Real estate regulator act (RERA) is expected to be enforced from 1st
may 2017. It is expected to be a blessing for all future home seekers and also
bring the real estate industry under control over huge unsold inventories and
sky rocketing prices. This act is expected to reduce delay in project
completion and increasing hooliganism in case of default.
Some of the facts of the RERA are as follows:
a)
Pay
for only the area you can use- one of the misleading facts in
every home purchase is the use of words like” super built up” or “ built up “
with 25-30% loading which wrongly includes the window/ balcony or loft space I calculation. Going forward it is
mandated to only mention the usable area where the space ca n be actually used
by the buyer. The advertisement or agreement should contain the carpet area. It
is rightfully known as carpet area as the place where you can lay down the
flooring or carpet. The buyer needs to pay price on this area only.
b)
Creation of bank escrow accounts –
usually the builders have had a tendency of starting multiple projects at one
go and collecting funds from home buyers showing them futuristic images. Going
forward, to avoid pumping of funds from one project to another, an escrow
account has been mandated to all. At any given point of time, the builders can
only withdraw 70% of available funds of home buyers after required approvals
from their engineers and chartered accountants.
c)
Payment
schedule – the buyers are expected to pay only 10% of amount
before the signing of agreement. Also, the buyer is entitled to see all the
layout plans, copy of entire sanctioned plans and the schedule of completion.
The maximum period of project completion is currently 7 years. The buyer is
entitled to get possession within 2 months of getting the Occupation
certificate. The onus of getting the OC
is with the promoter. The promoter is also responsible for creating a society
and is responsible for complete maintenance till then. There is also a five
year warranty of structural defect in the interest of buyers but it has not
been clearly defined in the law. The promoter cannot make any change in the
layout plan without seeking approval of 2/3rd buyers. Also, the
promoter can’t transfer the project to any other developer without again
seeking permission by 2/3rd of allotees.
d)
Registration
of projects- the developers need to register their projects with
the regulators before making any public announcement of the project. The
permission is necessary for any construction beyond eight floors. Also, it is
necessary to submit details about the past performances of projection completion,
any impending cases against the builders and copies of necessary sanctions from
the land department. Also, the registration seeks details of complete layout
including the latitudes and longitude details. The total number of flats to be
created and commitment of creating the mandated escrow accounts for the said
projects. The registration would include the deadline to complete the project.
e)
Audited
papers for the projects – the promoter are responsible for submitted audited
project accounts to the RERA every 6 months for approval. If the project is
expected to be completed in phases then each phase is considered as an
individual project and separate registration is necessary for all phases. There
is also mandated updating the webpage to mention the quarterly progress of the
project. The brochure created should include the details of the webpage. The
builder would have to abide by all the details mentioned in the brochure. An
tribunal Appellate is expected to be created in each state to hear the queries
of the aggrieved parties. The role of RERA is to protect the interest of home
buyers but in case of delayed payments by the buyer, he could also be liable
for penalties or punishments.
Our
word of caution
The provisions for ongoing projects are that the
builders only require submitting the time frame from now on to complete the
project. Also, the latest layout and other details of status of project would
be visited as on date ignoring all the previous delays and structural changes.
So, it is not much beneficial for the already invested new home buyer. Also,
the RERA is a central rule; the State government has additional right to amend
the rule any further. So if you are on the one, who has been stuck with delayed
possession of your dream home, your wait has just got legitimatized and not
over.
Thanks and Regards
Team
Email: saarthifp@gmail.com
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