By Tanishka Tiwari
Published on: February 14, 2024 at 13:16 IST
Everyone’s ambition is to have their own home where they can spend time with their loved ones and enjoy the luxuries of life. However, purchasing a home is one of the most challenging transactions a person can make. It requires significant money, work, time, and documentation.
India is one of those countries where purchasing a home is an exceedingly expensive process. Property prices are skyrocketing due to population growth, a shortage of available space, and general inflation. Even if purchasing power has risen, this is not true when buying a property.
Furthermore, property fraud is a well-known concern in civil courts. Thus, before purchasing a property, it is critical to understand the rights & duties of home buyers in India. Here’s where the RERA Act comes in.
The Real Estate Regulatory Authority (RERA) is a significant law in India that aims to safeguard purchasers’ rights while introducing openness and responsibility to the real estate business. Since its implementation, RERA has substantially altered the relationships between buyers and developers, assuring fair practices and timely project delivery.
A Brief Overview of the RERA Act, 2016
Implementing RERA was a significant move in favour of one of the country’s top revenue-generating sectors. RERA serves as a platform for developers and buyers to reduce the risks they encounter. The legislation has required several things, such as the mandatory enlisting of undertakings and Real Estate Agents, which is relevant for more than 76,000 organisations.
In new projects, 70% of the assets collected from purchasers are to be stored in a different bank, while in current projects, 70% of the unused money is to be saved in a different bank. The purchaser has complete rights to learn about the project’s nuances and to get any documents relating to it.
As a result, we required RERA to restore trust in our country’s real estate industry. According to the Standing Committee on Urban Development’s report (2013-14), despite several programmes, the government needed help to fulfill the country’s growing housing and infrastructure needs.
This prompted many difficulties, the first of which was that the market’s private actors gained significantly from their arbitrary methods and customer abuse, establishing themselves as unchallenged rulers of the field.
Second, despite the ease with which state and private banks provided loans, the high-interest rates and EMIs added to the strain on consumers in this unregulated sector. Finally, with an effective system, customers could request responsibility or information from builders and developers.
The primary purpose of the RERA is to restore buyer trust in the real estate industry and enhance openness in real estate transactions. RERA seeks to protect purchasers’ rights by creating the Real Estate Regulatory Authority (RERA), which will serve as a grievance mechanism in the real estate market. It also attempts to improve the reputation of promoters, real estate brokers, and agents, so avoiding needless delays in project completion and delivery.
The RERA Act requires the construction of an Appellant System for Grievance Redressal and the implementation of fines and sanctions against defaulters. Before the Act’s enactment, there were no consistent norms and regulations to follow, resulting in conflicts between developers and purchasers and no adequate redressal process to resolve the problems.
The following is a list of some of the malpractices and remedies given under the Act:
Buyers experience significant delays in owning a house because builders regularly exceed the dates specified in the sales agreement. Buyers experience financial issues due to such delays, as the overall purchase is considerable.
Section 18 of the Act offers a recourse for the builder’s unreasonable and arbitrary delays in transferring possession. The condition specifies that if the builder does not transfer ownership of the plot, flat, or building by the date stated in the sale agreement, the buyer has two options:
- If the buyer decides to withdraw from the project, the promoter (builder) must refund the money paid as consideration for the property, plus interest as stated.
- If the buyer does not withdraw from the project, the promoter (builder) must pay interest each month until possession is transferred to the buyer.
Builders typically operate many projects simultaneously and are renowned for transferring monies received for one project to another, leaving the buyer(s) unsatisfied with their money being locked in the project and causing significant delays in possession transfer. Section 4(2)(I)(D) of the Act offers a remedy for this.
The Act requires the promoter (builder) to make an undertaking saying that 70% of the funds collected from customers must be put in a separate Escrow Account and that this corpus may only be utilised for the project and nothing else.
Buyers usually struggle in real estate because they face surprises at every step. The sector is renowned for its lack of openness and accountability. Potential purchasers are only willing to invest in any project if they are entirely convinced of the promoter’s integrity, as unethical behaviour is frequent in this field. The Act seeks to modify this mentality by providing buyer rights and defining the promoter’s accountability and responsibility.
A certain level of uncertainty existed regarding the precise meaning of the term ‘carpet area,’ which allowed promoters and their agents to exploit the need for more comprehension among the general public to present built-up areas as carpet areas. Nevertheless, Section 2(k)68 of the Act explicitly defines ‘carpet area,’ stipulating that “carpet area pertains to the net usable area and excludes the space covered by the external walls, service shafts, balcony, or verandah but includes the area occupied by the internal partition walls of the unit.”
This meticulous depiction has facilitated the buyer’s ability to evaluate the property accurately before purchasing. Based on the aforementioned information, it becomes apparent that some of the objectives of the Act involve regulating the real estate industry by ensuring transparency in the transactions that occur within the sector and by elucidating the rights, responsibilities, and liabilities of the parties involved in the transaction to establish a consumer-friendly marketplace, establishing the ‘Real Estate Regulatory Authority,’ a resolving body that will ensure that customers have expeditious access to redress.
Additionally, it establishes an Appellate Authority, which will address challenges to the rulings of the RERA, and it establishes the norm of creating a separate Escrow Account for each project undertaken by a builder to guarantee that funds received from the buyer for one project are not misappropriated and utilized for the construction of another project. The Act also imposes penalties and sanctions on promoters, developers (builders), buyers, and agents who engage in fraudulent practices.
