A Comprehensive Guide On The RERA Act: Meaning & Things To Know
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29 December 2021The Government of India introduced the Real Estate Regulatory Authority Act in 2016 to safeguard home buyers’ interests and promote investment in the real estate sector. This Act was passed on March 10 and came into effect on May 1 2016.
Here is a detailed overview of the RERA Act to help you have a clear idea about its features, benefits and other crucial aspects.
Table of contents
Salient Features of the RERA Act
RERA was inducted with the motive to enhance transparency and accountability in the housing sector. These are some of its significant features:
- Every real estate project has to be registered with RERA, and authorities will have jurisdiction over these projects.
- There would be a fast-track mechanism to address all disputes related to the real estate and housing sector. Special adjudicating officers and appellate tribunals will take care of such disputes.
- In case a promoter wants to transfer a significant portion of your rights in a real estate project to another party, they would require written approval from two-thirds of allottees along with approval from RERA.
- If there are any violations of the provisions and rules laid down in this Act by a promoter, buyer, or agent, you can file a complaint.
- RERA can stop an agent, buyer, promoter or builder from all sorts of future activity if they have a complaint against their names.
- If a guilty individual or entity does not comply with the orders of the appellate tribunal, they have to face a penalty. It can be either 3 years of jail or a fine of 10% of their project value, or both.
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Advantages of RERA
RERA provides a host of benefits for home buyers, real estate agents, builders and promoters. These include:
- Reduced risk of insolvency for the builder
- Protection of the homebuyers’ rights in case of false promises
- Buyers have the right to information about a housing project
- Prompt settlement of grievances through appellate tribunal and dedicated officers’
- Buyers’ right to get free rectification in case of property damage within 5 years of possession
- Buyers’ right to seek compensation in case of defect in title
- Introduction of a standardised formula to calculate the price of carpet area
Impacts of Real Estate Regulatory Authority Act
With the RERA Act, it is now mandatory to obtain Occupancy certificates or Completion Certificates for registration of sales deeds of a particular project. However, there have been rampant registrations of units without proper Occupancy certificates.
These are some of the noted impacts of RERA:
- The provisions and sections of the RERA Act will promote and improve discipline and transparency in the real estate sector.
- Promoters will need to follow various regulations if they need to make changes in their projects after the initiation.
- There would be a significant boost in the confidence of homebuyers in the long run.
- Builders and promoters would be forced to avoid dishonest means.
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Steps to Obtain RERA Registration
Promoters looking to register their projects under RERA can follow these steps:
- Create a checklist and collect all documents needed for property registration under RERA.
- Open a bank account as per Section 4(2)(I)(D) of the RERA Act.
- Fill up and submit the RERA application form (Form A).
- Complete Form B and submit it. This form is the promoters’ declaration as per Section 4 of the RERA Act.
- Complete and submit the draft agreement of sale or allotment of the project (Form G).
- Provide an affidavit showing that all information on Form G is in compliance with RERA rules.
- Provide an affidavit mentioning no booking money is obtained from homebuyers.
- Make the necessary payments.
- Send signed hard copies of necessary documents to the RERA authority by post.
- Finally, fill out and submit Form C to get the RERA registration certificate.
However, the process for real estate agents is different:
- Fill up the registration form and submit it along with all necessary documents and fees.
- You will get a registration number which you have to mention during all property sales.
Make sure to provide all necessary documents and information about a project with the buyers. Any misrepresentation or fraud will lead to the cancellation of registration.
Important Documents for RERA Registration
To register any project under RERA, you have to furnish these documents:
- Income tax returns for the last 3 years
- Audited profit and loss accounts and balance sheet
- PAN and Aadhaar of the promoter
- An authenticated legal title deed
- Approved layout and sanction plan
- Passport size photo of the promoter(s)
- A plan for all the amenities to be provided in a project
- Project location details with the latitudes and longitudes
- An estimated invoice along with the sale agreement and conveyance deed
- Details about the number of garages with open parking area
- Name and addresses of architects, engineers, real estate agents, and others associated with the projects
- Declaration stating promoters will avoid discrimination during allotment
- Additional documents as asked by the State Government
Final Word
As a prospective homebuyer, you should look for projects that have been registered under RERA Act. This will help you eliminate any risk of loss and get compensation in case of fraud.
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Check State-Wise RERA
Frequently Asked Questions
Ans: Promoters can face the following penalties under RERA Act:
For providing false information: 5% fine of the estimated cost of a project
Non-registration of the project: 10% fine of the project cost
Violation of provisions: Either 3 years of jail or a 10% fine of the project cost or both
Ans: As per RERA, the carpet area is the total floor area enclosed within the walls of an apartment. This does not include areas such as balconies, terraces, shafts, or anything else. This standardised definition of carpet area will make sure that dishonest promoters do not misguide homebuyers.
Ans: The applicable penalties for certain offences under the RERA Act are as follows:
Violation of orders given by the appellate tribunal: Imprisonment of up to 1 year or 10% fine of the price of the unit sold
Violation of Section 9 and Section 10: Rs. 10,000 per day fine till the default continues up to a maximum of 5% of the sold unit
Obtaining registration through misrepresentation or breaching the terms of registration: Revoking of an agent’s registration number
Ans: The following types of projects can get approval under RERA:
Projects of more than 500 sq. metres
Residential and commercial projects that include plotted development
Projects that did not have a completion certificate before the beginning of this Act
Projects meant only for repair, renovation or improvement and do not involve allotment of new plots or marketing or advertising will not qualify for RERA approval
Ans: 23 Indian states and Union Territories have so far established either permanent or interim regulatory authorities as of July 2017. Each state and UTs will have its specific regulator under RERA. Only 4 states Gujarat, Madhya Pradesh, Maharashtra, and Punjab, have set permanent authorities.
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