The Real Estate (Regulation and Development) Act, (RERA) 2016, was passed in both the Houses of Parliament in March, 2016 and recently given assent by the President. RERA Bill, 2016, is now an Act. The stage for setting up a regulatory authorities and appellate tribunals has finally been set. The state governments will now have to frame rules for the Act and constitute the Real Estate Regulatory Authority (RERA), the regulatory body with which developers have to register their projects. According to Section 20 of the act, state governments have to establish the regulatory authorities within one year of the law coming into force. These authorities will take decisions on the complaints of buyers and developers in 60 days. It is an initiative to protect customers’ interests, promote fair play in real estate transactions, and ensure timely execution of projects
The Act will bring greater transparency and accountability in real estate market. In an environment wherein homebuyers have low trust in under-construction properties because of delays in delivery, this law will help bring in clear accountability of developers and lead to greater optimism of homebuyers. The Act will bring relief to thousands of homebuyers across the country that are facing issues of delayed possession and other problems with real estate developers. Single-window clearance of construction projects will lead to time-bound approvals in the industry, providing cheer to the developer community. Moreover, with the MoUD planning to bring all construction-related procedures and approvals online by May end, ease of doing business is set to improve.

RERA ACT, 2016: KEY FEATURES

It establishes the State Real Estate Regulatory Authority for that particular state as the government body to be approached for redressal of grievances against any builder.

This law vests authority on the real estate regulator to govern both residential and commercial real estate transactions.
This Act obliges the developer to park 70% of the project funds in a dedicated bank account. This will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project, thus delaying completion and handover to consumers.
This law makes it mandatory for developers to post all information on issues such as project plan, layout, government approvals, land title status, sub contractors to the project, schedule for completion with the State Real Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.
The current practice of selling on the basis of ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal. Carpet area has been clearly defined in the law.
Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer.

The maximum jail term for a developer who violates the order of the appellate tribunal of the RERA is three years with or without a fine.

The buyer can contact the developer in writing within one year of taking possession to demand after sales service if any deficiency in the project is noticed.

The developer cannot make any changes to the plan that had been sold without the written consent of the buyer.
Every project measuring more than 500 square metres or more than eight apartments will have to be registered with the RERA. Developers as well as real estate brokers will have to register themselves, disclose project details, and will not be able to launch projects without proper approvals.

The agreement with customers will also have to be more transparent than what it has been. It will have to include clauses such as:
• Advance money of not over 10% before entering into a sale agreement.
• Possession date, specifications of the property, construction schedule, and compensation to be paid to buyers for default or delay, which should be the same as that charged to buyers for delayed payment from their side.
• Liability of builders for structural defects for five years (instead of the earlier two years) and clearly defined carpet area, which means customers must know precisely how much space they are going to get for the price paid.