The Act aims to enhance the openness and responsibility within the land sector. The presence of the Real Estate Regulatory Authority (RERA) not only safeguards the concerns of home purchasers but also provides advantages to developers through increased transparency.
The concept of RERA is flawless if implemented without alteration. Still, non-compliance with regulations by certain states and developers makes it exceedingly challenging to accomplish the precise objectives of RERA fully.
RERA offers various mechanisms to facilitate and oversee transactions in commercial and residential projects and ensures that project completion by developers is timely. However, this can only occur if the State Government implements a practical implementation. Hence, the most significant challenge is successfully establishing the Real Estate administrative unit in all states within one year to achieve consistency and standardization.
In addition to the shortcomings, there is a vast potential for amendment. The Act promotes well-planned urban real estate development while safeguarding the interests of unsuspecting consumers who invest their hard-earned funds.
Rights of Buyers under RERA
Here are some key rights that buyers have under RERA:
- Right to Information
Buyers have the right to know everything about the property they want to acquire. It comprises information about sanctioned plans with specifications, layout plans, and information in the sale agreement signed with the promoter if the relevant authorities have approved such specifications.
- Right of the buyer to know everything related to the Completion of the project and Construction Schedule
The buyer has the right to be informed of the project’s progress and construction at each step. It covers power, water, sewage, and other services as specified in the selling agreement’s terms and conditions. As a result, the promoter must keep everyone updated on the project’s progress.
- Right to Possession
The buyer is entitled to claim ownership of the individual property, but the association of the remaining buyers is entitled to all common area possession. For example, Project ‘X’ is a block that houses individual flats. The buyer of a specific apartment in Project X will be entitled to that flat. In contrast, the purchasers of the remaining flats will form an association of buyers entitled to shared spaces such as corridors, lifts, amenities, and so on.
- Right to Refund
If the promoters cannot complete and deliver over the property, the allottees have the right to a total return of the amount they paid for such property. An allottee can register a complaint under RERA and seek a refund, interest at the stipulated rate, and compensation from the promoter. If a buyer is dissatisfied with RERA’s judgement, they may submit a complaint with the Appellate Tribunal. The claim can be filed in circumstances where possession is not given over, the promoter’s company is discontinued, his registration for land development is cancelled, and so on.
Other Rights
- False Promises
If there is any disagreement between the builder’s claims and the property delivered, the purchaser has the right to withdraw from the project while still receiving compensation.
- Defect after possession
If a deformity in the construction is discovered after 5 years of the building’s ownership, the builder will rectify it within 30 days, and the buyer has the right to seek compensation.
- Delay in possession
If the builder fails to complete the work by the stipulated date, the buyer may withdraw from the project and receive a full refund and compensation.
- Defect in the title
If there is a flaw in the project’s title, the buyer may seek reimbursement from the builder. The idea of a flaw in the title is not prohibited by restriction.
Duties of a Buyer under RERA
While the Real Estate (Regulation and Development) Act (RERA) in India primarily focuses on protecting the rights of homebuyers, it also imposes certain duties on buyers to maintain transparency and accountability in real estate transactions. Here are some of the key duties of a buyer under RERA:
- Every buyer must make the requisite payments as they become due within the time constraints stipulated in the AFS.
- Every buyer is responsible for paying their fair share of registration fees, municipal taxes, water and electricity costs, maintenance fees, ground charges, and other charges when they become due.
- Every buyer shall be obliged to pay interest for any delay in completing the abovementioned payments.
- Every buyer is required to participate in the creation of an allottee association.
- Every buyer must take physical possession of the property within two months after receiving the occupancy certificate.
- If the buyer fails to take possession of the property within two months after receiving the occupancy certificate, he must pay maintenance costs.
- Every buyer is required to participate in the registration of the conveyance deed for the land.
- If any buyer fails to comply with or violates any order, decision, or instruction of the authority, he will be required to pay a penalty for the time of failure, which may be up to 5% of the property cost.
- If a buyer violates the Appellate Tribunal’s orders, decisions, or directions, they may face imprisonment for up to one year or both and/or pay a penalty for the default period, up to 10% of the property’s cost.
- The court may compound the crime if the allottee pays 10% of the property cost.
- The buyer must comply with the Appellate Tribunal’s rulings within 30 days after the compounding court judgements.
- The buyer in custody will be released upon payment and compliance with the court order, and no further proceedings against such person will be filed or pursued.
- The acceptance of such money for compounding shall be considered an acquittal order.
Conclusion
The Real Estate (Regulation and Development) Act of 2016, marks a watershed moment in India’s real estate legislation, providing buyers with a robust framework of rights and obligations. RERA has instilled trust in homebuyers and developers by assuring project openness, accountability, and timely delivery, providing a more conducive climate for investment and growth. As real estate market stakeholders, purchasers play an essential role in sustaining RERA standards and contributing to the sector’s integrity and sustainability.
References
- What are the Rights & Duties of Home Buyers under RERA?
- RIGHT OF HOME BUYERS UNDER RERA | Abbasi & Associates Law Firm
- Rights and Duties of a Buyer i.e. Allotte under RERA and Model AFS
- CRITICAL ASSESSMENT OF RERA