Team Jagoinvestor

August 12, 2019

Understanding RERA – 14 rules real estate investors should know

For Long, the real estate sector was unregulated and in favor of builders and developers. From getting delayed possession to bearing a huge loss of project cancellation, all has to be borne by home buyers.

Even in worse case after living in a society for a long period of 10-15 years, homeowners need to vacant the society due to builder’s mistake of not getting approval from government for the said project.

And after all these, for any of these malpractices, if a home buyer files a complaint, it use to take years to get a verdict. However, now to bring transparency and accountability to this sector, Real Estate Regulatory Act, 2016 has come to force.

This aims to create a more equitable and fair transaction between sellers and buyers of properties. The Real Estate (Regulation and Development) Act is expected to ensure consumers will not be cheated or taken for a ride by the developers.

So, we will see in 14 points that how RERA will benefit us. But, before that let’s see all loopholes and malpractices builders and agents use to do in the real estate sector.

  • Delay in project completion
  • Use to cheat buyers with false information
  • Divert funds to another project or for other purpose
  • Get-away with sub-quality construction
  • Offer special pre-booking rates
  • Keeping Date of possession clause in agreement empty
  • Altering the project developments without consent

14 RERA rules investors should know

1. Registering project with RERA :

RERA makes it mandatory for all commercial and residential real estate projects where the land is over 500 square meters, or eight apartments, to register with the Real Estate Regulatory Authority (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution.

The builders or developers have to publish all the details such as sanctioned plan, layouts, the location of the project with clear demarcation of land, carpet area, number and area of garage, etc. So, with RERA builder have to get all the clearance before they could advertise or sell any property, it will help in malpractices to be curbed.

Hence, before entering into the contract, you can check online on the website of RERA about every detail of the project by visit the RERA site of the concerned state and go into the registration tab. I have attached a screenshot of RERA Maharashtra. To get an idea about how RERA MAHARASHTRA REGISTRATION site looks like.

Snapshot of RERA website for registration

If you are offered to buy a property of any unregistered project then you can notify the same to RERA to save others from any kind of fraud.

2. Quarterly updates on Construction progress : 

Now builders/developers have to upload project details including number and types of units sold out, government approval taken or approval pending list & completion scheduled every three months. Along with that if there is any litigation going on related to that property then all the documents of proceedings have to be uploaded by builder/developer. Hence now you can check online the progress of the project they are putting their money in.

3. Escrow Account:

The developer will have to transfer 70 percent of the money received from customers to an escrow account. This will ensure the builder does not spend the money on other projects since they can withdraw money from this account after approvals from engineers and chartered accountants they appoint and your money will be used only for the project you invested.

4. Sale agreement standardization –

Earlier sale agreement use to be in such format that the home buyers were penalized on any default but similar defaults by promoters would not attract any penalty. But, now as per RERA norms, a standard model sale agreement has to be entered between promoters and homebuyers to ensure equality and protect buyers from various penalties and charges.

The agreement of sale shall specify particular details of the project including the construction of buildings and apartments, along with specifications, internal development works and external development works, the date on which the possession of the apartment, plot or building is to be handed over, etc.

5. Maximum 10% of cost of project as advance payment :

The promoter can not accept a sum of more than 10% of the cost of project, plot, etc.. as an advance payment or an application fee from you without first entering into a written agreement for sale with such person and register it.

6. Five years of defect liability period :

Under RERA, in case of any structural defect or poor quality, it will be the responsibility of the developer to rectify such defects for a period of five years. So, if any defect is found in the quality used in the construction of property then you can make the developer/builder liable for all sub-quality issues and ask for repairing or compensating the same.

You can also watch the video on RERA –

7. Carpet Area :

The area of a property is often calculated in three different ways – carpet area, built-up area, and super built-up area. Hence, when it comes to buying a property, this can leads to a lot of disconnect between what home buyer pays and what he actually gets.

But, now it is mandatory for the developers to disclose the size of their apartments, on the basis of carpet area (i.e., the area within four walls). This includes usable spaces, like the kitchen and toilets.

