RERA

HOW IT IMPACTS THE BUYER?

 Contents

What is the importance of RERA? ..................................................................................................................1

How Will Buyers Be Benefitted .....................................................................................................................2

Whom to approach in case of a problem? .................................................................................................3

Does RERA Cover All Projects? ....................................................................................................................4

What can attract penalties? ...........................................................................................................................6

Why Was There A Delay In Implementing RERA? ....................................................................................7

Will real estate prices come down or go up post RERA? .......................................................................8

Commonly Asked Questions .......................................................................................................................9

WHAT IS THE IMPORTANCE OF RERA?
The Real Estate (Regulation and Development) Act (RERA), 2016 came into
existence after almost eight years of deliberations, largely fuelled by
concerns over unscrupulous practices of developers, such as delaying of
projects, demanding unscheduled or unaccounted payments without
actually delivering the product, misrepresentations, etc. The Real Estate
Act is intended to achieve the following objectives:

Ensure accountability towards allottees and protect their interest

Infuse transparency, ensure fair-play and reduce frauds & delays;

Introduce professionalism and pan India standardization

Establish symmetry of information between the promoter and allottee

Imposing certain responsibilities on both promoter and allottees

Establish regulatory oversight mechanism to enforce contracts

Fast-track dispute resolution

Promote good governance in the sector

1
 HOW WILL BUYERS BE BENEFITTED?
1 Clarity: It is mandatory for promoters to register all projects with the State
Real Estate Regulatory Authority, along with extensive information about
them-- project implementation schedule, layout plan, land status,
government approvals, sub-contractors, etc.

2 Accountability: 70 per cent of funds collected from buyers have to be

maintained in an escrow account and have to be used only for the
construction. This will restrict the entry of fly-by-night developers.

3 Conformity: Developers must list all projects and their details on the RERA
website. Details about layout and schedule have to be mentioned clearly.
It ensures a standard code of conduct for all builders alike. Violations will
be penalised.

4 Answerable: Overall issues related to property matters will be dealt by the

authority in the quickest way possible. This makes erring developers
answerable to consumers. Details regarding developers projects would
be easily accessible by homebuyers.

5 All-encompassing: Not just developers and their projects, all practising

brokers need to be listed too. This will mean that homebuyers can
approach registered and professional brokers.

2
WHOM TO APPROACH IN CASE OF A PROBLEM?
Previously, all disputes between homebuyers and developers ended up in
a consumer court but now the regulator appointed through the Act would
deal with the disputes. The regulator is also entrusted with the
responsibility of making sure that the stakeholders honour provisions of
the Act. This is binding on all. There could even be two regulators for a
state or one regulator for two states.

The regulators caters to rationalize the sector at different levels. Players on

the supply side would need to adhere to the guidelines. This to a degree
will ensure transparency. If homebuyers are not happy with the decision of
the regulator, they can approach the Apellate Tribunal for justice. RERA
and the Appellate Tribunal will be established through the Act. To ensure
that stakeholders on the supply side can conform to guidelines as per
RERA, respective states will need to have proper laws in place.

3
DOES RERA COVER ALL PROJECTS?

Projects within 500 sq mt not under the radar

Where area of land proposed to be developed does not exceed 500 sq

mt or number of apartments proposed to be developed does not
exceed eight, inclusive of all phases, the project neednt be registered
at all. If the authority considers it necessary, it can also reduce the
threshold below 500 sq mt or eight apartments. If you thought that 500
sq mt is the minimum permissible area on which a construction can be
done, you are wrong. Hence, a lot of plots would be in the exemption
range thereby rendering small buyers unarmed. In this case, buyers
need to watch out for the projects they are settling for.

As a buyer, you must arm yourself with this knowledge. While there are
always checks and balances, if you are settling for a private builders
project that is constructed within 500 sq mt plot, ensure the track
record of the builder. Ask for approved building layouts. Insist on
completion and occupancy certificates too. Dont let this RERA
provision make you vulnerable.

4
Completion Certificate Received? Due Dilligence Is Yours
RERA provisions clearly point out that where promoter
has received completion certificate for the real estate
project prior to commencement of the Act, such a
project neednt be registered with the authority.
Therefore, if prospective home buyers are settling for a
property completed before March, 2016, the onus of
proper research and due diligence falls on you.
Like any other buyer who didnt probably feel as secure
as prior to the Act materialised, you too are in the same
plight. Ensure that the property has a clear title, the
developer has a clean name and the layout has been
approved as per local building norms. You may want to
refer this.
Renovated, Repaired, And Redeveloped? Out Of RERA
For purpose of renovation or repair or re-development
which does not involve marketing, advertising, selling or
new allotment of any apartment, plot or building, the
project neednt be registered under RERA.
Make sure that the clause is followed to the T. In case of
a redevelopment where usually a large house or a
duplex can give way to the rise of a multi-storeyed
apartment, a buyer must be sure about the construction
quality and all other documentation and procedures
which are necessary. Similarly, in the case of a
renovated house, has your house owner renovated and
rebuilt to an extent that it can house many other
families? Perhaps he neednt have to advertise to sell
the other newly built floors and could clearly flout the
rules. Watch out if you were planning to buy a unit from
such a seller.
5
WHAT CAN ATTRACT PENALTIES?

