Necessity is the mother of invention
There was a need of consumer protection in the real estate sector. Over the years, real estate sector was going through a roller coaster ride. Government of India framed the Real Estate regulation & Development Act (2016), a powerful act for grievance resolution mechanism. The objective of the act is to promote an even-handed and fair transaction between buyers and sellers of properties. Initially only 69 sections were implemented, however from 01st May 2017 all the sections of the RERA became implemented in full force.
RERA looks forward to boosting up investments in real estate and shield the interests of home buyers. For a long while, realty sector was going through a roller coaster ride and there was a lack of transparency and accountability in the sector. Implementation of RERA will enable accountability, transparency and help the home buyers in the following ways:
- Regulatory Authority: SEBI for the stock exchange, RBI for the banking industry, and now RERA has been established as the regulator for real estate industry. It will protect the interests of stakeholders, redress grievances, and all within a maximum period of 60 days.
- Compulsory Registration: Real estate projects are exceeding 500sq meters or having more than 8 apartments are mandatorily required to register with their state’s RERA. This regulation acts as a safety measure for prospective buyers as they can now be sure about the status of land, completion schedule, promoter details, approvals etc.
- Reserve Account: Previously most real estate projects would get delayed owing to diversion of funds from one project to another. However, RERA mandates it for developers to keep aside 70% of funds collected for a particular project in a separate reserve escrow account. It also necessitates the certification of this account by a professional.
- Monitor Progress: RERA makes it compulsory for promoters to share the progress of projects through periodic submissions. So, a home buyer can now monitor the development of their project on the website of RERA.
- Title Representation: To ensure a right title, RERA requires promoters to warrant their right title and land interest.
- Sale Agreement: RERA has standardized the sale agreement which is required to be entered into by the home promoters and buyer. This arrangement has established a way forward to more balanced contracts among the involved parties.
The most positive impact of the RERA Act is the unification of a legal regime for purchase and sale of real estate properties. Standardization of processes will also ensure a balance in the transactions carried out throughout the country. Only a RERA registered developer can start marketing their projects. Now, buyers can be assured about their investments to a great extent.