The Real Estate (Regulation and Development) Act, 2016 (RERA) is a landmark legislation that has significantly transformed the Indian real estate sector. This Act was enacted to regulate and promote the real estate industry in an efficient and transparent manner, while also protecting the interests of home buyers. Here's how RERA has impacted property transactions:
Increased Transparency
RERA mandates that all real estate projects and real estate agents must be registered with the regulatory authority. Developers are required to disclose comprehensive details about the project, including the layout, construction timelines, approvals, and land title status. This increased transparency allows buyers to make informed decisions.
Stricter Regulations
The Act imposes strict regulations on developers, such as requiring them to deposit 70% of the project funds in an escrow account to be used solely for construction. Developers are also prohibited from making changes to the sanctioned plans without the consent of the buyers. These regulations help prevent diversion of funds and ensure timely project completion.
Buyer Protections
RERA provides several protections for home buyers, including the right to get possession of the property as per the agreed timeline and the ability to claim compensation for delays. The Act also mandates that developers provide accurate information about the carpet area of the property, preventing any misleading claims.
Dispute Resolution
RERA establishes Real Estate Regulatory Authorities and Appellate Tribunals in each state to adjudicate disputes between buyers and developers. This provides a faster and more efficient dispute resolution mechanism compared to the traditional court system.
Accountability and Professionalism
The Act has increased accountability for developers, as they can now face penalties and even imprisonment for non-compliance. This has led to a more professional and organized real estate sector, with a focus on timely project delivery and customer satisfaction.
Penalties for Promoters/Developers
Non-Registration of Project
Penalty of up to 10% of the estimated project cost for failing to register the project as required under Section 3
Imprisonment up to 3 years and/or fine up to 10% of estimated project cost for continued non-registration despite orders
Providing False Information
Penalty of up to 5% of the estimated project cost for providing false information or contravening registration requirements under Section 4
Non-Compliance with Authority Orders
Penalty of up to 5% of the estimated project cost per day for failing to comply with orders/directions of the Regulatory Authority
Non-Compliance with Appellate Tribunal Orders
Imprisonment up to 3 years and/or fine up to 10% of estimated project cost for failing to comply with orders of the Appellate Tribunal
Penalties for Real Estate Agents
Penalty of up to ₹10,000 per day, up to 5% of project cost, for failing to register as required under Sections 9-10
Imprisonment up to 1 year and/or fine up to 10% of estimated project cost for non-compliance with Appellate Tribunal orders
Penalties for Allottees (Homebuyers)
Penalty of up to 5% of plot/apartment cost for non-compliance with Authority orders
Penalty of up to 10% of plot/apartment cost or 1 year imprisonment, or both, for non-compliance with Appellate Tribunal orders
Overall, the implementation of RERA has brought about a significant positive change in the real estate industry. By promoting transparency, accountability, and consumer protection, the Act has instilled greater confidence in the market and facilitated smoother property transactions. The penalties are designed to ensure compliance with RERA regulations and protect the interests of homebuyers. The specific penalties may vary across different states as per their RERA rules. Overall, RERA has introduced strict penalties to bring more transparency and accountability in the real estate sector.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions. The content of the above article is based on references, learnings and interpretations. Invest Corners does not guarantee the accuracy of the information provided.
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