What is RERA? How Does it Safeguard Homebuyers?
The Real Estate Regulation and Development Act (RERA) came into effect on March 25, 2016. This Act aims to establish the Real Estate Regulatory Authority for the regulation and promotion of the real estate sector. It ensures the efficient and transparent sale of plots, apartments, or buildings, thereby protecting the interests of consumers in the real estate sector. Additionally, RERA establishes an adjudicating mechanism for speedy dispute resolution.
Compensation to Buyers/Consumers
If any person makes an advance or deposit based on the information in a notice, advertisement, or prospectus, or on the basis of any model apartment, plot, or building, and suffers a loss or damage due to any incorrect or false statement included therein, the promoter must compensate them as provided under this Act. Moreover, if the person affected by such false information intends to withdraw from the proposed project, they shall be returned their entire investment along with interest at the prescribed rate and compensation as provided under this Act.
Ownership Transfer by Promoter (Section 15(1))
The promoter cannot transfer or assign their majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-thirds of the allottees, excluding the promoter, and without prior written approval of the Authority. However, such transfer or assignment should not affect the allotment or sale of apartments, plots, or buildings in the real estate project made by the previous promoter.
Insurance of the Project (Section 16(1))
The promoter of the real estate project must obtain all insurances as notified by the appropriate government, including:
- Title of the land and building as part of the real estate project
- Construction of the real estate project
Compensation to Consumers (Section 18(1))
If the promoter fails to complete or is unable to give possession of an apartment, plot, or building as per the terms of the sale agreement or by the specified date, or due to discontinuation of business as a developer on account of suspension or revocation of registration under this Act, they shall be liable, on demand of the allottees, to return the amount received with interest at the prescribed rate along with compensation as provided under this Act.
Additionally, if the buyer does not intend to withdraw from the project, they shall be paid interest for every month of delay until possession is handed over, at the specified rate. The promoter must also compensate the buyer for any loss caused due to a defective title of the land on which the project is developed.
RERA ensures that homebuyers are protected and their investments are secured by enforcing strict regulations and providing mechanisms for compensation in case of discrepancies. This legal framework promotes transparency and accountability in the real estate sector, thereby fostering trust and confidence among consumers.
