This article is written by Saurabh Abhay Pawar.
The RERA Act has been enacted in the year 2016 and was enforced throughout the country in the year 2017. Though it was drafted with the aid of existing acts such as ‘Maharashtra Flat Owners Act, 1960’, it was an entirely new perspective towards the real estate legalities. The main motive was to regulate the involved parties with the law present in the construction industry. As this was a fresh establishment, the Act was open to interpretation providing a wide array of legal concepts ranging from technical to practical difficulties which were unforeseen by the act. RERA has been a blessing and has opened up a new scope in real estate laws.
Intention of the RERA Act
The major motive of the RERA Act was to make the promises made by the Builders and Developers binding in a legal manner. Though the agreement is signed by the home buyer and the developer, there was no regulation over the way the possession dates and the other respective promised dates were delivered to the home buyers. There was no dedicated authority to scrutinize the same. Since the enforcement of the Act and Authority, it has enabled home buyers to carry out transactions with the promoters in a trustworthy manner and has also provided the general public to access the project details legally. But, it shall remain the responsibility of the home buyer to carry out his due diligence before investing in the project. The Authority has been in existence with the enactment of the Act. An aggrieved party can submit grievances to this Authority with respect to any issues faced in the project or its transaction. The boon of RERA is its quasi-judicial nature. The Tribunal has the power to interpret the law and to provide relief as it can conduct proceedings similar to court which includes conducting investigations as well.
Real Estate Administration through RERA
This Act has enabled not only speedy redressal of grievances between the promoters and home-buyers but has also provided an open web platform for the home buyer to study the professional background of the promoter. This shall provide the home buyer to gauge the nature of the promoter in handling the construction projects carried out in the past with respect to the completion of promises of various deadlines such as possession date. In the last 5 years, RERA has been helping in resolving matters with respect to real estate. But, it has indirectly made the promoters more disciplined and diligent while providing details to the Govt. during the registration of their respective projects. Transparency in Real Estate Industry was missing which RERA is functioning to make an effect.
RERA is not biased
There has been a misconception that RERA is inclined only towards home buyers and does not really consider the situation of the promoter. As mentioned earlier, RERA has been enacted and enforced to streamline the Real Estate Industry and not to favour a specific party. Even though the Act is more useful for home buyers, the promoters also get sufficient security in the Act which was not present earlier. In fact, RERA simultaneously has got the power to penalize home buyers.
Case Law – M/s. SMP Namrata Associates Vs. Mrs. Suvarna Santosh Nazrekar, 2019:
The agreement between the parties was signed on August, 2019. The home buyer had caused a delay in completing his payment towards the promoter. Although there is not an express mention of the promoter being able to file a complaint against the home buyer in the Act, it is the responsibility of the home buyer to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges. Therefore, Section 19(6) of RERA Act implies that the promoter has the right to reimburse the pending payments from the home buyer and the authority interpreted the same. MahaRERA ordered the home buyer to pay the penalty in the form of interest to the promoter. This judgement confirms that RERA is not biased towards the home buyer and instead, could also create stringent rules to the home buyers in the future.
Recent developments by MahaRERA
Due to COVID-19 and lockdown in first wave of 2020, an extension of 6 months to the promoters was granted for the necessary statutory compliances due to the imposed lockdown. Similarly, the second wave of the virus brought about lockdown again. As the wave was a lot stronger than the previous wave, there has been a severe damage and loss of life. An order dated 6th August, 2021 has been announced yet again granting an extension period of 6 months. MahaRERA declared the force majeure period from 15th April 2021 to 14th October 2021. However, projects scheduled before 15th April, 2021 are not a part of this aforementioned period. Similar extensions have also been announced in states like Telengana.
- Compliance of Agreements: There could be a provision in the RERA Act expressly mentioning that the various timelines for different kinds of statutory compliances should be under the prescribed period in the act. Though the Indian Contract Act, 1972 is applicable, this added provision could avoid future disputes and save the time of parties which is utilized in filing complaints to the authority for conveyancing, possession dates, etc. Due to the lack of awareness of laws, the home buyers fail to detect the lop-sidedness of the sale agreements which later becomes a nuisance in case of disputes. There are instances that many of the clauses do not match the provisions in the RERA Act and the home buyers sign the agreements without conducting any basic research.
