What is RERA Act & Know about its Registration Process?

What is RERA act?

The Indian real estate industry has seen many cases where the home buyers were cheated out of their money by property developers. In the absence of accountability, builders did not provide the project as per the buyer’s expectations and promised timelines. The constructed units also turned out to be faulty or low-quality after some time. To prevent these instances of abuse, RERA was enacted to protect the buyers’ interest. 

The Real Estate Regulatory Authority (RERA) Act provides a comprehensive list of rules and regulations for the builders to follow. Builders need to get themselves registered under RERA and their details can be verified on RERA’s website. RERA also provides a redressal mechanism in case any disputes arise between the buyers and the real estate developers. This act was enacted on 1 May 2017 to relieve buyers from malpractices in the real estate sector.. 

RERA has necessitated the creation of Appellate tribunals and Real Estate Authorities in every state of India. Homebuyers can register their complaints against builders by approaching these authorities.
 

Rules under RERA Act

RERA has brought a revolution in the housing market by increasing accountability on the part of real estate agents and builders. It also vests the buyers with some rights they can exercise if a project is not delivered within the promised deadlines. Following is a comprehensive list of rules under RERA:
 

• The Real Estate Regulatory Authority created under the RERA Act promotes a fast-track complaint redressal mechanism for real estate buyers.
• RERA can dismiss the registration process of any project if proper guidelines are not followed.
• When an issue arises from the side of both the buyer and promoter, the two parties will be liable to pay interest at an equal rate. 
• If a third party had claims on the land under construction, the project promoters will be held responsible for this defective title of the land. They will also compensate the buyers in case of any losses.
• If the builder commits any offense, the person in charge of the company at the time of the offense will be held responsible.
• The real estate agent cannot avoid following RERA’s orders. In case of non-compliance, a penalty can be imposed that may go up to 5% of the total value of the property.
• RERA can prohibit an agent or promoter from continuing an activity if it has received a complaint or inquiry against them.
• Builders must follow the Appellate Tribunal’s orders. Failing to do so can attract imprisonment of up to 3 years or a fine that can go up to 10% of the value of the property under consideration. 

What is meant by RERA registered?

RERA registered projects are those which have been registered by developers under this Act. This registration is important as it provides a sense of trust and relief among buyers of the property. The buyers can go to the Appellate Tribunal if they find any malpractices or the delivery of the project is delayed. To get this certification, builders need to register with their respective state’s RERA authority.  

Benefits of RERA registration for Buyers

People looking to buy homes often avail home loans to finance the purchase of under-construction apartments. They expect the property to be ready in time as per specifications but this may not always happen. In this regard, RERA Act has many provisions to safeguard the interests of home buyers:
 

• Relief in advance payments- As per RERA guidelines, builders are not permitted to take an advance payment of more than 10% of the value of the housing unit.
• Rights provided to the buyer- If the builder fails to deliver the project, the buyer can exercise the following rights-

• Refuse to take possession of the property and withdraw the offer to buy. In this situation, the builder must refund the full amount, along with the interest accrued from the date of completion of the project till the time the amount is refunded.
• Stay invested in the project until it is completed. The buyer will be entitled to get compensation in the form of interest payable by the builder from the date the project is completed till the date the project is finally delivered.

• Correction of defects found in the constructed unit- The buyer can avail correction of faults found in the unit after possession at no extra cost. However, these concerns or quality issues must be highlighted within 5 years of possession. The builder is responsible for correcting these damages within 30 days of the complaint.
• Reducing the risk of bankruptcy- Before RERA, real estate developers could transfer funds raised from one project to another. Under RERA, 70% of these raised funds need to be deposited in a separate escrow account. The funds can be withdrawn only after certification by an engineer, a chartered accountant, and an architect.
• Carpet area standardization- Unscrupulous builders were misleading buyers before the RERA Act by quoting a higher carpet area than available. The RERA Act has standardized the calculation of carpet area to stop this malpractice.

Carpet Area as per RERA Act

Real estate developers must offer their units based on the carpet area as specified in the RERA Act. The Act excludes spaces such as terrace, balcony, etc. and includes only the floor area within an apartment's walls in determining the carpet area.

A standardized definition of carpet area can protect buyers from developers who quote a bigger saleable area than is available in an apartment. This deceptive tactic increases the loading factor and misleads buyers into thinking they are getting a great value for their investment.

Exceptions to use of RERA

The RERA Act is not applicable in the following situations:
 

1. When the number of apartments under construction is less than 8 or the land which is under construction occupies an area less than 500 square meters.
2. If the promoter had received the completion certificate for the property before the introduction of RERA.
3. When a property is being redeveloped or renovated and does not require marketing and advertising efforts.

