This article is written by Khan Saba, pursuing Certificate Course in Real Estate Laws from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).
A house is one of the most fundamental needs of a person, and everyone wishes to have one of their own. However, purchasing one requires a significant amount of money. Apart from that, in order to construct a home and take ownership of it, one must first establish a relationship with the builders, who have their own set of terms and conditions, making it even more difficult for the average person to build their own home. For a long time, there was no openness and uniformity in the home-buying process and no checks and balances in the real estate sector as there were not many laws linked to the “real estate sector” and it was unregulated.
The Indian court has shown admirable interest in the right to housing, interpreting it in the context of “Article 21 of the Constitution”, which guarantees the “right to life”. It has been observed that the demand for housing has risen dramatically over time. The “Real Estate Regulation Act” (hereinafter referred to as “RERA”) was enacted to emphasize its significance and provide transparency. In the history of the Indian real estate industry, “RERA” is revolutionary legislation of the Indian parliament. The real estate law was approved by the “Rajya Sabha” on “March 10, 2016”, and the “Lok Sabha” on “March 15, 2016”. The measure was signed into law by the Honorable President on “March 25, 2016”. Our honourable President, among other things, issued the act, which was published in the “Official Gazette” on “March 26, 2016”.
Overview of RERA
The goal of implementing RERA was to achieve uniformity and openness. There were several conflicts between consumers and providers prior to RERA. They were confronted with several issues, but they were unable to address them since there were no suitable laws and regulations. Consumers were the ones who bore the brunt of all of these problems, with the largest difficulty being the wait. There are a few additional concerns that have arisen as a result of the implementation of this Act. RERA was created particularly to increase transparency among all parties involved and to improve the consumer-agent relationship. The RERA Act has the following features:
- Establishment of a fast-track process for resolving disputes by this body, which will monitor, judge, and arbitrate any issues with regard to real estate developments in the relevant state. This will be accomplished via the use of an appellate tribunal and specially trained adjudicating officials.
- RERA requires that all real estate developments be registered. They have the authority to deny the registration of a project if the standards are not followed.
- If RERA receives any complaints that are confirmed to be valid following an investigation, the project’s registration might be revoked. It is not possible to sell a property that has not been registered under RERA.
- All information pertaining to the plot, building, or any other subject pertaining to registration or anything else should be posted to the RERA website. It should be updated on a regular basis.
- Within 30 days, it will be approved or rejected, and if no information is provided, it will be deemed approved.
- If a promoter wants to charge a buyer an application fee or an advance payment for a plot, apartment, or building, it can’t be more than 10% of the total price. Furthermore, advance payment or the appliance fee is only accepted after the promoter and the client has signed formal documentation relating to the sale of the property, and the transaction has been registered. Every promoter will need to secure insurance on the building’s ownership, the land, and the project’s development.
- 70% of the money received from project purchasers must be put in a completely different account. This account should, in theory, include the cost of building as well as the cost of land. It can only be revoked once an architect, a controller, and an engineer have given their approval. If you’re a promoter and want to transfer or assign a majority of your rights and obligations in a large property project to a third party, you may need to gain two-thirds of the allottees’ written approval beforehand (not including the promoter). Additionally, you may need RERA’s written consent.
- If either the promoter or the consumer fails to meet their obligations, they both risk incurring an identical amount of interest. The promoter will be required to reimburse the customer if the promoter causes any losses to the customer as a result of people’s assumption of property (defective title of land) that is under development or has been built. There is now no legal restriction on the amount of compensation that may be paid.
- If someone has a concern with a promoter, buyer, or agent violating the laws or norms of this Act, they may register a complaint with RERA. RERA may prevent an agent, promoter, or buyer from continuing any action that has been the subject of a complaint while the investigation is underway. If any of RERA’s rulings on a complaint are unsatisfactory, the aggrieved party has the option of appealing to the Appellate Tribunal.
- If the promoter does not follow RERA’s instructions, they will be fined. This sum might be up to five times the property’s assessed value. If the orders of the Appellate Tribunal do not seem to be followed, a penalty will be imposed, which includes a sentence of up to three years in jail, a fine of up to 10% of the project’s estimated cost, or both. If a corporation violates this Act, anybody who was in charge of the firm at the time the offence was committed, as well as the company, may be held liable and penalized. No civil court shall have jurisdiction over any subject that falls within the jurisdiction of RERA or the Appellate Tribunal. As a result, no court may issue an injunction against RERA or the Tribunal’s actions.
Steps involved in filing a complaint under RERA
The processes involved in filing a complaint or grievance with the RERA are described below:
Step 1 – Anyone who wants to make a complaint with the authorities must first go to the state’s official site. There, the person in question must look for the website where he or she may file a complaint.
Step 2 – The individual who is worried now has to click on the complaint registration page. He or she will be taken to the complaint form after clicking on it, where he or she must fill out all of the specifics of his or her complaint.
Step 3 – When that individual files the complaint as a homebuyer, he or she may be requested to provide personal information such as name, address, contact information, and so on. When submitting the complaint, the person in question might also attach supporting papers.
Step 4 – After the individual has fully filled out the complaint form as a complainant, he or she is required to pay a fee for submitting the complaint. To complete the purchase, one may make use of the online payment method.
Issues with the complaint redressal mechanism under RERA
Every area requires that the issues encountered by that field be resolved as quickly as possible and that there be someone who will listen to their problem and provide a solution If a person is having trouble running a laptop that he just bought and goes to the store for assistance, but does not get a solution to his issue, he will lose faith in the shop’s efficiency as well as the shopkeeper.
