By Sunil Dhawan, ECONOMICTIMES.COM|Updated: May 01, 2017,
11.52 AM IST
..
The Real Estate (Regulation and Development) Act,
2016 (RERA) becomes effective from May 1, 2017. Each state and UT will have its
own Regulatory Authority (RA) which will frame regulations and rules according
to the Act.
RERA has been established for regulation and
promotion of the real estate sector and to ensure sale of properties, in an
efficient and transparent manner. The objective is to protect the interest of
consumers in the real estate sector and to establish a mechanism for speedy
dispute redressal.
Here are 10 important ground rules of the RERA:
1. Informing the buyer at the time of booking
The promoter at the time of the booking and
issuing the allotment letter shall be responsible to make available to the
allottee, the following information
(a) Sanctioned plans, layout plans, along with
specifications, approved by the competent authority.
(b) The stage wise time schedule of completion
of the project, including the provisions for civic infrastructure like water,
sanitation and electricity.
And, booking process itself is tweaked a bit.
2. Booking amount
Currently, most builders ask for 10 per cent of
the total cost of the property as a booking amount. The 'agreement of sale' is
prepared at a later date. Now as per RERA, a promoter cannot accept more than
10 of the cost of the property, as an advance payment or an application fee,
without first entering into a registered agreement for sale.
But, even before reaching out to the buyers
through advertisement or otherwise, the promoter has to register the project
with the state regulatory authority. To keep the builder under wrap, each
tower/phase within a project has to be independently registered.
3. Getting the project registered
Before a project gets advertised, a registration
number has to be obtained against it. Few important documents that the promoter
has to furnish to RA will include:
(a) Promoter's background details
(b) A brief detail of the projects launched by
the promoter, in the past five years including ones which are already completed
or being developed. The current status of the said projects, any delay in its
completion, details of cases pending, details of type of
land and payments pending, will also need to be shared.
(c) An authenticated copy of the approvals and
commencement certificate from the competent authority. And, where the project
is proposed to be developed in phases, a copy of the approvals and commencement
certificate from the competent authority for each of such phases, is also to be
furnished.
(d) The sanctioned plan, layout plan and
specifications of the proposed project or the phase and the whole project as
sanctioned by the competent authority.
(e) Proforma of the allotment letter, agreement
for sale, and the conveyance deed proposed to be signed with the allottees.
(f) The
number, type and the carpet area of apartments for sale in the project along
with the area of the exclusive balcony or verandah areas and the exclusive open
terrace areas with the apartment, if any.
(g) The number and areas of garage for sale in
the project.
(h) The names and addresses of the contractors,
architect, structural engineer, if any and other persons concerned with the
development of the proposed project.
(i) A declaration, supported by an affidavit, which
shall be signed by the promoter or any person authorised by the promoter,
stating:
(A) That the promoter has the legal title to the
land.
(B) That the land is free from all encumbrances.
(C) The time period within which he undertakes
to complete the project or the phase.
(D) That 70 per cent of the amount realised for
the real estate project from the allottees, from time to time, shall be deposited
in a 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.
4. Ongoing projects
RERA will not only cover the new launches but
also the on-going the projects. Promoters have been given three months to get
their ongoing projects registered with RERA i.e. till 31st July, 2017.
For this now that they will have to make public
the original sanctioned plans with specifications and changes made later, total
amount collected from allottees, money used, original timeline for completion
and the time period within which the developer undertakes to complete the
project, duly certified by an Engineer/Architect/practicing Chartered
Accountant.
5. Registration of projects
Make sure a property that you buy any time after
May 1, 2017, is in a project which is registered with the RA. Once the state
has its RA established, builders will be required to register their projects
with it by furnishing all the information including, financial statements, copy
of legal title deed and other documents. The builders will get a registration
number project-wise i.e. tower wise.
6. Online information
After registration with RA, the builder will be given a
login-id and password to create a page on RA's website to upload the project
related information on authority's website. It will show quarterly up-to-date
the list of number and types of apartments or plots, as the case may be,
booked; quarterly up-to-date status of the project; and amongst others.
7. Home buying advertisement
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. Each
advertisement has to carry the RERA registration number.
8. Interest on default
The state RA has to specify the rate of interest
on a default by either the developer or the buyer. Such a rate could be the
interest rate of SBI's highest Marginal Cost of Lending Rate plus 2%. Odisha
state RA has already mentioned about this in its rules. Such payment has to be
made within 45 days of it becoming due.
9. Quality of construction
The quality of the construction has also been a
matter of concern with several builders. The RERA rules provides for protection
against this up to 5 years after possession. In case any structural defect or
any other defect in workmanship, quality or provision of services or any other
obligations of the promoter as per the agreement for sale is brought to the
notice of the promoter within a period of five years, it shall be the duty of
the promoter to rectify such defects without further charge, within 30 days.
10. Delayed delivery - compensation
Delayed possession has been the norm all these
years. If the promoter fails to complete or is unable to give possession of the
property within the agreed timed-period, he has to return the total amount with
interest at such rate as mentioned in the agreement to sale. And, in case the
buyer does not intend to withdraw from the project, he shall be paid, by
the promoter, interest for every month of delay, till the handing over of the
possession.
Conclusion
Delayed delivery of projects, bad construction
quality, not sticking to sanctioned plans, were some of the common problems
marring the industry. Till now, there wasn't any regulator and neither were the
rules of the game in place. In the absence of a regulator, the homebuyer was
literally at the mercy of the builder.
RERA is a huge step forward and lot of
expectation will be there for the state RA to frame the rules according to the
Act and not dilute them in builder's favour. How far RERA is able to bring back
buyer's confidence, however, remains to be seen.
To start with buyers will look forward to at
least three things from RERA - One, promoters falling in line and sharing all
information as required by authority. Second- transparency by making the
information available online and finally, a robust feedback mechanism between
the authority, promoter and the buyer. Let not the buyer suffer from delays, of
any nature, from now on.
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