In the Indian real estate industry, the Real Estate (Regulation and Development) Act, 2016 represents a crucial turning point. This legislation was passed in order to improve the real estate sector's long-standing problems with efficiency, accountability, and openness. This article deals with the RERA Act's contents and effects on Indian real estate development, as well as pertinent case law that has influenced how it was put into practice.
Contents
- Overview of the RERA Act and its Key Provisions
- Impacts of the RERA Act on Real Estate Development
- Case Laws and their Impact on RERA Implementation
- Closing Mark
Overview of the RERA Act and its Key Provisions
The RERA Act was designed to safeguard homeowners' interests and encourage the prompt completion of real estate developments. It incorporated a number of significant measures to govern the real estate industry, including:
Ø Establishment of Regulatory Authorities
In order to monitor and control real estate activity, the Act requires the establishment of Real Estate Regulatory Authorities (RERAs) in each state.
In order to monitor and control real estate activity, the Act requires the establishment of Real Estate Regulatory Authorities (RERAs) in each state.
Ø Mandatory Registration
All real estate projects with land exceeding 500 square meters or more than 8 apartments must be registered with the respective state RERA.
Ø Strict Disclosure Norms
Developers are required to provide detailed information on project plans, layout, approvals, timelines, and completion schedules to prospective buyers through a publicly accessible portal.
Ø Separate Escrow Account
Developers are obligated to deposit at least 70% of the funds raised from buyers and financial institutions in a separate escrow account, ensuring that this money is used solely for construction and development purposes.
Ø Standardized Apartment Carpet Area
The Act mandates that builders sell apartments based on the carpet area, eliminating discrepancies caused by super-built-up areas.
Ø Advanced Sales Regulations
Developers cannot advertise, market, or sell any apartments in a project before obtaining necessary approvals.
Impacts of the RERA Act on Real Estate DevelopmentAll real estate projects with land exceeding 500 square meters or more than 8 apartments must be registered with the respective state RERA.
Ø Strict Disclosure Norms
Developers are required to provide detailed information on project plans, layout, approvals, timelines, and completion schedules to prospective buyers through a publicly accessible portal.
Ø Separate Escrow Account
Developers are obligated to deposit at least 70% of the funds raised from buyers and financial institutions in a separate escrow account, ensuring that this money is used solely for construction and development purposes.
Ø Standardized Apartment Carpet Area
The Act mandates that builders sell apartments based on the carpet area, eliminating discrepancies caused by super-built-up areas.
Ø Advanced Sales Regulations
Developers cannot advertise, market, or sell any apartments in a project before obtaining necessary approvals.
ØEnhanced Transparency
The RERA Act has increased transparency by making it mandatory for developers to provide comprehensive information to homebuyers. This transparency has boosted buyer confidence, encouraging more people to invest in real estate.
Ø Timely Project Completion
With strict provisions regarding the use of funds and the obligation to deliver projects on time, the Act has instilled a sense of urgency among developers to complete projects promptly. Consequently, the number of delayed or abandoned projects has significantly decreased.
Ø Improved Quality
The RERA Act has laid down guidelines and standards for construction quality, ensuring that developers adhere to specified norms. This has resulted in improved build quality and reduced instances of structural defects.
Ø Resolution Mechanism
The Act introduced a dispute resolution mechanism through the establishment of dedicated RERA tribunals. Homebuyers can register complaints against developers, enhancing their ability to seek redressal for any grievances.
The RERA Act has increased transparency by making it mandatory for developers to provide comprehensive information to homebuyers. This transparency has boosted buyer confidence, encouraging more people to invest in real estate.
Ø Timely Project Completion
With strict provisions regarding the use of funds and the obligation to deliver projects on time, the Act has instilled a sense of urgency among developers to complete projects promptly. Consequently, the number of delayed or abandoned projects has significantly decreased.
Ø Improved Quality
The RERA Act has laid down guidelines and standards for construction quality, ensuring that developers adhere to specified norms. This has resulted in improved build quality and reduced instances of structural defects.
Ø Resolution Mechanism
The Act introduced a dispute resolution mechanism through the establishment of dedicated RERA tribunals. Homebuyers can register complaints against developers, enhancing their ability to seek redressal for any grievances.
Case Laws and Their Impact on RERA Implementation
Ø Jaypee Infratech Ltd. vs. Yusuf Ansari (2017)
The Supreme Court upheld the rights of homebuyers in this historic decision, reimbursing those harmed by the crisis of unfulfilled real estate contracts with money. The significance of the RERA Act in defending the interests of homebuyers was underscored by this case.
Ø M/s Cinematically Sonata Homes Pvt. Ltd. vs. M/s Real Estate Regulatory Authority Haryana (2018)
The Haryana RERA ruled that builders could not insist on additional payments beyond what was specified in the agreement. This case established that developers must adhere to the terms and conditions specified in agreements with buyers, further strengthening consumer protection.
Closing Remark
The RERA Act has had a significant positive impact on real estate development in India. It has brought transparency, accountability, and efficiency to the sector and improved buyer confidence while encouraging timely project completion and better-quality construction. The Act's provisions, along with relevant case laws, have paved the way for a more regulated and customer-oriented real estate industry in India.