Similarly, the real estate industry, like any other, relies on the trust and confidence of customers, developers, and government officials to keep it running smoothly. For this to happen, developers must concentrate on completing projects, responding to concerns, and resolving them as quickly as possible. Previously, there was no redressal process. Now, as a result of this Act, authorities are ensuring timely project delivery, but there is no complaint procedure in place if the purchaser commits fraud or engages in frivolous conduct. The efforts should come from both sides; it should be ensured that no frivolous or unnecessary complaints are filed by consumers and that there are no biases in the authorities regulation of complaints.
Both, the developers and builders of property in India must register their projects with the state regulatory body of the respective state, according to RERA. As a result, purchasers will have an appropriate platform to keep track of the progress of under-construction properties, as well as to register any complaints if they have any issues against the developer, builder, or both. Any buyer who has been misled by the developer, builder, or both is entitled to submit a complaint against them under Section 31 of the Act. Furthermore, the complainant must submit their personal information, as well as the registration number of the developer or builder projects, as well as the names and contact information of people against whom the complaint is being filed.
If the buyer is unable to find a satisfactory and acceptable remedy via RERA, he or she may pursue the issue further by submitting an appeal with the Appellate Tribunal within sixty days after registering the complaint with RERA. If the concerned buyer does not get a solution or measure from the Appellate Tribunal, he or she has sixty days from the date of appearance before the Appellate Tribunal to file an appeal with the High Court of the relevant state.
Need of full-fledged complaint mechanism
There are numerous developers and builders in India who have yet to register their projects under RERA. As a result, purchasers of commercial or residential units in such developments are experiencing a variety of issues since they are unsure where to direct their concerns. As a result, customers who are left with unregistered projects have no other option except to pursue additional legal remedies. They have two options for seeking redress: initiating a criminal case or bringing a consumer complaint against the unregistered project’s builder or developers. They may even submit an appeal before the High Court, requesting reimbursement from the unregistered constructions’ fraud builders or developers.
As a result of the growing number of cases filed against builders and developers for unregistered projects in India, many state governments are now demanding a full-proof plan to register, address, and respond to complaints filed by buyers who are trapped with builders and developers who have not registered their projects. Buyers who have been stuck with an unregistered property, on the other hand, may finally breathe a sigh of relief. Both the government and the real estate regulatory body are putting in a lot of effort to resolve the buyer’s concerns and frustrations. There is also a glimmer of optimism for all property owners or potential buyers that an adequate and accurate regulatory structure would be in place to address their concerns and difficulties with unregistered builders and developers in India.
If a person has a problem with a promoter, buyer, or agent violating the Act’s requirements or rules, they can register a complaint with RERA. RERA can prevent an agent, promoter, or buyer from continuing any action that has been the subject of a complaint while an investigation is underway. If a complaint’s resolution by RERA is not satisfactory, the aggrieved party may file an appeal with the Appellate Tribunal. If the promoter does not follow RERA’s instructions, they will be fined. This sum might be as much as 5% of the property’s assessed value.
The major goal of RERA is to protect buyers from unfair builder’s practices. RERA establishes certain standards for the construction and development of real estate that will improve the openness of real estate transactions. The Real Estate (Regulation and Development) Act of 2016 was enacted to safeguard the interests of Indian home buyers.
Aside from challenges with possession, real estate buyers must deal with a slew of vexing issues from their builders and real estate brokers. Low ventilation, delayed possession, a charge for excessive maintenance costs, low-quality building, unresolved property claims, non-handling of cost plans to the buyer for complete spending in property, and other issues may arise. These all problems associated with the real estate sector, makes one feel the need of a full-fledged complaint system under RERA.
Real estate purchasers now feel comfortable and confident with the passage of RERA. Furthermore, this legislation has provided purchasers with an appropriate platform to monitor the progress of under-construction properties and to register any complaints if they have any issues against the developer, builder, or both. However, a large number of developers and builders have yet to register their projects under RERA’s rules, and purchasers of commercial or residential units are experiencing a variety of issues since they are unsure where to direct their concerns. As a result, although this Act has benefitted purchasers significantly, there are still flaws in the system, such as complaint handling. Therefore, it is highly imperative that a harsh penalty should be imposed for failing to adhere to the regulations, and the system of complaint redressal must be made simpler and speedier for the benefit of the affected parties. Even with a law like this for the real estate sector, there are several obstacles (as mentioned before, including the complaint redressal mechanism) to RERA’s successful implementation, which must be addressed as soon as possible.
- Real Estate Regulatory Act, 2016
- Burman, Land Title Insurance in India: Lessons from U.S. Regulatory Approaches 22(8) Carnegie Endowment for International Peace 3, 5-6 (2020), (hereinafter “A. Burman”)
- PATEL, S. B., TANDEL, V., & GANDHI, S. (2013). Revisiting the Real Estate Bill, 2013. Economic and Political Weekly, 48(48), 34–39. (hereinafter “S. Patel”)
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- Nikhita, “Critical Analysis of RERA Act, 2016”, B&B ASSOCIATES, 3 Sep 2020 (hereinafter “Nikita”)
- S. Sharma, “RERA: Registration Of Real Estate Projects- A Brief Overview”, MONDAQ, 29 March 2018 (hereinafter “S. Sharma”)
- Rouanet, H., & Halbert, L. (2016). Leveraging finance capital: Urban change and self-empowerment of real estate developers in India. Urban Studies, 53(7), 1401–1423. (hereinafter “Rouanet, H., & Halbert”)
- Gupta, A., Sawhney, A., Bajaj, D., & Agarwal, S. (2017). Significance of Real Estate Fund Management in India. Journal of Real Estate Literature, 25(1), 141–168. (hereinafter “G Ashish”)
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