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Empowering Real Estate: Unveiling The Triumphs And Insights Of The RERA Act, 2016

Buying a home represents the most treasured desire for individuals. The real estate industry plays a pivotal role in realizing this dream by establishing residential communities and townships. However, we have witnessed numerous instances of unscrupulous builders perpetrating fraud to deceive innocent home buyers.

To address this issue, the Real Estate (Regulation and Development) Act, 2016 (RERA) was enforced as a measure to combat such misconduct. This legislation aims to bring transparency in the real estate sector and to address the grievances of home buyers, builders, brokers, and agents.

Need for the RERA Act, 2016:

  1. To regularize the real estate sector. Earlier, home buyers had a remedy under the Consumer Protection Act, 1986. But it was inadequate to deal with the grievances of home buyers. Hence, the need was felt to enact a separate and stringent legislation that effectively deals with the issues of home buyers and promoters.
  2. To protect the home buyers from frauds and to uplift the investments in the real estate sector.
  3. To establish an authority which could act as a watchdog for the real estate sector and provide speedy dispute resolution to home buyers.
  4. To balance the interests of home buyers and promoters by fixing a set of responsibilities on both.
  5. To fix accountability on builders towards allottees and consumers.

Key Provisions under RERA Act, 2016:

  1. Section 3 of RERA Act, 2016 states that no promoter can advertise, book, sell or offer for sale the project without prior registration with RERA. However, certain categories are exempted from registration as given under proviso to Section 3 of the act.
  2. Section 13(1) of the RERA Act, 2016 establishes a limit on the initial payment, commonly referred to as token money, that a builder can request from a buyer during the booking process. This section stipulates that the promoter may only receive up to 10% of the total property cost as an advance payment from the buyer after formalizing a written sale agreement. In commercial terms, this agreement is know as Builder Buyer Agreement (BBA).
  3. RERA Act states that at least 70% of the buyer's and investor's money will be deposited in a special account known as "Escrow Account". The funds held in Escrow Account must not be redirected or used for any other purpose.
  4. Promoters failing to follow RERA rules may face penalties of up to 5% of the property's estimated cost
  5. Section 34 of RERA Act, 2016 states that to maintain transparency and accountability, promoters shall make periodic submissions to RERA authority about project's development. Home buyers can also track the progress of project on the RERA website.
  6. RERA Act, 2016 has standardized and codified "Carpet Area". As per section 2(k) of RERA Act, 2016, "carpet area" means 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. After introduction of RERA Act, 2016, builders and agents are mandated to sell apartments/property based on carpet area only.

    RERA Carpet Area=Net Usable Area of Apartment + Internal Partition Wall Areas
  7. Restriction on delay of projects-As per RERA Act, 2016, builders must complete the project within the stipulated time as per agreed contractual terms. If builder fails to so, it will attract penalty and allottee can claim delayed possession interest from RERA Court. (DPI shall be 2% + Lending rate offered by SBI).

How to file RERA Complaint?

Section 31 of the RERA Act, 2016 prescribes complaint procedure. Any aggrieved person may file a complaint with the RERA authority or adjudicating officer for any violation or contravention of provisions of this act against any promoter, allottee or real estate agent. Process of filing a complaint can be initiated online.

The following steps outline the process for filing a complaint:
Step -1. Go through the HRERA (filing of Complaints) Regulations carefully. [1]

Step-2. Go to the Home Screen of HRERA-Panchkula/Gurugram web portal and click on tab "Complaints".

Step-3. Fill up the complaint registration form and follow the steps prompted by the system.

Step-4. After submitting the form, you will receive an online complaint no from system. This complaint number will be used for all future correspondences.

Step-5. Make payment of requisite fee, Complaints fees @ Rs.1000 per complaint plus Rs.10 per annexure attached with the complaint by way of Demand Draft in favour of Haryana Real Estate Regulatory Authority (Gurugram), payable at Gurugram Bank Branch/Online Payment Gateway/ Online Payment Gateway.

Step-6. Take a printout of the Registration Form (Performa-B) and make 03 copies.

Step-7. Separately type out the Detailed Complaint in the format prescribed in the Regulation. Make 03 copies of the detailed complaint form and attach with the documents as mentioned in Step-6.

Step-8. Annex a copy of a certificate declaring that a self-signed copy of complaint has been sent to the Respondent directly and attach that certificate with the Complaint.

Step-9. Physically deliver 03 copies of the set comprising of Complaint Registration Form and Annexure and Demand Draft of Fees Paid and Detailed Typed Complaint and Self-declared and signed certificate (Step 8) in the office of Authority by hand or by post at the address.

Step-10. Check the status of complaint regularly on in by entering the complaint details.

Landmark Judgements:
  1. Vinod Kumar Agarwal v. Jaipur Development Authority (Rajasthan RERA)[2]

    Here the issue was whether the provisions of RERA will have an overriding effect over the provisions of local laws?

    Can the promoter demand cost of plot more than 10% before execution and registration of sale agreement?

    It was held that provisions of RERA have an overriding effect over the provisions of local laws.

    The forum further directed that the promoter of a real estate project shall not accept amount of more than 10% of the cost of the plots as advance payment without first entering into an agreement recording the transaction.
  2. Baldev Singh v. Ultratech Township Developers Private Limited (Panchkula RERA)[3]

    The question, in this case, was whether an allottee can demand a refund while withdrawing from a project which was nearing completion?

    The Authority held that it not only protects the interest of the buyers but promotes orderly growth of the real estate industry through efficient project execution in the interest of the larger public. In case the relief of refund is granted to the complainant, interests of the rest of the non-complainant allottees could also get seriously jeopardised. Moreover, the flat of the respondent is complete and ready for possession and the complainant can take possession of the flat after clearing his pending dues.
  3. Pioneer Urban Land and Infrastructure Limited vs. Union of India (Supreme Court)[4]

    In 2018, the Insolvency and Bankruptcy (Second Amendment) Act, 2018 was passed by the Parliament of India. The said amendment introduced a deeming fiction that definition of "Financial Creditors" shall include "Allottees" of a real estate project under its ambit. In this case, the constitutionality of the said amendment was challenged.

    The Apex Court upheld the constitutionality of the amendment and recognized the inclusion of "allottees" of real estate project within the definition of "Financial Creditors". This case involved a 'committed returns scheme', under which the homebuyers pay for their property while the developer makes periodic payments to the homebuyers until the handing over of possession. In this case, "committed return" was accepted as "consideration for time value of money".

Way Forward:

The RERA Act has become a protective shield for homebuyers, and the way forward entails the rigorous enforcement of its provisions. This legal framework has brought about a positive transformation in the entire real estate sector. To maximize its benefits, it is essential to expedite the disposal of cases.

I would further add on that Government accountability is also crucial here because, in some instances, government agencies are responsible for project approval delays. These delays ultimately result in builders being unable to provide buyers with timely property possession, causing significant hardship for homebuyers due to bureaucratic hurdles.

  2. RAJ-RERA-C-2020-3622
  3. Complaint no.92 of 2020
  4. 2019 SCC OnLine SC 1005

Award Winning Article Is Written By: Ms.Radhika Verma
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