8. Title Representation :

Promoters are required to disclose clear title over the property and project. If any defect is found in title of property then you can ask for the compensation and there is no limit for the amount of this compensation.

9. False information to home buyers :

If you made an advance payment for a project on the basis of any false information given to you via prospectus or in advertisement then you have the right to ask for a refund of your money. And if you want to continue with the project then the builder has to pay penalty and that can go up to 5% of the cost of property.

10. Failure to complete possession on time :

If the promoter fails to complete or is unable to give possession on time then, the promoter is liable to pay the entire amount given by you if you wish to leave the agreement. But, if you wish to stay in the agreement then the promoter will have to pay interest for every month of the delay till you receive the possession.

11. Approval for alteration in sanctioned plans :

If a builder wants to make alteration in plans and specifications of your individual flat then he can do that only with the approval of you. And if a builder wants to make alteration in the entire project’s layout & common areas of society  then he needs approval of the 2/3rd number of total buyers.

12. Obligations of the promoter in case of transfer of real estate project to a 3rd party :

The promoter will not be allowed to transfer the majority rights and liabilities in respect of a real estate project to a 3rd party without the prior written consent from two-third allottees (buyers), except the promoter, and without the prior written approval of the RERA authority.

13. Agent registration is mandatory :

Now, every real estate agent has to register himself under RERA before selling or advertising any property and he has to abide by all rules of regulation like, maintaining books & records, not be involved in unfair trade practices or make any false statement oral or written.

14. Grievance Redressal: :

If any buyer, promoter or agent has any complaints with respect to the project, they can file a complaint with RERA. State real state regulatory department will try to resolve the dispute within 60 days. If you aren’t satisfied with RERA’s decision, a complaint can also be filed with the Appellate Tribunal within the next 60 days. Even after that if he is not pleased the complaint can be filled to high court and supreme court.

Benefits of RERA act 2016 :

This act is not benefiting only buyers but also agents and builders. RERA infuses credibility by making the sector mature & transparent and helping to Channelize investment into the sector. It will increase the confidence of financial institutions & foreign investors in the real estate sector.

Offense-wise penalties for developers :

The following are the penalties and compensation that can be levied on promoters.

[su_table responsive=”yes”]

For non-registration of a project Penalty of up to 10% of the estimated cost of the project.
For violation of other provisions of the Act Penalty of up to 5% of the estimated cost of the project.
For non-compliance of the orders of the Authority Penalty for every day of default, which may cumulatively extend up to 5% of the estimated cost of the project.
For non-compliance of the orders of the Appellate Tribunal Penalty for every day of default, which may cumulatively extend up to 10% of the estimated cost of the project or with imprisonment for a term which may extend up to three years or both.

[/su_table]

Offense-wise penalties for Real Estate Agent :

The following are the penalties and compensation that can be levied on the real estate agent.
[su_table responsive=”yes”]

For non-registration under project, he is selling Rs. 10,000 per day of defaults which may extend up to 5% of the cost of the property.
For contravention of the orders or direction of the RERA Penalty on a daily basis which may cumulatively extend up to 5% of the estimated cost of the property whose sale or purchase was facilitated.
For contravention of the orders or direction of appellate tribunal Imprisonment up to 1 year with or without fine which may extend up to 10% of the estimated cost of project or both.

[/su_table]

Offense-wise penalties for Allottees(Homebuyers) of RERA registered project:

The following are the penalties and compensation that can be levied on allottees.

[su_table responsive=”yes”]

Contravention of any order of the RERA Penalty for the period during which defaults continues which may cumulatively extend up to 5% of the apartment or building cost.
Contravention of the orders or direction of appellate tribunal Imprisonment up to 1 year with or without fine for every day during which such defaults continues, which may cumulatively extend up to 5% of the apartments or building cost or both.

[/su_table]

*Apartment means block, chamber, dwelling unit, flat, office, showroom, shop, warehouse, premises, etc.

