All you need to know about RERA

Overall impact on property buyers

Some of the positive developments in this category include the following

• Information on project layout, plan, government and other approvals, land title and status and sub-contractors to be shared.
• Allottees to be informed prior to any minor changes.
• Consent of 2/3rds of allottees needed for any other alterations/additions.
• Consent of 2/3rds of allottees required for transfer of majority rights to any 3rd
• No advertisement/launch of projects prior to RERA registration.
• Increase in construction quality on account of the defect liability period of 5 years (during which any quality issues will be fixed by the promoter free of cost).
• Timely delivery and completion of projects under RERA due to greater accountability of developers for the same.

10 Key Features of RERA Act

Here are the features of the Act which have the most impact

• Regulatory Authority Establishment- There was no regulator earlier in the real estate sector. RERA establishes real estate regulatory authorities for every union territory and State for safeguarding interests of all stakeholders, information accumulation at the designated repository and also for grievance redressal. For combating time based delays, the authority can dispose off applications within 60 days with extensions only upon recording of reasons for the delay. The REAT (Real Estate Appellate Authority) will be the appeals forum in this regard.
• Registration is compulsory- As per RERA, each and every real estate project, i.e. one where total area under development crosses 500 sqm or where there are more than 8 apartments proposed for development in any single phase, should be registered under RERA. Existing projects which do not have their occupancy certificates or completion certificates are also required to register under RERA. Promoters have to register with extensive information about the status of land, their own company details, completion schedule, approvals and more. Upon completion of registration and other approvals, promoters can then start marketing their projects.
• Reserve Account Mandate- Projects would often be delayed since promoters would divert funds garnered from one ongoing project to fund newer ones in other locations. Under RERA, promoters have to keep 70% of all project receivables in a separate reserve account. These proceeds can be used only for construction and land expenses and will have to be professionally certified.
• Promoter disclosure on a continual basis- Under RERA, home buyers will be empowered with regard to tracking project status and progress on the RERA website since promoters have to periodically disclose project information and progress details to the regulator.
• Representation of Title- Promoters have to make positive warranties on the interest and right title of land which can be used in the future by the home buyers against them in case of any defects in the title later on. Promoters have to take insurance against the construction and title of projects and these proceeds will be allocated for the allottee post execution of the sale agreement.
• Sale agreement standardization- RERA has recommended a standardized model for the sale agreement between home buyers and developers. Home buyers will now get agreements that are more balanced with suitable clause and penalties as a result.
• Penalties- There are monetary penalties going up to 10% of the cost of the project and even imprisonment prescribed under RERA for violators of the Act.
• Carpet Area is the key denominator- The carpet area is the key factor under RERA. It is mandatory for developers to reveal the apartment size on the basis of carpet area, i.e. the area within the four walls. This will include toilets, kitchens and other usable zones. RERA defines this as the net usable floor area of an apartment, excluding the area covered by the external walls, areas under service shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.
• Every phase of the project to be treated separately- In a bid to ensure more efficiency, RERA makes it mandatory for each phase in a project to be treated as a standalone project, requiring fresh registration.
• Developer advertisements- Real estate developers cannot make any false statements/commitments in their advertisements, failing which, they can be penalized by the RERA authorities

Project Categories under RERA

• Residential and commercial projects inclusive of plotted developments
• Projects with sizes exceeding 500 sqm or 8 units
• Projects minus completion certificate prior to implementation of Act
• Every phase to be taken as standalone realty project needing fresh registration

Projects for repair/redevelopment/renovation which does not have any re-allotment, selling/marketing/advertising or new allotment of apartments/plots/buildings will not come under the aegis of RERA.

Developer Information required under RERA

• Type, number and carpet area of units
• Consent from allottees for additions or alterations
• Time frame for completion of project
• Quarterly updating of information on RERA website with details like approvals which are pending and unsold inventory
• No cancellation (arbitrary) of units by the developer
• No false commitments or statements made in the advertisement

Project Registration under RERA

Here’s what is required for registering projects under RERA

• Compulsory registration of new/existing projects prior to launch
• Dispute resolution within a period of 6 months at RERA/RERA Appellate tribunals
• Separate registration for multiple project phases
• Authenticated approval copies, sanctioned plan, commencement certificate, specifications, layout plan, facilities proposed, development work plan, agreement for sale, proforma allotment letter and conveyance deed
• Details of projects launched in last 5 years from developers with reason for delay and status
• Timely updates on the RERA website
• Maximum extension of 1 year in case of delay if it is not the fault of the developer
• Annual audit of project accounts by CA
• Construction and land title insurance
• Conveyance deed for common areas in favour of the residents welfare association (RWA)
• Time period for completion of project

RERA for real estate brokers/agents

Here’s what agents/brokers have to keep in mind with regard to RERA registration

• There can be no booking/advertising/selling/offer for sale of projects minus RERA
registration
• Project cannot be sold by agent without getting RERA registration
• RERA number of agent has to be documented in sales enabled by him/her
• Registration is renewable and it can be revoked/blocked in case of any breach has been made for conditions of registration within a particular timeline
• No agent can sell an unregistered project and books and records have to be maintained
• Unfair trade practices are a strict no-no
• No incorrect statements, either written/oral/visual can be made
• Representation cannot be done that the developer or the broker has any affiliation or approval which the former does not possess
• Publication of advertisements in newspapers or otherwise is not allowed for services which will not be available
• Agent has to enable possession of all necessary documents for the allottee while booking