Developers
For developers who violate norms through either of the following ways, the developer may be liable to pay up to 5% of the
entire cost of any/all of these defaults. RERA will take into view the nature of this default.

False Declaration Incorrect or No information on website

Publicity without registration
To execute conveyance deed
Failure to get notified insurances
Formation of Association of Buyers
Failure to Maintain Essential Services
Failure to provide buyers with CC/OC
Transferring rights without obtaining prior
consent of 2/3 allottees
Mortgaging or creating change on property
after sale or agreement of sale
To pay outgoings till transfer of possession
No mention of website in advertisement for sale
Not rectifying defects brought to notice within 5 years
Failure to prepare and maintain details specific to RERA
Failure to Obtain Lease Certificate If On Leasehold Land
Failure to give possession as agreed in the sale agreement
Failure to make prescribed information unavailable at the
time of booking
Accepting more than 10% of cost without executing and
registering agreement of sale

Allottees
Failure to comply by RERA (Up to 5% of the Failure to comply by Real Estate Apellate Tribunal (Imprisonment
total cost of the apartment,plot) or/and penalty up to 10%) of the cost of the apartment/building/plot

6
WHY WAS THERE A DELAY IN IMPLEMENTING RERA?
Too many laws?
A key issue is the reconciliation of land laws and apartment ownership acts
pre-existing within the state with the new law and extension of its
applicability. As for the latter, the law is applicable in what it defines as
urban areas a term that encompasses all municipal areas and areas
within the control of an analogous local authority, or part of a planning
area.

However, several states do not have planning areas defined and several
census towns (areas which are urban as per the census but not under the
municipal law of the state) are still governed by panchayats. Although
building and/or development control rules may exist for such areas as laid
down by the town and country planning law or municipal law, these would
not ordinarily fall within the description of urban areas as defined under
the Act.

Dilution of the RERA

A number of concerns had risen, with respect to states having effectively
diluted the provisions of the main law, particularly with respect to the
applicability of the law to ongoing projects, statutory protection to home
buyers and disclosure of information by developers.

7
WILL REAL ESTATE PRICES COME DOWN OR GO UP POST RERA?

The argument in favour of higher property prices

Prior to demonetisation, deals between developers and land owners often used to be entirely cash-based.

If cash transfers are made illegal for land-based transactions, there is a real possibility that land owners will load the tax costs
on the price to the developer and in turn, the developer will load this cost back to the purchaser. This will increase the prices
of the real estate product, but with no substantial gain in margins for the developer.
Similarly, there are chances that with compliance costs going up after RERA, developers would need to bill this on to the
consumers.

The argument in favour of lower property prices

The focus is now to provide value-for-money homes that can attract more buyers with a lesser budget. However, such stock
is often produced in areas that have limited connectivity to places of work and lack basic economic and social infrastructure.
Consequently, there is little value, in terms of usability of such an asset.

However, the asset is still worth investing into for speculative long term capital gains. There are no real recurring costs
involved in holding the asset without using it. Moreover, post RERA there are chances that with transparency building in,
pricing could be buyer-friendly or even when prices remain stable, buyers would find it encouraging to invest. With
unstructured sellers out of the market, homebuyers can be confident that they will get value for money.

8
COMMONLY ASKED QUESTIONS
How to file a complaint?
Section 31 of the Act provides for filing of complaint by an aggrieved with
the Regulatory Authority. The form and manner and the fees payable for
filing the complaint are to be specified by Rules to be made by the
appropriate Government.

How soon will the Authority look into the matter?

Authority should endeavour to dispose of the questions / complaints as
expeditiously as possible but not later than sixty days from the date of filing
the same. However, where it could not be disposed of during the said
period the Authority is required to record its reasons for the same.

Can you oppose the decision of the Appellate?

Any person aggrieved by the decision or order of the Appellate Tribunal
can file and appeal with the High Court.

What happens in case the developer defaults?

As per section 61 if the promoter defaults any other provision of the Act or
the Rules and Regulations made thereunder, he shall be liable to a penalty
upto five percent of the estimated cost of the real estate project or ten
percent of the estimated cost of the real estate project or with
imprisonment for a term which may extend upto three years or with both.