Also Read: Looking for a Higher Loan Amount Then Choose Loan Against Property

Documents required for RERA registration

Builders are required to register themselves with RERA, for which a comprehensive list of required documents is provided below- 

1. Form REA-I
2. Income tax return (ITR) copies of last 3 years
3. Balance sheet of the builder
4. PAN and Aadhar Card copies
5. GST certificate copy
6. If your business is limited liability partnership (LLP), then an LLP certificate
7. In case of companies, board resolution documents
8. For firms, a partnership agreement
9. List of partners and designated partners
10. A demand draft
11. Passport size photograph

Registration process of RERA

 

Registration process for promoters

• Make available all the required documents.
• Ensure the bank accounts have been opened as per section 4 (2) (I) (D) of the Act.
• Fill out the Form A, which is for registration.
• Complete Form B, which carries the declarations made by the promoter as per Section 4 of RERA.
• Fill up the Form G which is a form of a draft agreement.
• An affidavit needs to be submitted that confirms the compliance of the information in Form G, as per rules laid out by RERA. 
• An affidavit that confirms that no amount has been collected from the buyers as per Section 3 of the act.
• Pay the fees for registration.
• A signed copy of all the above documents needs to be dispatched to RERA by registered post.
• Complete Form C, which ensures you get the registration certificate.

Registration process for real estate agents

• Fill the application form.
• Pay the prescribed fee.
• Get your registration number, which needs to be attached to every sale of property.
• The agents need to have sets of books of accounts and records.
• The project documents are to be shared with the buyers.
• During the registration process, if any fraud is committed, the real estate agent can be suspended from the registration process.

How to find out if a property is RERA registered?

You can check whether your builder has registered the property under RERA through the following steps:

• Go to your state’s RERA website
• Select the project registration tab and further search projects from the drop-down list
• The next page will require you to enter the registration number and the year
• After filling in the above information, select the option ‘search case’
• A page will appear that will show you all the project details. You also have an option to download all its details.

What if a builder is not registered with RERA?

The approval of RERA is essential for both residential and commercial properties. In case a project is not registered with RERA, customers should be wary about the delivery of the project. RERA registration works as a guarantee that the project will be completed on time. Otherwise, the buyer can decide whether to accept the project if it is delayed or not as promised. This adds transparency and enlightens the trust of customers who deal in the real estate sector.

The customers can also file a complaint with their regional Real Estate Authority if the builder is not registered with RERA. The builders cannot avoid RERA registration even after getting the completion certificate for a project. RERA guidelines may also extend to the projects that are not registered under it. 

How to file a complaint under RERA?

The procedure to lodge a complaint under RERA is straightforward:

• Go to your state’s RERA website and click on ‘file complaint’, which is displayed on the complaint tab.
• The next page would require you to register yourself as a complainant by filling in all the required details.
• A link will be sent to your e-mail account, using which you can log into the portal.
• Select the type of complaint you need to file and fill in the details that are not pre-filled.
• Pay the fee specified to file your complaint.
• Upload the required documents.
• Submit the application.
• You will be provided an application number upon submission, which you must note for future reference.       

Penalties under RERA

RERA has prescribed penalties that shall be imposed on the builders, agents, and even the buyers if some specific requirements are not met. The following is a list of offenses and the penalties applicable thereon:

• Penalties for Promoters

  Offence	Penalty
  A real estate project is not registered	10% of the estimated cost of the project
  Misleading information provided	5% of the estimated cost of the project
  RERA Act Violation	3 years’ imprisonment and/or 10% of the estimated cost of the project

• Penalties for Agents

  Offence	Penalty
  Project not registered	A fine of Rs. 10,000 per day (up to 5% of the property’s cost)
  Non-compliance with RERA	A fine payable daily (up to 5% of the project value)
  Non-compliance with the appellate tribunal	One year imprisonment and/or fine up to 10% of the cost of project

• Penalties for Buyers

  Offence	Penalty
  Non-compliance with RERA Act	A fine applicable daily (up to 5% of the cost of project)
  Non-compliance with the Appellate Tribunal	One year imprisonment and/or fine up to 10% of the cost of project

Also Read: All You Need to Know About Commercial Property Loan

Shortcomings of RERA

Despite its visible effect on removing malpractices from the real estate sector, the RERA Act is not without flaws. Some of these are described as follows:

• Owing to delays from government officials, it can take time in obtaining the registration, which can cause the projects to be delayed.
• The new regulations are not binding on ongoing projects.
• Developers whose project area is less than 1000 square meters are not required to register under RERA.
• The project launch can be impacted when approvals are not granted on time.

Are projects registered under RERA safe?

As a buyer, your interests stay protected if you invest in a project that has been registered under RERA. The registration under RERA ensures that the builders must deliver what they have promised. The projects are safe under RERA owing to these provisions-

• 70% of the funds that the builder receives from homebuyers are required to be transferred into an escrow account. It will safeguard the buyer’s money as the same is not channeled into other projects.
• The sale of projects by the developers is facilitated only after obtaining necessary clearances.
• The payment made by home buyers will only be limited to the carpet area. Buyers cannot be made to pay for the super-built-up area.
• When delays occur, the builders must pay the buyers the interest amount that will start accruing from the date of delay of the project.
• If the project is not as per the expectations of the buyers, they can contact the builder up to one year after taking possession of the project. The builder can be contacted in writing for the issues.
• RERA enables the buyers to get what they have paid for. The builder has the obligation to deliver all those amenities that were promised to the home buyers.
• If any defect surfaces within 5 years of possession of the property, the builder shall be held accountable for the same.

RERA’s introduction has brought a much-needed transparency in the real estate sector to ensure that the consumers’ rights are well protected. Buyers can check the RERA status of their builders online and can even file complaints against the developers by paying a nominal fee. Thus, RERA has increased the trust and confidence among prospective home buyers because they are no longer under the threat of cheating and malpractices by real estate developers.