The builders will now have to deposit 70 percent of the payment made by the buyer in another bank account and this money must be used to cover the construction cost of the particular real estate project.
On May 1, the Real Estate Real Estate (Regulation & Development) Act (RERA) will come into effect. This act aims to bring transparency and accountability in real estate sector of the country and will benefit buyers in a big way.
Here are the 10 important provisions to ensure buyers interest from the builders and developers.
1. Mandatory regulatory authority: This act makes it mandatory for states to create State Real Estate Regulatory Authority for addressing grievances of buyers. In the case of any grievance against the builder, the buyer can approach this government authority.
2. Mandatory registration for every phase: These days, apartments are up for sale even before the launch of the real estate project. In many cases, this has been seen as a method to dupe innocent buyers. However, RERA makes every single phase of construction a standalone real estate project and makes it mandatory for the promoter to register every single phase separately under this act.
3. Monitoring builders’ money: The builders will now have to deposit 70 percent of the payment made by the buyer in another bank account and this money must be used to cover the construction cost of the particular project. In other words, the act prevents developers from using buyers' money for any other purpose. Also, this will help the builder complete the project in time.
4. Transparency of projects: Now, builders must provide all information related to the real estate project including government approvals, status of land title, project plan, subcontractors, construction status and so on and so forth to the regulatory authority as well as to the buyers.
5. Ongoing and under-construction projects: Even under-construction and online projects will be governed by this enactment. All real estate projects – commercial and residential spread over 500 sqm or has eight apartments must be registered. Non-compliance will invite penalty and repeated offender might get jail term.
6. Monetary provision for delayed project: If the developer fails to complete the project on time, the RERA makes the developer liable for it. Under this new law, for such delay the developer will have to pay the same interest to the buyer as the EMI that the buyer pays to bank.
7. No ambiguity anymore: At present, the developers sell projects on the basis of an ambiguous build-up area. This practice will stop as the law clearly define the carpet area.
8. No change of construction plan without consent: The developer cannot change plan of project once it is sold without written consent of the buyer.
9. After sales service: After taking possession of the property, the buyer in written can contact the developer within one year asking for after sales service if there is any deficiency in the project.
10. Jail term or fine or both: For violation of any order issued by the appellate tribunal under this act, a developer can be sent to jail for a maximum period of 3years along with a fine or without a fine.