9
What if the project is not registered?
As per section 59, where under the Act, it is obligatory for the promoter to
register a project with the Authority, and the promoter fails to do the same,
he shall be liable to a penalty upto ten percent of the estimated cost of the
real estate project. However, in case the promoter consistently defaults or
does not comply with the directions / orders of the Authority as regards
registration of the project with the Authority, he shall be liable to additional
fine of ten percent of the estimated cost of the real estate project or
imprisonment upto 3 years or both. As per section 60 if the promoter
defaults as regards matters covered under section 4, he shall be liable to a
penalty upto five percent of the estimated cost of the real estate project.

What is the punishment prescribed for non-registration of by a real estate

agent?
As per section 62, where under the Act, it is obligatory for the real estate
agent to register himself with the Authority, and the real estate agent fails
to do the same, he shall be liable to a penalty up to of rupees ten thousand
per day of default, which may cumulative extend upto five percent of the
cost of the plot / apartment, for which the sale has been facilitated by him.

Does the term allottee include secondary sales?

As per section 2(d) an allottee includes a person who acquires the said
apartment / plot through transfer or sale, but does not include a person to
whom such plot, apartment is given on rent.
10
What is the punishment prescribed for non-compliance of the orders of the Authority by the allottee?
As per section 67 if the allottee fails to comply with the orders of the Authority, he shall be liable to a penalty for every day of
default, which may cumulative extend upto five percent of the cost of the plot / apartment.

What is the punishment prescribed for non-compliance of the orders of the Authority by the real estate agent?
As per section 65 if the real estate agent fails to comply with the orders of the Authority, he shall be liable to a penalty for every
day of default, which may cumulative extend upto five percent of the cost of the plot / apartment, for which the sale has been
facilitated by him.

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 upto ten percent of the cost of the plot / apartment or with imprisonment for a term
which may extend upto one year or with both.

Can an offence which provides for imprisonment be compounded?

As per section 70 if any person is punishable with imprisonment under the Act, the same may be compounded on such terms
and conditions which may be prescribed by Rules made by the appropriate Government. In addition, the fine payable in lieu of
imprisonment needs to be specified by the said Rules, which cannot be more than the maximum fine payable for that offence.

Can the penalties imposed under the Act be deposited in the Real Estate Regulatory Fund?
As per section 76 penalties recovered under the Act are to be deposited in the Consolidated Fund of India (in case of Authority
established by the Central Government) and in the State Account (in case of Authority established by the State Government).
However, as per section 75, grants received by the Authority, fees received under the Act / Rules and the interest accrued
thereon shall be credited to the Real Estate Regulatory Fnd.
11
Does the denition of promoter include public bodies such as
Development, Authorities and Housing Boards?
The Act covers all bodies (private and public) which develop real estate
projects for sale to the general public. Section 2(zk) denes the term
promoter which includes both private and public real estate promoters.
Thus, both Development Authorities and the Housing Boards, when
involved in sale are covered under the Act.

What is the rate of interest payable in case of default by the promoter or

theallottee? Is the rate of interest payable by either party (promoter or
allottee) the same?
As per the Explanation to section 2(za) the rate of interest payable by either
the promoter or the allottee shall be the same. The rate of interest is
required to be specied by the appropriate Government in the Rules.

Is open parking areas a part of common areas?

Section 2(n) denes common areas to include open parking areas, thus
open parking areas cannot be sold to the allottees.

At what stage can a promoter start to advertise his project for sale?
The promoter can advertise his project for sale after the project has been
registered with the Regulatory Authority as provided in section 3(1).

12
What happens in case of jurisdictions (States/UTs) which do not provide for
both the occupancy certicate and the completion certicate?
Section 2(zf) and section 2(q) respectively, dene occupancy certicate
and completion certicate. The two denition are very broad and uses the
term by whatever name called. Thus, if in a State/UT only one certicate is
issued which provides for both the aspects covered under the two
denitions, it would suce the requirements under the Act.

Are real estate agents covered under the Act? Does the term real estate
agents include web-portals engaged in selling of apartments or plots?
Section 2(zm) denes the term real estate agents, which is a very broad
and inclusive denition 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.

13
About PropTiger
PropTiger.com is Indias leading real estate advisory firm offering a one-stop platform for buying residential real estate. Founded
in 2011 with the mission to help people buy their dream homes, PropTiger.com leverages the power of information and the
organisations deep-rooted understanding of the real estate sector to bring transparency and trust in the process.

PropTiger.com helps home-buyers through the entire home-buying process through a mix of technology-enabled tools as well
as on-ground support. The company offers researched information about various localities and properties and provides
guidance on matters pertaining to legal paperwork and loan assistance to successfully fulfil a transaction. Since inception, the
platform has sold homes worth nearly $1.5 billion to 18,000+ people.

PropTiger.com is a part of Singapore based Elara Technologies Pte Ltd which also owns Housing.com and Makaan.com. The
company provides digital real estate marketing and transactions services. PropTiger.com and Housing.com merged in January
2017 to create Indias largest full service online-to-offline (O2O) real estate platform.

Follow us :

Call us at: 1800-103-104-1

Email us at: customer.service@proptiger.com