Introduction
The Real Estate (Regulation and Development) Act, 2016 (commonly known as RERA), was enacted to bring much-needed structure, accountability, and transparency to India’s real estate sector, which had long operated with minimal regulation. Initially, 69 sections of the Act were notified on 1st May 2016, with full implementation by 1st May 2017. RERA not only safeguards the interests of homebuyers but also seeks to establish a fair framework for real estate promoters, developers, agents, and allottees. By mandating full disclosure, standardized practices, and timely delivery, RERA has significantly contributed to formalizing and organizing the real estate market.
Objectives of the RERA Act
The key objectives of the Act include:
1. Consumer Protection: RERA primarily seeks to protect homebuyers by ensuring transparency, timely disclosures, and accessible grievance redressal mechanisms.
2. Enhanced Transparency: It mandates full disclosure of project details including timelines, financials, and approvals to help buyers make informed decisions.
3. Accountability of Promoters: The Act imposes strict timelines and penal provisions on developers for non-compliance with construction norms and project delivery dates.
4. Establishment of Regulatory Authorities: RERA creates a Real Estate Regulatory Authority in every state to oversee the sector, enforce compliance, and resolve disputes efficiently.
Key Functions of the RERA Authority
RERA Authorities across states have been vested with wide powers, including:
* Mandatory Registration: All real estate agents and developers must register with the Authority to operate legally.
* Maintenance of Records: A comprehensive database of registered projects, revoked licenses, blacklisted promoters, and compliant agents is maintained for public access.
* Monitoring of Promotions: Advertisements and promotional materials are scrutinized for accuracy to prevent misinformation.
* Efficient Dispute Resolution: Authorities are empowered to adjudicate disputes through conciliation, mediation, or formal proceedings.
* Enforcement and Transparency: Developers are required to update project progress regularly, and the Authority ensures timely compliance.
Key Provisions of the RERA Act
RERA introduces several groundbreaking provisions:
1. Delayed Possession Penalty (Section 18): Developers must compensate buyers with a refund and interest if possession is delayed beyond the agreed date.
2. Fund Management (Section 4(2)(l)(d)): 70% of funds collected from buyers must be deposited in a separate escrow account, preventing misuse across multiple projects.
3. Sanctioned Plan Adherence (Section 14): Changes to project plans require consent from two-thirds of allottees, ensuring buyers’ rights are protected.
4. Cap on Advance Payment (Section 13): Developers cannot collect more than 10% of the apartment cost before signing a formal agreement for sale.
5. Mandatory Disclosures (Section 34): Developers must submit periodic progress reports; buyers can track this via RERA’s online portal.
6. Carpet Area-Based Pricing (Section 2(k)): Prices must now be based solely on the carpet area, ending misleading practices around super built-up areas.
7. Establishment of Appellate Tribunal (Section 43): Buyers or developers aggrieved by the Authority’s decisions can appeal to a designated tribunal.
Limitations of the RERA Act
Despite its far-reaching reforms, RERA has certain limitations:
* No Retrospective Effect: Projects initiated before RERA’s enactment are not covered, leaving many buyers without recourse.
* Approval Delays: Increased bureaucratic requirements have led to delays in project commencement and completion.
* Small-Scale Exemption (Section 3(2)(a)): Projects under 500 sq. meters or fewer than 8 apartments are exempt, leaving loopholes for small developers.
* Lack of Force Majeure Provisions: The Act does not provide clear guidelines for unforeseen events like natural disasters, leading to ambiguity in delays.
* Fragmented Implementation: Variation in rules and enforcement across states undermines uniform protection.
Landmark Case Laws
1. M/s Geethanjali Aman Constructions v. Hrishikesh Ramesh Paranjpe-
Interpretation of Section 3(2)(a) clarified that the conditions for exemption are disjunctive, thus limiting misuse of exemption clauses by developers.
2. Fortune Infrastructure v. Trevor D’Lima & Ors.- Upheld the right of homebuyers to receive refunds and compensation due to unjustified delays, emphasizing the need for accountability.
3. Supertech Ltd. v. Rajni Goyal– Reaffirmed that compensation must be paid for delays exceeding even the grace period, reinforcing the binding nature of possession timelines.
Conclusion
RERA marks a significant shift towards a buyer-centric real estate regime in India. By instituting clear guidelines, enforcing accountability, and empowering regulatory authorities, it addresses long-standing malpractices in the sector. However, the Act’s success depends heavily on robust implementation by state authorities, timely approvals, and the closing of loopholes related to smaller projects and exemptions. Strengthening these areas will ensure that RERA continues to be a cornerstone in protecting homebuyers and maintaining integrity in the real estate industry.
