REAL ESTATE REGULATION ACT (RERA), 2016 is established by Indian Parliament in every state of India, which seeks to protect property investors, ensuring the transparency and to enhance the investment rate in real estate sector. A few important clauses home buyers should take under consideration
Launching the project for price benefit of the customer before receiving the legal approvals has been banned now. RERA has ensured that all the legal documents are to be verified and submitted before launching the project. Documents namely Occupancy certificate, Commencement certificate, fire NOC, defense NOC, title verification etc have to be primarily cleared.
Escrow account is basically a three party account consisting of buyer, builder and bank, where bank is the authority which regulates the flow of amount in exchange of committed service from the seller. It is mandatory for developers to maintain a separate escrow account for every project. This account is under the regulation of a bank which means bank is the signing authority or escrow manager. The developer has to maintain 70% of the amount and can withdraw it for the stage work ONLY for the respective property. This has prohibited the siphoning of funds, for construction of other project, investing in land parcels and such various reasons which cause delay in possession which is prime pain point of the property purchaser.
To protect the property purchaser’s investment the penalty clause is defined in RERA which is enforced when concerns such as delay in delivering the project arise. There are five possible instance where violation comes in
Calling off the deal: There have been numerous cases where after the booking amount has been paid, the developers call off the deal for a better price than the first buyer. And when the client calls off the deal, the developer refuses to return the amount paid more the token amount by the consumer. To avoid these transgressions, RERA has outlined the fixed amount in the agreement to be forfeited with respect to both the parties in both of the above cases.
Deviation in payment schedule: If the home buyer fails to deliver the payment according the planned schedule he/she shall be charged with STATE BANK OF INDIA HIGHEST MARGINAL COST OF LENDING RATE PLUS TWO PERCENT(2%).
Delaying the project from the committed time: RERA has granted the property investor two options in case the developer fails to deliver the project; either the consumer can continue in the investment and receive the compensation from the developer or withdraw the deal. However, the developer will be charged with a significant amount of penalty in delay of the project.
Variance in approved plans: If the developer has not constructed the project as per sanctioned layout and floor plans, the repercussions are enforced.
Maintaining and delivering the quality: The developer must deliver the quality that has been promised to the consumer. Defective or faulty structure that do not meet the quality standards are rejected by RERA and developer face the outlined and defined penalty charge in RERA.
How RERA has a positive impact on the future of Real Estate
Assured delivery on the committed time: Previously, often home buyers were subjected to late charges on delaying the payment of the property. Developers were used to not mentioning the date of possession and delivery. But when, RERA was enforced all the developers are obligated to deliver the property at the committed time. If they fail so do so, they are charged with reimbursement and have to face the consequences from the government as well. They have to pay their clients the compensation with respective rate of Interest as well.
Transparency: Consumers now experience the benefit of cross examining and checking the legalities of the project uploaded by the developer on the website.
Refinement in the quality: Defective structures might not be the consumer’s concern anymore the RERA approved projects always ensure to deliver tier A quality of construction and faulty structure risk has vanished.
Dispute resolution: Since RERA has come into action it has successfully settled real estate disputes within the given timeline with a degree of finality.