In recent years, the Real Estate (Regulation and Development) Act, 2023, commonly known as RERA, has emerged as a pivotal piece of legislation in the Indian real estate sector. Aimed at safeguarding the interests of homebuyers and promoting transparency and accountability in the real estate industry, RERA has ushered in a new era of regulation. In this blog, we will delve into “What is RERA Act,” explore its key features, and understand how it functions to protect the rights of both homebuyers and developers.

What is RERA Act?

The Real Estate (Regulation and Development) Act, 2016, often referred to as RERA, is a significant legal framework established by the Government of India. RERA was enacted to bring about much-needed reforms in the real estate sector and to ensure that homebuyers are not left in the lurch due to unscrupulous practices by builders and developers.

Key Features of RERA Act

1. Mandatory Registration

One of the fundamental aspects of RERA is the requirement for all real estate projects, both residential and commercial, to register with the regulatory authority. This registration process involves providing detailed project information, including project plans, approvals, and timelines.

2. Transparency

RERA promotes transparency by making it mandatory for developers to disclose all project-related information on the RERA website. This includes project details, layout plans, and the progress of construction.

3. Advance Deposits

Developers are required to deposit a significant portion of the project’s budget in a separate bank account. This provision ensures that the funds allocated for a particular project are not diverted to other purposes.

4. Timely Completion

RERA stipulates that developers must adhere to the project’s timeline and complete construction as per the promised schedule. Delays can result in penalties for the developer.

5. Defects Liability

Developers are responsible for any structural defects or poor workmanship for a specified period after the possession of the property is handed over to the buyer. If any issues arise during this period, the developer is obligated to rectify them at no additional cost to the buyer.

6. Grievance Redressal

RERA establishes Real Estate Regulatory Authorities (RERAs) in each state to address grievances from both buyers and developers. This provides a legal platform for dispute resolution.

How Does RERA Act Work?

RERA functions by promoting transparency, accountability, and fairness in the real estate sector. Here’s a simplified overview of how RERA works:

• Project Registration: Developers must register their projects with the respective state’s RERA authority, providing all necessary details.
• Disclosure: Developers are required to disclose project-related information, including approvals, financial details, and construction progress, on the RERA website.
• Advance Deposits: A significant portion of the project budget must be deposited in a separate bank account to ensure funds are not diverted.
• Timely Completion: Developers must adhere to the promised project timelines, reducing the likelihood of project delays.
• Buyer Protection: RERA protects buyers by holding developers accountable for structural defects and delays in possession.
• Grievance Redressal: Both buyers and developers can approach the state’s RERA authority to resolve disputes and grievances.

What projects are eligible for RERA approval?

1. Both commercial and residential projects, including those involving the development of plots, are subject to RERA approval. 
2. Projects that are larger than a certain size require RERA approval. Projects that fall under this threshold typically have a land area of more than 500 square meters or include more than 8 units. Such projects must adhere to RERA rules and request regulatory authority approval.
3. RERA approval is also necessary for projects that were started prior to the RERA Act’s passage and do not yet have a Completion Certificate. 
4. When a project is developed over several phases, each phase is treated as a separate project and needs to be registered under the RERA separately. 

RERA Act does not apply to projects that only involve renovation, repair, or redevelopment without allotment changes, remarketing, advertising, or selling of existing apartments, lots, or buildings. If these projects don’t involve the sale or allocation of new units, they might not need RERA approval.

Also Read: Flat Purchase Checklist

How are projects registered under RERA Act?

The process of registering projects under RERA involves the following steps: 

1. Submitting authenticated copies of all necessary approvals, certificates, plans, and agreements and ensuring mandatory registration of both new and existing projects before their launch.
2. Registering agents/brokers.
3. Resolving disputes within 6 months at RERA and its appellate tribunals.
4. Separately registering different phases of a single project.
5. Providing project details, including status and reasons for delays, for projects launched in the past 5 years.
6. Timely updating of the RERA website.
7. Allowing a maximum 1-year extension in case of delays beyond the developer’s control.
8. Conducting an annual audit of project accounts by a CA.
9. Facilitating the conveyance deed for common areas in favour of RWA (Residential Welfare Association) and obtaining construction and land title insurance.

Conclusion

As buyers and investors, it is crucial to familiarize ourselves with what is RERA, RERA’s rules, regulations, and implications. RERA has significantly decreased information asymmetry, mitigated risks for buyers, and created a level playing field by establishing clear rules and enforcing compliance. Additionally, it has compelled builders to adopt moral behaviour, raising the general bar for the real estate industry.