After a lot of anticipation, Real Estate (Regulation And Development) Act 2016 (RERA) has finally come into the force, effectively 1st May 2017, and all the realty projects, the new and the on-going alike, need to be registered under state Regulatory Authority within three months, before 31st July 2017, as per the Government’s mandate.
What is RERA?
RERA {Real Estate ( Regulation and Development) Act 2016} is meant to safeguard the interest of homebuyers and bring about the transparency between all the stakeholders, by promoting fair practices, and as a result, see to the systematic growth of the real estate sector in the country.
RERA was conceived by Government of India as a model law, which invited the States and Union Territories to come up with a set of rules and regulation pertaining to the act, to define the final law. The individual states and UTs notified the center of their version of the rule and now it is implemented in 13 states and UTs, with their own Regulatory Authority.
The key highlights of RERA are discussed further in the article in a way to help the reader put those facts in perspective.
Key highlights of RERA for the homebuyers to watch for
The Registration
As per the act, it is mandatory for the developers and the promoters to register the project with the Regulatory Authority (RA) before its launch, and each project will be assigned a unique registration number for the said project.
RERA makes it mandatory for the builders to submit all the sanctioned plans, layout plans, and specifications approved by a competent authority. Builders also need to present the regulator with the stage-wise schedule/ timeline to complete the project.
As part of the registration process, the builder will need to provide all the crucial details of their background, projects are undertaken in past five years, the names and addresses of the contractors, engineers, architects and any other key personnel associated with the project. Also, an affidavit validating the ownership of the land and it’s freehold.
Escrow Account
The real estate firm will need to maintain a separate escrow account for each of their project, in which at least 70% of the money raised from investors and buyers will need to be maintained. And this fund could only be utilized against the construction or land related expenditures of the project. This is to prevent the diversion of one project’s money to other projects by the builder.
The Booking Amount
Booking amount cannot exceed the 10% of the total cost of the property.
Online Information
All the registered projects will be listed on the website of Regulatory Authority, and builders will be given login information to update the progress of their project on a quarterly basis, at max.
Click here to check the details of project registered in Maharashtra.
Advertisement
No advertisement could be published without having the RERA registration number published in it.
Compensation against Delayed Possession
In case of delayed possession, the developer will need to either refund the amount with interest (which will be defined by the State Regulatory Authority, as part of the agreement, typically the SBI’s highest lending rate plus 2%), or if the homebuyer chooses to wait, the builder will need to pay the due interest for the complete delayed period, within 45 days of it becoming due.
Quality of Construction
If the homebuyer finds any default with the quality of construct and notifies the state RA within five years of the possession, the developer will have to rectify it within 30 days.
Know your rights as a homebuyer in Mumbai
Download Real Estate (Regulation & Development) Act 2016