The real estate sector in India has witnessed significant growth over the years. However, with this growth came concerns about transparency, delays, and fraud. To address these issues and protect homebuyers, the Indian government introduced the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA. This law aims to bring accountability, reduce delays, and ensure fair transactions in real estate projects. Whether you are planning to buy your first home or invest in property, understanding RERA is crucial.

What is the RERA Act?

RERA was enacted by the Government of India in 2016 to regulate the real estate sector. The primary objective of the act is to protect homebuyers from unfair practices, ensure transparency, and promote efficiency in real estate transactions. It establishes a Real Estate Regulatory Authority (RERA) in each state to oversee and regulate real estate projects.

Key Features of the RERA Act

  1. Mandatory Registration of Projects

Under RERA, all real estate projects (residential and commercial) with land exceeding 500 square meters or more than eight apartments must be registered with the respective state’s RERA authority. Developers cannot advertise, sell, or book properties without registering their projects.

  1. Protection of Homebuyers’ Interests

Before RERA, many homebuyers faced project delays and financial losses due to unregulated real estate practices. The act ensures that developers adhere to the promised timeline and specifications, minimizing risks for buyers.

  1. Escrow Account for Funds

To prevent mismanagement of funds, RERA mandates that at least 70% of the money collected from buyers must be deposited in an escrow account. Developers can only use this money for construction and land-related expenses, ensuring that funds are not diverted to other projects.

  1. Standardized Sale Agreement

Many buyers have faced issues with ambiguous clauses in sale agreements. RERA requires that sale agreements between buyers and developers follow a standard format, eliminating unfair terms and ensuring transparency.

  1. Compensation for Delays

Before RERA, project delays were common, and homebuyers had no legal recourse. Under the act, developers must compensate buyers for any delay in possession at the same rate of interest that they charge from buyers for late payments.

  1. Quality Assurance for Five Years

RERA makes it mandatory for developers to provide a five-year warranty against structural defects in the property. If any defects are found within this period, the builder must fix them within 30 days at no additional cost to the buyer.

  1. Clear Title of the Property

Developers must ensure that the property title is clear and marketable. If a buyer finds any discrepancy in the title after purchasing the property, the builder is liable to compensate the buyer.

  1. Quick Dispute Resolution

Before RERA, homebuyers had to go through long legal battles to resolve disputes. Now, each state has a Real Estate Appellate Tribunal to handle disputes. Complaints must be resolved within 60 days, making the process quicker and more efficient.

  1. Real Estate Agent Registration

Not only developers but real estate agents must also register under RERA. This ensures that buyers deal with authorized and accountable agents, reducing fraudulent practices in property transactions.

Benefits of RERA for Homebuyers

RERA has introduced significant benefits for homebuyers, making real estate transactions more transparent and fair. Some of the major benefits include:

  • Greater Transparency: Builders must provide accurate details about projects, including layout plans, approvals, and completion timelines.
  • Reduced Risk of Fraud: Since all projects must be registered, the chances of investing in fraudulent projects have significantly decreased.
  • Assured Quality: The five-year defect liability ensures buyers get a well-built home without worrying about construction flaws.
  • Timely Possession: Developers are now more cautious about completing projects on time to avoid penalties.
  • Better Pricing: With increased accountability, developers cannot overcharge buyers or make false promises.

How to Check if a Project is RERA-Registered?

To ensure you are investing in a RERA-approved project, follow these steps:

  1. Visit your state’s RERA website (each state has its own RERA portal).
  2. Search for the project or developer using the provided search feature.
  3. Check the project’s registration details, including approvals, timelines, and financial status.
  4. Verify if any complaints or legal issues are associated with the project.

RERA in Different States

While RERA is a central law, each state has its own RERA authority responsible for implementing the act. Some states have made significant progress in enforcing RERA, while others are still improving their regulatory frameworks. For example:

  • Maharashtra (MahaRERA): One of the most active RERA authorities, providing easy access to project details and dispute resolution.
  • Gujarat RERA: Ensures strict compliance and transparent dealings in the real estate sector.
  • Karnataka RERA: Has an efficient online system for project registrations and complaints.
  • Delhi RERA: Covers both urban and suburban projects, ensuring compliance with regulations.

Homebuyers must check the respective state’s RERA portal to get up-to-date information on projects and developers.

Penalties Under RERA

RERA imposes strict penalties on developers and agents who fail to comply with regulations:

  • Failure to Register a Project: Fine of up to 10% of the project’s cost.
  • False Information in Advertisements: Up to 5% of the project’s cost.
  • Delay in Project Completion: Buyers can seek compensation at an interest rate specified by RERA.
  • Non-Compliance with RERA Orders: Imprisonment of up to three years or a fine, or both.

How to File a Complaint Under RERA?

If a homebuyer faces any issue related to a RERA-registered project, they can file a complaint by:

  1. Visiting the respective state’s RERA website.
  2. Submitting a formal complaint along with necessary documents (sale agreement, payment receipts, etc.).
  3. Attending hearings if required.
  4. If not satisfied, appealing to the Real Estate Appellate Tribunal.

RERA ensures that all complaints are resolved within 60 days, making it easier for buyers to get justice.

Conclusion

The RERA Act has transformed the real estate sector by making it more transparent and accountable. It protects homebuyers from fraud, ensures timely delivery of projects, and provides a reliable dispute resolution mechanism. If you are planning to buy a property, always check for RERA registration and review project details on the official state portal.

At Shrija Realty, we assist homebuyers in finding RERA-approved properties, ensuring a smooth and secure real estate investment. For expert guidance on property purchases, feel free to reach out to us!

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