A Comprehensive Guide On The RERA Act: Meaning & Things To Know

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The 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. 

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.

Also Read: Home loan insurance

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. 

Also Read: Home loan prepayment calculator

Steps to Obtain RERA Registration

Promoters looking to register their projects under RERA can follow these steps:

1. Create a checklist and collect all documents needed for property registration under RERA. 
2. Open a bank account as per Section 4(2)(I)(D) of the RERA Act.
3. Fill up and submit the RERA application form (Form A). 
4. Complete Form B and submit it. This form is the promoters’ declaration as per Section 4 of the RERA Act.
5. Complete and submit the draft agreement of sale or allotment of the project (Form G).
6. Provide an affidavit showing that all information on Form G is in compliance with RERA rules. 
7. Provide an affidavit mentioning no booking money is obtained from homebuyers. 
8. Make the necessary payments.
9. Send signed hard copies of necessary documents to the RERA authority by post.
10. Finally, fill out and submit Form C to get the RERA registration certificate. 

However, the process for real estate agents is different:

1. Fill up the registration form and submit it along with all necessary documents and fees.
2. 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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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.