How to file a complaint :

After the implementation of RERA, we are optimistic that the new law will protect our interest. However, the most important question is, how to file a complaint or a case, under the new RERA rules.

So, for this, every state has described specific forms and procedures which are to be followed. The application can also be filed online, as per the format available. For filing a complaint, the complainant has to provide following details-

  • Particulars of the applicant and the respondent
  • Registration number and address of the project
  • A concise statement of facts and grounds of claim

The form has to be filled and submitted with Real Estate Regulatory Authority or the adjudicating officer.

Conclusion:

RERA is a huge step forward against thief developers. Till now, there wasn’t any regulator and neither were the rules in place. Delay in delivery of projects, bad material used for construction, changing of sanctioned plans every now and then was the major reason why RERA ACT,2016 came into existence.

However, even after RERA, there are many loopholes in this sector. For eg. It might happen that you wrongly signed some document which gives consent to any changes in agreement or project. Because RERA is just a mechanism which is in place to serve justice to all the parties. So, it is always your responsibility to be alert and get into any contract after due diligence.

I hope this article has helped you in understating RERA act 2016. Feel free to ask any doubts in the comment section.

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94 Comments
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Suraj S
Suraj S
1 year ago

Attended their online presentation and did the booking.. I have not signed any forms till now and no charges were mentioned at the time of booking.

Jagoinvestor
Jagoinvestor
Admin
Reply to  Suraj S
1 year ago

Charges exist.. Paying without any proof or without any document is a big risk. Now you are at the mercy for the rules what they mention to you.

Suraj S
Suraj S
1 year ago

I have booked a flat in Pune Maharashtra, RERA was not received for the Tower (i.e. T6) in which I have booked but for other Towers (i.e. T1, T2, T3) was there, initially, the sales team said RERA will come in next 15 days and then rates will be high, so I have booked the flat in the pre-launch offer and paid 1lac booking amount. But now after 3months RERA still not come for that Building/Tower. Now I want to cancel the booking but the sales team said there will be cancellation charges of Rs.45000. Can I get refund of full booking amount ? If Yes How or I have to take legal action against them?

Jagoinvestor
Jagoinvestor
Admin
Reply to  Suraj S
1 year ago

Check the terms and conditions on the form which you have signed

RS
RS
1 year ago

Does a builder have to register with Rera ? I have paid amounts with a Mumbai builder in 2008 for multiple flats and that project has never been launched or registered. They say they are still trying to get a clearance certificate and intend to build .Meanwhile they have built 2 other projects. Do I have any rights under Rera to get my money back with interest?

Jagoinvestor
Jagoinvestor
Admin
Reply to  RS
1 year ago

RERA was not there in 2008. So they may not be registered.

There is no rights under RERA to get any money back..

Luckyh
Luckyh
2 years ago

We have 4 buildings in a complex in Thane Maharashtra and in same complex builder want to construct a new building. Does as per RERA is it mandatory that builders have to get NOC for existing society or APEX body before staring construction on one more new building? Please guide

Jagoinvestor
Jagoinvestor
Admin
Reply to  Luckyh
2 years ago

If society owns the land then builder cant do it. But in Maharashtra it can also happen thats the flats are in apartments mode where conveyance deed may never have happened and land still belongs to builder. Than they can do it

Mrs sharada
Mrs sharada
2 years ago

I have bought a flat of 545 sqft from a builder who is registered under reta at bangalore. My querry is
Whether builder can charge separate amount for car parking, legal fees and club house, bescom charges.
2the builder has delayed the project inordinately. He has given the letter of compensation. Whether this can i claim in rera.
3can you guide me how I should claim the relief. More than 90petcent of cost paid.
One of the partner has abscondex and in his place another partner joined. Can i make the absconding partner too a party.
I am an old lady. Is it worth going for a litigation. If not what is the remedy.

Jagoinvestor
Jagoinvestor
Admin
Reply to  Mrs sharada
2 years ago

Cant charge extra for parking!

