Real Estate Regulation and Development Act 2016, RERA Act. The Real Estate Regulation and Development Act 2016, herein after called as “RERA”, which got the assent of the president on 25th March 2016 and published in the Gazette of India on 26th March 2016, which is set to come into effect from May , 2017, this year, has a surfeit of advantages that shall help the home buyers in various ways. RERA has taken into consideration and has tried to improve the things for the better so that the homebuyers do not suffer in the process of home-buying. It would come to the rescue of homebuyers as below.
- RERA establishes the state authority and vests authority on the Real estate regulator to govern both residential and commercial real estate transactions and with this it shall improve the governance hold on the real estate sector reducing disputes to a great extent. The state Real estate regulatory authority shall become the government body to which any grievances, problems, issues can be addressed to for solutions.
- The rule of RERA of depositing around 70 per cent of funds in a dedicated account will ensure sufficient funds for the projects to speed up and lead to getting completed on time. This timely delivery of the project is the biggest factor or cause of concern for the homebuyers and by taking this step if it helps in having a timely delivery, then it shall be a big relief for the homebuyers.
- Another big advantage for the homebuyers now is that RERA shall bring in more clarity in the deals between the developers and the homebuyers leaving out ambiguities. Now the deals and transactions shall be more specific so as the homebuyers do not suffer unnecessarily later on for the lack of clarity.
- Following the above, transparency shall be brought in deals and transactions between the homebuyers and the developers. As the deals and transactions shall become more clear, they shall become more transparent benefitting the homebuyers in the way that they shall be more aware of their buy.
- RERA is likely to bring in more transparency in the Real estate sector, it shall lead the sector to be able to attract more FDIs. This is set to improve the feasibility of financing options availability in the market leading to increased investments and propelling more FDIs and thereby making the system more efficient and home-buyers friendly. Taking into consideration all these factors, the ultimate beneficiary is going to be the homebuyer.
- No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act:
- Every promoter shall make an application to the Authority for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be specified by the regulations made by the Authority.
- That seventy per cent of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
- Provided further that the amounts from the separate account shall be withdrawn by the promoter 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.
- Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
- The Authority may, on receipt of a complaint or suo motu in this behalf or on the recommendation of the competent authority, revoke the registration granted under section 5, after being satisfied that—(a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made there under;(b) the promoter violates any of the terms or conditions of the approval given by the competent authority;(c) the promoter is involved in any kind of unfair practice or irregularities.
- Upon lapse of the registration or on revocation of the registration under this Act, the Authority, may consult the appropriate Government to take such action as it may deem fit including the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority: Provided that no direction, decision or order of the Authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of this Act: Provided further that in case of revocation of registration of a project under this Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works.
Author – CA Sanjay Sharma