Investments

RERA : What it means for Apartment Buyers ?

RERA is the Real Estate Regulatory Authority announced by the Real Estate Bill in all states and federal territories. This Authority will be above the real estate regulator to ensure transparent transactions and provide clarity on governing and monitoring of real estate projects.Previously the real estate sector in India was largely unregulated and unorganized, which left consumers with little or absolutely no clarity on the default promises made by the developers. This bill which will now be state-level RERA Act, benefits the consumers in the form of standardized processes and protect them with transparent functioning, leading for a boost in more deals and overall growth in this sector and eventually boosting Indian economy.

rera

Here are a few important points we need to know:

1. Compulsory registration of projects  

The Act provides for mandatory registration of all projects with the Real Estate Regulatory Authority (Rera) in each state. Real estate agents who intend to sell any plot, apartment or building should also register themselves with this authority. Every project, measuring more than 500 square metres or more than eight apartments, will have to be registered with Rera

2. No changing of building plans in the middle of development

To further ensure that buyers get what they signed up for, the builder cannot make any major changes (like “addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall”…) in “the sanctioned plans, layout plans and specifications of the buildings or the common areas” without written permission of at least two-thirds of the buyers, other than a promoter.

3. Certification of project

Under the Act, if the developer fails to obtain a completion certificate for ongoing projects in a specified time period, the original sanctioned plans will have to be made public by the developer and any changes that were made at a later date.

4. Definition of carpet area

An important distinction the Act makes is between carpet area and super area. The Act mandates that the sale be made in accordance with the former. Advertisement and sale on basis of super area (area in which a flat is spread plus common area such as lobby) will be prohibited. Buyers will only pay for the carpet area – area enclosed within the walls of a flat, including kitchen and toilets – which is the practical area under use.

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5. Complete information on the developer

Complete details of developers would be available on the regulator’s website. The information would include company profile, track record, details of any legal cases, financial details of the promoters, status of approvals and projects, among other things

6. Increased responsibility

Developers would be responsible for fixing structural defects for five years after transferring the property to a buyer

Structural” or “workmanship” defects and the lack of quality of provisions as highlighted in the terms of sale – if any of these is pointed out by the buyer to the promoter within five years of possession, the promoter is bound to rectify the errors within 30 days of the complaint and without extra charge. If he fails to do so, appropriate compensation must be paid to the buyer under the Act.

7. Punishment for delay

In case the deadline given by the builder is not met and delayed, the buyers are entitled to a certain amount of interest from the builders – the idea here is to compensate for the interest that buyers are paying on home loans, according to a report in

Under the clauses of the Act, in case of delay in transferring properties to buyers, the Real Estate Appellate Tribunal has the power to intervene and levy fines on developers within 60 days. The maximum jail term for a developer who violates the order of the appellate tribunal is around three years, with or without a fine.

Real estate agents will have to pay a fine of Rs 10,000 for violating any provisions of the Act, for each day the violation continues or face imprisonment of up to one year

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