forth to safeguard the rights of the buyers or customers in the real estate industry.

• ● The sellers/builders/promoters cannot demand more than 10% of the property cost from the buyers as advance payment.
• ● If there are any construction defects that compromises the structure and quality of the building within the 5 years of possession then the buyers can get it repaired from the builders at no cost.
• ● The builders must rectify the defects within 120 days from the date of a complaint by the buyers.
• ● If the buyers discover any discrepancy in the documentation at the time of possession. He/She can demand compensation from the builders.
• ● If there is a delay in the project and the property is not delivered within the promised time then the buyers can demand a full refund of the money invested. In certain situations, the builders are also entitled to provide interest to the buyers’ invested money as compensation for the loss of time.
• ● If there is a difference or discrepancy in the property that was delivered and it was not as per the terms originally promised then the buyers can demand a full refund if required.

Important rules of RERA that Builders should keep in mind:

While the RERA act was enforced by the central government, each state has their own RERA act with few minor changes.

So it is necessary to know about the state RERA rules depending on the location of the business. Now let us look into the important rules of RERA for builders.

• ● The builders should not make any changes to the structure or the plan on the property without the consent of the buyer after payment of the advance.
• ● 70% of the money collected from the buyers for the construction of the project should be deposited in a separate bank account. And the money from this bank account should be used only for building the respective project with proper transaction history and bills. This rule is enforced to prevent money laundering or other fraudulent activities by the builder.
• ● All the original documents regarding the project should be submitted for approval during the RERA registration.
• ● It is mandatory for all the builders to register under their respective state RERA board if the project area exceeds the land area of 500 sq. mt or if it is more than 8 apartments.
• ● Getting approval from the RERA board for the proposed project is mandatory before starting your project.

The consequence of being non-adherent to RERA:

RERA policy is not only for the builders but for the buyers to follow as well. Failure to comply with RERA policy will lead to a huge amount of penalty as well as imprisonment for repeat offenders. So let us see the penalty and punishment for non-adherent of RERA rules for both Builders and Buyers.

Buyers who violate RERA rules:

• ● Up to 5% of the project cost will be applied daily as a penalty if the RERA rules are not followed.
• ● Up to 10% of the project cost or 1 year of imprisonment will be applicable for the buyers who do not compile with the Appellate tribunal.

Builders who violate RERA rules:

• ● Non-registration under RERA will lead to a 10% penalty on the project’s estimated cost.
• ● Repeated non-compliance with the RERA rule will lead to a 5% daily penalty on the estimated project cost.
• ● Further, non-compliance with the Appellate tribunal will lead to 1 year of imprisonment along with a 10% penalty on the project’s estimated cost.

Now let us see how the builders/promoters/sellers can register their projects under RERA.

Registration process:

The registration process for RERA is quite simple and straightforward. The first step is to visit the official website of RERA in the state where the property is located. Next, the developer or builder of the project is required to fill out an online application form and submit it along with the required documents. These documents include the project plan, land title documents, and details of the promoter, among others.

Once the application is submitted, the RERA authority will review the documents and approve or reject the application. If the application is approved, the developer will receive a registration number, which must be displayed on all marketing materials and advertisements for the project.

In addition to the registration process, RERA also has several other provisions that developers must comply with.

For example:- RERA requires developers to submit regular progress reports to ensure the project is built as per the plan and on time.

Charges:

The charges for RERA registration vary from state to state. In some states, the charges are a percentage of the total project cost, while in others, a fixed fee is charged.

Hence, developers or builders should check with the RERA authority in their state for specific charges and fees.

Documents required:

• ● Project plan and layout
• ● Land title documents
• ● Details of the promoter/builders/sellers
• ● Details of the project
• ● Details of the financial arrangements
• ● Details of the proposed amenities and facilities
• ● Details of the proposed construction schedule
• ● No-objection certificates from relevant authorities
• ● Copy of the agreement for sale

In conclusion, RERA is an important legislation that helps to protect the interests of home buyers and to ensure transparency and accountability in the real estate sector.

Therefore, it is mandatory that the developers should be aware of the registration process, charges, and documents required under RERA as well as to comply with all its provisions to avoid any penalties or fines.