PN Badri
PN Badri
2 years ago

My rogue developer deceptively retained small UDS and constructed a flat in stilt floor and one more flat in the open terrace. Stilt and open Terrace are common areas. Unfortunately all these dishonest practices with tacit support of coowner. Highlighting these to other home buyers FIP.

Jagoinvestor
Jagoinvestor
Admin
Reply to  PN Badri
2 years ago

Bad to know this

stephen v
stephen v
2 years ago

we thought of buying a plot from rera approved layout.but when checked in the government rera website, the uploaded document does not contain that particular plot number which we plan to buy..why is it so..can we buy that

Jagoinvestor
Jagoinvestor
Admin
Reply to  stephen v
2 years ago

A lot of times the plot numbers are changed internally also .. meet the developer once..

Sunil
Sunil
2 years ago

I have been asked to pay stage wise completion cost. Can someone point me the guideline on understanding the stage or percentage of completion.
Say for e.g SPR Cons Chennai asking me to pay 50 perc just for completing roof and pillar only

Jagoinvestor
Jagoinvestor
Admin
Reply to  Sunil
2 years ago

Hi Sunil

This is very much state specific and you will get correct info from google only

Sneha
Sneha
2 years ago

I wanted to know whether the builder has to compulsorily disclose details of contractors, like PMC contractors, etc employed for the project. Is there any mandatory section under the act or any notification or rules for the same.

Jagoinvestor
Jagoinvestor
Admin
Reply to  Sneha
2 years ago

I am not aware of anythign like this. I dont think so

Diya
Diya
Reply to  Sneha
2 years ago

Wanted to know the intrest on delayed payment to builder? My building is asking me to pay 13% intrest. As my bank Disbursement payment was delayed to 30 days due to approval, processing and then rejection and then applied to other bank delay and then hospitalized due to covid ?

Jagoinvestor
Jagoinvestor
Admin
Reply to  Diya
2 years ago

It will depend purely on your agreement. It must be mentioned there!

hemanshu shah
hemanshu shah
2 years ago

In Mumbai, lots of redevelopment work is going on, are the original members eligible in RERA?

Jagoinvestor
Jagoinvestor
Admin
Reply to  hemanshu shah
2 years ago

If its a new project or construction (even if its redevelopment) it shall come under RERA

Ajay Pandey
Ajay Pandey
2 years ago

I am planning to buy a ready to move flat with a builder in Noida Extension. As per builder the OC is applied in Mar-21 however GNID (greater Noida authority) has still not issue the approval on same. Other buyers are now taking possession without OC (occupancy certificate) as builder has explained them that as per UP RERA if builder has taken CC/NOC from GNID then buyers can avail the possession. Request to guide if it is legally viable as per RERA to buy a flat without OC.

Jagoinvestor
Jagoinvestor
Admin
Reply to  Ajay Pandey
2 years ago

I think its not prudent to buy a flat if OC has still not come.

Please stay away!

Anwar
Anwar
3 years ago

Hi, I had purchased a new flat in Ahmedabad, However within 7 months we could see the issue of water leakages and some lines of cracks here and there in the society. Should the builder be liable for this? until when can we hold builder liable for rectifying the above issues

Jagoinvestor
Jagoinvestor
Admin
Reply to  Anwar
3 years ago

Mostly its 4-5 yrs, but the right place to raise this issue with your society/office

Anwar
Anwar
Reply to  Jagoinvestor
3 years ago

what if the builder does not repair and blames above flats for leakage of water from ceilings or walls

Jagoinvestor
Jagoinvestor
Admin
Reply to  Anwar
3 years ago

You need to check if its builder liability to compensate or not. If yes, then he has to do it, else file a case against it!

Manish

Azhar P Anwer
Azhar P Anwer
3 years ago

I booked a RERA approved plot in Bengaluru and paid 20%, I got the approval of 80% loan from the bank.
But due to some delay in the process, the disbursement of loan amount is getting delayed.
All of a sudden I received an email from developer stating as 3rd remainder to pay the remaining full amount with 5% interest. Where as i did not receive 1st and 2nd reminder.
Can I approach RERA and file a complaint?. Please advice

Jagoinvestor
Jagoinvestor
Admin
Reply to  Azhar P Anwer
3 years ago

Yes, do reach out to RERA on this.

