RERA stands for Real Estate Regulatory Authority and as the name suggests its aim is to regulate the activities in the real estate industry so that various types of constructions are carried out according to specific standards.
As a result, home owners benefit by getting a sophisticated and modern structure, which builds confidence in consumers to invest further into this market. It lays down rules, regulations which developers have to follow so that residents gain a high quality of life and through which real estate investments flourish.
How Has RERA Transformed The Real Estate Community?
Many people want to buy a dream home and approach a builder who has advertised an attractive property in their city, only to find out later that there are many discrepancies in its style, design and payment methods.
Sometimes, the title deed itself is not drawn correctly or the building has been developed on land that is disputed. Such incidents create huge and sad losses to buyers and developers tarnish their image. Such issues are being resolved through the RERA implementation.
Over the past decades, there have been disputes about the carpeted area offered by the promoter, either it was not enough or prices were inflated etc.
However, with RERA coming to effect in a State, the guidelines that it has laid down for calculating carpeted area must be followed. Since the specific standard formula has to be used to determine carpet area, promoters can no longer show inflated carpet area and extract higher payments from buyers.
Another important improvement brought about by RERA is the amount of advance payment paid by the buyer. As per its guidelines, the promoter cannot charge more than 10 percent of the project cost for application fees or advance.
Buyers are now saved the trouble of having to find a means of paying hefty sums fast to book a home. Furthermore, 70 percent of the money that is collected from buyers towards property purchase will have to be credited into a bank account using cheque as the medium of deposit, which effectively prevents money laundering or fraudulent transactions.
There have been many disputes on poor quality property construction which was noticed only after years of moving and living in it. RERA solved this problem by stating that if any structural defects were found by the buyer after five years of ownership, these have to be solved by the builder, free of cost, in just 30 days.
Due to the stringent rules and guidelines given by RERA, only honest, expert and experienced promoters can carry out construction activities. After project commencement if any changes have to be made to the structure, builders have to complete several formalities to implement them. It has also made it mandatory to obtain the Occupancy Certificates or Completion Certificates prior to carrying out sale deed registration.
One of the most important changes brought about by RERA is that buyers have to pay only for the carpet area of the unit they want to buy and should not pay for super built-up areas such as balconies, stairs, lifts etc.
Furthermore, if buyers find a problem in the title deed, they can ask for compensation right away from the developer. RERA has also come up with a sale deed model which is to be followed by promoters and buyers.
About RERA Features
This authority was established in accordance with the Real Estate (Regulation and Development) Act, which came into effect in May 2016, wherein only 52 sections of the 92 sections were notified and the rest of its provisions came into effect on 1 May 2017. Here is a look at the salient features of this act:
- It requires that every state in the country establish a Real Estate Regulatory Authority for the purpose of monitoring real estate development.
- The State’s Real Estate Regulatory Authority also has the power to settle disputes arising in any real estate project inside it.
- Any building development that is planned in the state should be first show to its Real Estate Regulatory Authority.
- Approval of a planned building development occurs only if it is in accordance with the state’s RERA guidelines.
- If the promoter causes loss to the buyer due defective title of land that is under construction or which has already been constructed upon, he has to compensate the buyer.
- Any default in payment by either the buyer or the promoter will result in payment of interest from both.
- If an enquiry is occurring against a complaint, the activity on-going in the project done either by the buyer, promoter, agent can be stopped by RERA.
- In the event of a promoter wanting to transfer allottees rights and liabilities to a third party, the same can happen only if there is a written consent given by two-thirds of the allottees plus state RERA approval.
- If a company undertaking a project commits an offense, its owner at the time of such an offense will be considered guilty and also punished.
- If there is a situation wherein a person finds a project to be against the state’s RERA rules done either by a agent, buyer or promoter, action can be taken about it by filing a complaint with RERA.
The huge authority that lies with RERA is shown in the following points on its absolute power:
- If any individual or group does not find RERA’s decisions as satisfactory, they can give an appeal about it to the Appellate Tribunal.
- RERA can give specific orders on a project to a promoter, which if not followed will cause a penalty, which may be a fine that is five percent of the property’s cost.
- Appellate Tribunal can give specific orders on a project to a promoter which if not followed will cause penalty, which may be a fine that is ten percent of the property’s cost else imprisonment for up to three years.
- RERA or the Appellate Tribunal’s jurisdiction cannot be challenged by civil court and cannot grant an injunction against their actions.
The various rules, regulations laid down by RERA brought about better transparency in the real estate industry and also streamlined their work processes. Not only does it govern the residential real estate industry but also the commercial one.
It has implemented reforms that protect the interests of both buyers and building developers or promoters. RERA Karnataka is the official site of RERA in the State of Karnataka and details for site registration, fees, charges, RERA project list, services, agent’s rules, buyer’s protection can be found in it. You can find out more by visiting https://rera.karnataka.gov.in/.
To know more details, also check our article on how RERA will impact the real estate industry and home buyers