Owning a nice house is a dream harboured by every individual – be it an elite entrepreneur, the average middle-class salaried man or someone living on the fringes of poverty and hoping to stumble upon a better fate. The reality, however, is that, while some are able to achieve this dream, the majority of the common crowd is unable to. The high prices of real estate property as opposed to the moderate income levels of most Indians wreck these dreams, or at least delay them. To add onto the misery, builders and real estate agents are not always considerate and fair. A good example would be the builder-buyer contract drawn up by property developers. Some legal research would reveal that these contracts are drawn up in favour of the builder and end up exploiting the buyer.
Further specific online legal research for Indian laws would bring up the RERA act for property buyers, an act introduced by the government of India in order to put a stop to such harassment by builders and real estate authorities.
What is RERA?
Fortunately for the buyers – and not so fortunate for the sellers – the Real Estate Regulation Act 2016 or the RERA 2016 aims to protect the interests of a consumer while the sale of a plot, apartment or building is carried out. Legal research reveals that the creation of a Real Estate Authority and Appellate Tribunal for speedy grievance redressal, directions to follow transparent methodologies, and rules and regulations for builders are a few salient features of this act.
Major Benefits of RERA for Property Buyers
- Use of Escrow Account: A not-so-secret fact about developers is that they don’t hesitate before transferring funds obtained by a customer of Project X to another Project Y. If the Project Y happens to be a failure, customers of Project X are often left high and dry. However, from now onwards, the developer/builder will have to transfer 70 percent of the amount received from a buyer to an escrow account or a reserve account. As per Narendra Kumar, Advocate on Record, Supreme Court, this would help tackle the problem of money being diverted to newer, unrelated projects.
2. Mandatory Registrations and clearances to be obtained: Until before this act was introduced, builders were involved in the practice of marketing projects even before they were started or structured.
However, under the RERA, if the real estate project in question is greater than 500 square meters, the project has to be registered at the state RERA with complete details such as the size of the land, approvals, schedule of completion and the like. Only when all these particulars are approved, the project can be marketed.
3. Right of the Buyer in case of false promises: Under the RERA, if the builder fails to deliver his promise, the buyer is entitled to a 100% return of advance payments. Also, a builder is not entitled to charge any more than 10% of the actual cost of the apartment as application fee before entering the agreement of sale.
4. Pay for the carpet area only: Fed up of paying for 1000 sqft while only 800 sqft can be lived in and the rest is the common area? To avoid this malpractice, the government directs that the customer will be charged only for the carpet area where carpet area is defined as:
” the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.”
5. Establishment of Regulatory Authority: The need for a regulatory authority for one of the biggest industries in India, the Real Estate Industry, was long felt. Under RERA, the government has directed for a RERA and an Appellate Tribunal to be set up in every state. All grievances and appeals can be put up here and will be addressed within 60 days of filing. This eliminates the time lag and the threat of your builder tying you up in long court cases.
If you are a potential buyer looking to familiarizing yourself with the current picture of the real estate industry and how you can navigate the same, a thorough online legal research for Indian laws on this subject can provide you with a slew of more benefits attributed to this law. This step by the government to protect the buyers of the country has been a great initiative and has now taken a common man closer to his dream of buying a house for his family without the threat of being exploited by a system riddled with loopholes.