Sheetal
Sheetal
3 years ago

Hi Manish,

Builder is collecting a last disbursement money from all the flat members but he is making partiality in giving pocession. Instead of giving the pocession to the member whose money received first, he is providing pocession to rich and influenced person. Shall I register a case against builder in RERA for the same?

Thanks

Sheetal

Jagoinvestor
Jagoinvestor
Admin
Reply to  Sheetal
3 years ago

Yes if he is not following the agreement done with you. You shall reach RERA on this.

Manish

Vaishnavi
Vaishnavi
3 years ago

I have bought one villa in Kanakapura Bangalore and construction is going on. But I see a lot of damages while doing this construction. As an owner, i have the right to ask the builder about damages and stop the work until the problem is solved or explained?
1. Also as a customer what and all right I have to ask about construction in RERA projects?
2. Can I ask about all inside and outside sizes on house in the RERA project?
3. To whom we need to reach to give complaints in the RERA project?

Jagoinvestor
Jagoinvestor
Admin
Reply to  Vaishnavi
3 years ago

You need to resolve this with builder itself. If all these issues are happening due to construction outside your villa, then RERA will not help. Its a police case then

Raj
Raj
3 years ago

Dear Sir,
My case is pending in District Consumer Forum. Asking a Real Estate Company to refund my paid amount for the last 5 years but they refuses and filed case in District Forum in Nov 2019 but due to delay in Forum I want to approach RERA.

1. Can I complain in RERA even my case pending in District Consumer Forum?
2. Should the company be registered in RERA? If not , Will RERA resolve my case if I caomplain
3. Some one in A.P RERA Objected me to file complaint as my case pending in Forum . Any proof to file complaint in Rera?

Thx in advance
Raj

Jagoinvestor
Jagoinvestor
Admin
Reply to  Raj
3 years ago

You need to check this with a lawyer now. Its now a lawyer level issue

Manish

Kiran
Kiran
3 years ago

Shall we buy a flat if its having RERA registration number but in that showing.

Litigation related to the project —yes

Jagoinvestor
Jagoinvestor
Admin
Reply to  Kiran
3 years ago

Technically you can buy.

Because every project has small big litigations. What you need to check is the nature of litigation and then consult a lawyer about it

Manish

naveen kumar
naveen kumar
3 years ago

i have booked a project in khopoli in december 2016 and in my agreement the possession date was july 2022 and more than 90% payment i have done to the builder but still the project is in under construction. what should i do as iam tired of paying these EMI to the bank every month. no sign of completion of the project can be seen. can i get any relief from the court as my agreement date doesnt match with the RERA date.

Jagoinvestor
Jagoinvestor
Admin
Reply to  naveen kumar
3 years ago

You can surely go to RERA and complain to them. However, all these things are not so easily in your favour. There must be a clause in agreement and that in unforeseen situations, the delay can happen and the last 1 yr, it has been a corona period.

Manish

D S patwal
D S patwal
3 years ago

I buy a flat in 2016 in Dehradun and have a lozn against it I have taken the possession snd living in it but it is not yet registered against my name ,builder was making one after another exuces for not getting ready to register it on my name .Now I come to know that their is one more home loan against the same flat on some other person name what should I do plz guide

Jagoinvestor
Jagoinvestor
Admin
Reply to  D S patwal
3 years ago

Confront the builder and file a case. What else you can do !

P S SAIBABU
P S SAIBABU
3 years ago

I, P S Babu from hyderabad ,telangana state, my sel f purchased a flat in 2017 , entered into AFS on 2018 in RERA APPROVED venture , that project completion normally 5 yeras as per AFS , but the builders conastruction very slow, its ok but original AFS not given to me , as per Rera who will hold the Original AFS , pl give reply