- Awareness in Home Buyers: The home buyers are still of a mind-set that the responsibility of RERA is only to get the promoters, developers and agents registered in their database which is accessible to the general public through the web. RERA is an authority designed to function as a court and has powers to take up matters and can also pass orders accordingly. RERA can also direct imprisonment and levy fines on violations of the provisions. At the same time, home buyers shall be aware that it is their duty to pay all the bills and charges to the promoter in time as it indirectly causes a delay in the completion of the project and thus the possession in the longer term.
- Consistency throughout the Country: Currently, there are different Authorities set in different regions in the interest bifurcate the jurisdictions. As of now, various authorities are interpreting the act in different manners which may give rise to complications in the future. There should be just one RERA and no different versions should be interpreted by different regional authorities. According to the Housing and Urban Affairs of India Minister Mr. Hardeep Singh Puri, MahaRERA has been tremendously successful in the implementation of the act. For future stability and setting benchmarks, there should be consistency in the interpretation of the act. Detailed guidelines, rules and manuals shall be issued to protect the Act.
- More Powers to the Authority: The Authority passes orders and judgements involving matters with respect to RERA Act. But the power of bringing about justice is still the power of courts and not tribunals. The Authorities and Tribunals are set up only for conclusive solutions based on the disputes. For the execution of the same, different departments have to be accessed which could be a lengthy process. Even while applying for various permissions for the execution of construction, several platforms have to be approached causing delays in the process making it tedious to get the legal formalities completed. The RERA Act registered projects shall therefore be the single-handed window to complete all the legal formalities through the Authority. This issue can be solved by providing more powers to RERA in smoothing the overall process.
- Redevelopment Projects: Though the Act is specifically enacted for new construction projects and to eliminate the legal issues faced between the promoter and home buyers, a redevelopment project is also supposed to be a new project which could become a part of the RERA Act. The Act does not include any clauses with respect to redevelopment projects which might include various factors like arrangement of rental homes for flat owners, tenanted societies and others. As metro cities like Mumbai are running out of open land areas for development, re-development projects are in full swing which the RERA Act has not considered and it shall be the need of the hour. The risks level are going higher in redevelopment projects as many disputes arise between the society members and promoters thus leading to a financial loss for both parties.
- The solution to Stalled Projects: When the license of the promoters and developers get revoked or due to any kind of disputes between the parties, the matter is taken to the authority and the core project gets neglected. The construction activities get stalled and even after the redressal is provided, the construction gets ignored in most of the situations. A provision is required in the act to revive such projects so that the parcel of land, monies and construction material does not go to waste and can be reused to provide more options for occupancy to the home buyers.
- Attractive Schemes: After enforcement of RERA, promoters and developers have to be a lot diligent before taking any decision with respect to construction and promising various dates to RERA as well as to the home buyers. This has retreated many promoters and developers in investing in new projects and also has also hampered new innovations and revolutions in the industry. A new attractive scheme shall be put upon by RERA to keep the promoters confident to try out their new ventures into the market which in turn shall also boost the Real Estate Sector indirectly. Every participant is taking defensive decisions into the industry since enforcement of RERA but the market ought to have innovations to which, support from RERA is a must. To comply with the declared dates by the promoters, it is hampering the innovations as the promoters find too much risk in proposing a new design approach to home buyers.
Overall, RERA has been a boon to the Real Estate administration making all the norms stricter than the pre-RERA period. The industry has seen transparency more than ever before and also provides a fit platform for home buyers to invest in their dream homes. It has brought about discipline in the market for the parties and including the agents. Few factors like consistency in the Act throughout the country, modes of execution of orders and judgements, and application of the Act in different nature of projects shall be amended and expressly specified accordingly to make the process more refined. As it is a relatively fresh aspect in the Real Estate, there could be many more grey areas as mentioned above which the Act needs to specify well in advance. It shall also be taken care that RERA Act should not contradict Maharashtra Ownership Flats Act, 1960 (MOFA) in which, the earnest money deposit limit is 10% and 20% of the total consideration of the home amount respectively. Such contradictions shall be specified to keep validity of all the clauses in the respective Acts.
It can be said that RERA Act it is on the right track to meet the motive of speedy redressal individually to other courts. There has been a remarkable progress in less than a decade in this field. Although the functioning has been improving day by day, some refinement and fine tuning is required in the Act and its execution to take this initiative to perfection. RERA workshops can also be provided officially to the promoters and agents in the initial phase to standardize the working of this legal field. Social network has become a strong medium to reach out to the public and RERA can use various platforms to reach out to the public which could be through video presentations or written articles for awareness.
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