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Everything Homebuyers Need To Know About RERA

 Although the Real Estate Law has been a hit among the buyer community, objections and clarifications are also doing the rounds. Much of this is also because the state-level regulators would come into play and in each state, byelaws might be slightly different.

So, how would the Real Estate (Regulation & Development) Act, 2016, serve homebuyers? Here’s a one-stop guide for homebuyers like you:

What are the rights and duties of the buyer?

Section 19 of the real estate Act says that a homebuyer will be:

  • Entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information.
  • Entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities.
  • Entitled to claim the possession of apartment, plot or building.
  • Association of allottees will be entitled to claim the possession of the common areas.
  • Entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under the Act.
  • Entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the unit.
  • Responsible for making necessary payments as specified in the sale agreement at the proper time and place. They will also have to pay their share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges.
  • Responsible for mandatorily participating in the formation of an association or society or cooperative society of allottees.
  • Liable to pay interest as prescribed. The interest may be reduced if mutually agreed by promoter and allottee.
  • Take possession of the unit within two months of receiving the occupancy certificate.
  • Responsible for participate in registration of the conveyance deed.

Note: You can demand penalty from developer if the project has been delayed under the provisions of this Act.

How to file a complaint?

  • Association of allottees or any voluntary consumer association registered under any law can approach the Real Estate Regulatory Authority or the adjudicating officer to file a complaint.
  • The fees would be decided by the authority.
  • The authority may direct that specific matters or issues be heard and decided by a single Bench of either the chairperson or any member of the authority.
  • The authority will appoint an adjudicating officer for holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard.
  • The application for adjudging compensation will be dealt by the adjudicating officer as expeditiously as possible. The case has to be settled within 60 days from the date of receipt of the application.

When does a buyer become a defaulter?

Violation of authority orders:

Any violation of the provisions of the Act warrants a penalty. The penalty for the period during which such default continues may cumulatively extend up to five per cent of the plot, apartment or building cost as determined by your respective state authority.

Violation of Appellate Tribunal orders:

Homebuyers would be liable to a penalty for every day of default, which may cumulative extend up to 10 per cent of the cost of the plot/apartment or with imprisonment for up to one year, or both.

Can an offence which provides for imprisonment be compounded?

If a person is awarded imprisonment under the Act, it may be compounded if authorities decide to do so. In addition, the fine payable in lieu of imprisonment needs cannot be more than the highest limit of fine payable for that offence.


Where is your money going when you pay fees/penalties?

Penalties recovered under the Act are to be deposited in the Consolidated Fund of India (in case of the authority established by the Central government) and in the state account (in case of the authority established by states). However, grants received by the authority will be credited to the Real Estate Regulatory Fund.

What happens if your previous builder-buyer agreement violated the provisions of the current Act?

The agreement provisions would be followed if it is not in direct violation. However, both developers and buyers will have to follow the new rules. The rate of interest for violations would be the same as prescribed in the new Act for both parties.

When should you pay for the unit?

Much depends upon the builder-buyer agreement. However, do note that promoters cannot ask you for more than 10 per cent of the project cost before property registration.

What if the project you invested in is delayed?

All ongoing projects would come under the ambit of the new law. However, developers of delayed projects would be given one more chance to set a reasonable timeline to complete the delivery. If the promoter fails to do it yet again, he will have to pay the penalties as directed under the law.

Who is the ‘promoter’ as per the Real Estate Law?

The Act covers all private and public bodies that develop real estate projects for sale. Therefore, the development authorities and housing boards are also in its fold. It also mentions, “where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different persons, both shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder”. Therefore, it stands true in cases where a joint development is in question.

If the ‘promoter’ or ‘allottee’ defaults, what is the rate of payment payable?

Rate of interest payable by either the promoter or allottee is the same. It has to be specified by the appropriate government in the rules.

What if the Regulatory Authority does not respond?

Section 5 of the Act provides that the Authority has to decide on the application within 30 days of its receipt. It further provides that in case the Authority fails to take a decision within the said period of 30 days, the project shall be deemed to be registered.

What is the ‘escrow account’ and ‘separate account’?

Section 4(2)(l)(D) provides that the promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy percent of the money received from the allottees shall be deposited for the purposes of land purchase and construction. The account has to be self-maintained and is not an escrow account requiring the approval of the Authority for withdrawal. Section 4(2)(l)(D) clearly provides that the funds can only be used for construction and land cost.

When can the promoter withdraw the money from the separate account?

The promoter is required to withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. In addition, the promoter is permitted to withdraw from the separate account after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project.

Who else is under the purview?

Section 2(zm) defines the term ‘real estate agents’, which is a very broad and inclusive definition and covers all from of agencies involved in sale and purchase of projects, registered under the Act. Consequently, web-portals etc. engaged in selling plots or apartments are also covered under the Act and are required to comply with the duties and responsibilities as provided therein including under the Rules and Regulations made thereunder.

What is the obligation of the promoter as regards insurance of real estate project?

The promoter is required to seek an insurance of the real estate project towards title of the land and towards construction of the project. This provision shall only come into effect after and in the manner as may be notified by the appropriate government.

Are the civil courts and consumer forums barred from entertaining disputes under the Act?

As per section 79 of the Act civil courts are barred from entertaining disputes (suits or proceedings) in respect of matters which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the Act to determine. However, the consumer forums (National, State or District) have not been barred from the ambit of the Act. Section 71 proviso permits the complainant to withdraw his complaint as regards matters under sections 12, 14, 18 and 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.

What is the punishment prescribed for non-compliance of the orders of the Appellate Tribunal by the promoter?

As per section 64 if the promoter fails to comply with the orders of the Appellate Tribunal, he shall be liable to a penalty for every day of default, which may cumulative extend up to ten percent of the estimated cost of the real estate project or with imprisonment for a term which may extend up to three years or with both.

What is the punishment prescribed for non-compliance of the orders of the Appellate Tribunal by the allottee?

As per section 68, if the allottee fails to comply with the orders of the Appellate Tribunal, he shall be liable to a penalty for every day of default, which may cumulative extend up to ten percent of the cost of the plot/apartment or with imprisonment for a term which may extend up to one year or with both.

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Published by Property Thane

With an aim of simplifying the complex property search, PropertyThane brings together home seekers, sellers, real estate professionals on a common platform. We present you a team of diverse, creative and astute professionals adept in the fields of real estate, business, engineering, marketing and design.

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