The Real Estate (Regulation and Development) Act (hereafter referred to as “RERA”) came into force on 1 May 2016. The main idea behind this law was the regulation and promotion of the real estate sector. Now development projects in real estate need to register themselves under RERA. RERA provides credibility to real estate projects and protects customers against delays in handing over the projects. 

How to Register Projects under RERA?

The process of Application for Registration of Real Estate projects differs from state to state. The detailed procedure for each state is available on each state’s RERA website. The promoters and real estate agents have to apply for registration on the website, which is relevant for their state. For registration, you need to submit certain documents along with the application. These, too, differ from state to state. However, certain documents are common amongst most of the states. These are:

• Promoter’s PAN Card;

• Legal title deeds of the land. (See Section 4(2)(l)A);

• Encumbrance Certificate (See Section 4(2)(l)B);

• Commencement Certificate (See Section 4(2)(c));

• The Sanction Plan, Layout Plan, location details of the project (See Section 4(2)(d));

• The plan of development works; and

• Details of previous project experience of the promoter, if any (See Section 4(2)(b)).

Some of these documents across different states (as mentioned on their websites) are as follows:

• Name, type, and registered address of the enterprise;

• Registration Certificate, Memorandum of Association (MoA), Articles of Association (AoA) and date of incorporation of the promoter’s enterprise;

• Audited balance sheets of the last three financial years;

• Audited report and director’s report of the last three years; and

• Name, address, contact details, and photographs of the promoter/director/partners/chairman/ or any other authorized person.

What Are the Key Benefits?

Before RERA, the real estate industry was in shambles. Customers faced delays, there was no regulation, and there was widespread corruption and high-handedness of real estate agents and builders. We see the following key benefits after RERA came into the picture: 

• Carpet Area: A statutory definition of carpet area dispels the doubts regarding its determination. Promoters decided on carpet areas before RERA came into being. 

• Buyers can seek information regarding the projects (Section 19, Clauses 1 & 2): Buyers under RERA can seek information such as completion status, plan layout, stages of construction, etc.

• Delaying projects led to consequences for the promoter: Under RERA, each promoter has to give a due date on which they will hand over the possession of the property to the buyer. If the promoter cannot complete the project by this date,he can face penal consequences. 

• Liability of promoters:  If there is any structural defect or flaw in constructing a property, the allottee may bring up such an issue to the notice of the promoter and the promoter will be obligated to rectify such flaws within 30 days. If the promoter does not do the same, the allottee will need to be compensated for such structural defects.

• Advance Payments up to 10%: Under RERA, the builders cannot demand advance payments that are more than 10% of the project's total value.

• The buyers were given rights in case of false promises: If the allottee finds themselves in a position where the initial promises made by the promoter are not being kept, or there is a mismatch in the commitment between the parties, the allottee under this Act, has the right to withdraw from the project and get a full refund (sometimes with interest or compensation).

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Impact On Home Buyers

Homebuyers now have the following rights under RERA: 

• Buyers need not pay for the walls area, as the definition of carpet area is now clear. 

• Builders need to disclose information, establishing transparency between the buyers and builders.

• Registration manifests the credibility of builders and real estate agents. 

• RERA also prevents indefinite delays in project development and misappropriation of funds. 

• Asking for refunds in case of uncompleted projects is also easier under RERA. 

Impact On Real Estate Agents

RERA has the following impact on real estate agents:

• Real estate agents now have to mandatorily register themselves and also keep renewing this registration. 

• If a real estate agent is not registered, he will have to pay penalties. 

• Real estate agents will have to maintain accounts, books, records, etc. 

• They should display their registration number at all times, especially in the advertisements they place. 

• False advertisements will attract a penalty. 

Penalties

Various penalties under RERA are:

• Section 60: We already know that a promoter has to register themselves under Section 4 of RERA. For furnishing false information, a penalty of up to 5% of the approximate cost of the real-estate project needs to be paid.

• Section 61: Just like in the previous section, even if the promoter violates any other provision of RERA (i.e., other than Sections 3 & 4), the same amount of penalty can be levied against them.

• Section 63:  For non-compliance with RERA authority order, a penalty upto 5% per day gets levied on the promoter. 

• Section 64: For failure to comply with the order of the RERA tribunal, a promoter may also face imprisonment. 

• Section 62: If the real-estate agent violates the provisions of Section 9 & 10, they will be required to pay ₹ 10,000 per day till such default continues.

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RERA Laws Across India

Till now, every state has notified the rules for their respective state authority under RERA. The only exception here is the state of Nagaland, which is under process to notify the rules.

Most states have launched their websites regarding the same. However, in this regard, some north-eastern states (such as Assam, Manipur, Arunachal Pradesh, and Sikkim) and Jammu & Kashmir, Ladakh, and NCT of Delhi are lagging.

West Bengal refused to implement RERA and enacted its legislation called, “Housing and Industrial Regulation Act, 2017,” challenged in the Supreme Court.

Several states have implemented a diluted form of RERA. This has increased difficulties for homebuyers in these states.

RERA is forward-looking legislation, and before buying a house, you should always check the RERA registration of the builder and the real estate agent. If you are in the real estate business, make sure to comply with the provisions of RERA.

Consulting a Lawyer is always useful for quick and authentic information about RERA Act