Real Estate Regulation Act has been implemented in various states across India. This act strives to protect all stakeholder's interest - Alottee (Buyer), Promoter (Developer) and Agent (Consultant). They have taken great measures to protect the interests of the Allottee in particular.
So as a buyer or a potential buyer, what are the 5 things you should know about RERA?
Projects which have not been completed come under the ambit of RERA. RERA has given basic guidelines to State and Union Territory Governments. The appropriate state or union territory government is required to notify the rules to implement the act. For example, TNRERA, the Tamilnadu arm of RERA has notified the rules on June 22nd, 2017. All projects which have received completion certificate or have applied for completion certificate before June 22nd, 2017 will not come under the scope of RERA, as far as projects in Tamilnadu are considered.
A project cannot be advertised or marketed through any form of media i.e SMS campaign, email marketing, newspapers, hoardings, word of mouth by consultants/broker etc unless approved by RERA. The list of approved projects and the project information are available in the RERA website of the respective state.
The delay compensation clause applicable for the Allottee and the promoter are one and the same. Previously, if the Allottee delays the payments to the builder, the rate of interest used to be anywhere between 15% to 18%. Whereas if the project gets delayed, the rate of interest applicable for the builder used to be 3 to 5% or in lot of cases, no compensation at all for the Allottee. Now RERA stipulates that the rate of interest applicable for delay for both Allottee and the promoter would be Highest MCLR (Marginal Cost of Funds Lending Rate) + 2%.
Complaints pertaining to projects under the ambit of RERA can be filed with the Regulation Authority or the Adjudicating officer for faster dispute resolution under act 31A. Previously disputes and complaints were filed in consumer forums such as National Consumer Disputes Redressal Commission (NCDRC) and they could take a lot of time for final adjudication, owing to the huge volume of cases pending. Complaints filed with Regulation Authority have to be resolved no later than 60 days from the date of filing. In case the person is not satisfied with the decision made by RERA or its officer, he may file an appeal before the RERA Appellate Tribunal (a quasi judiciary body consisting of a sitting/retired Judge - a judicial member and a technical member) that has to pass a verdict on the appeal no later than 60 days from date of filing with the Appellate Tribunal. From the date of the decision made by Appellate Tribunal, a person can file an appeal to High Court within 60 days.
The project completion date is not determined by the Regulation Authority, rather specified by the promoter / developer during application filing for project approval by RERA. The significance of this point is that the consumer is allowed to make an informed decision based on the promoters' track record since each promoter has to determine/estimate the project completion date and stick to the deadline.
Let us consider the case of two promoters 'A' and 'B' developing projects in a locality.
'A' used to advertise that the project will be completed in 30 months but in reality completed the project in 60 months
'B' used to advertise that the project will be completed in 36 months and indeed completed it in 36 months but to no advantage
With RERA in place, promoter 'A' would not be advertising for project completion date as 30 months if they are unable to execute the project within the declared timeline as it has serious consequences and penalties.
Consequently, consumers would start preferring the project(s) delivered by Promoter 'B' which should have been the case all along. Hence RERA creates a level playing field for all promoters.