Real Estate Regulatory Authority, well known by the name of RERA came into corporeality under the RERA Act 2016 (Real Estate Regulation & Development Act). The RERA Act was put forward with the central aim of protecting property buyers from lopsided and at the same time boosting up the real estate transactions. The official bill associated with the Act was passed by the Rajya Sabha in 2016 on 10th March. Although it came into effect from 1st May 2016. Initially, the bill embraced 52 sections followed by the introduction of 92 sections under the RERA Act.

The rest of the sections came into the workforce from the next financial year in May 2017. RERA is a new domain and for better understanding, you have a lot to explore. In this well-curated guide, we have covered every minute detail that orients around the Real Estate Act 2016 including the RERA meaning, RERA agent registration, benefits of RERA, RERA no, RERA rules for maintenance charges, RERA official website, and much more. Keep scrolling to know everything about the RERA Act, 2016.

Objective of the Act

1. Enhance transparency and accountability in real estate and housing transactions.
2. Promote growth through efficient project execution and standardization.
3. Promote growth through efficient project execution and standardization.
4. Boost domestic and foreign investment in the real estate sector.
5. Enhance transparency and accountability in real estate and housing transactions.•Enhance transparency and accountability in real estate and housing transactions.
6. Promote growth through efficient project execution and standardization.

Importance

RERA offers an array of benefits to agents, promoters, and homebuyers. It somehow turned the table by offering immense distinct benefits to the real estate domain. If you are looking for Why is RERA important then here are the foremost reasons to justify its importance: 

Security

As per the Real Estate Regulation and Development Act 2016, a notable amount that is 70 percent from the buyer as well as the investors will be held back within a discrete account. Further this amount is granted to the builders for specific purposes such as construction or other costs associated with land. Regardless of your position i.e., developer or constructor, you are permitted to access at max 10 percent of the mortgage cost in terms of advance payment. This amount is sanctioned prior to signing the final agreement. 

Transparency

Constructors are obliged to capitulate all original documents associated with the undertaken projects. However, the builders aren’t allowed to make any sort of changes within the agreed plans especially without the buyer’s consent.

Unbiasedness

RERA have enlightened the developers with the fact that they have to sell all properties thoroughly drew on the carpet area. Considering the property’s super built-up area is outdated, If the RERA approved project somehow gets delayed, the buyers are accredited to ask for the entire paid amount that was initially invested in the property. The buyer is entitled to get their investment back in terms of monthly investments. 

Quality

The constructor has to mandatorily rectify any sort of issue that the buyer faces within five years of the property purchase. Additionally, the builder has to rectify the issue in a limited time frame that is 30 days counting from the day when the complaint was made. 

Authorisation

A regulator isn’t allowed to advertise, construct, sell, or even book any plot without actually getting registered with the RERA regulator. After registering yourself as a regulator, every advertisement made for specific investments will be allotted with a unique number. It will be distinct for every project and will be generated by RERA.

FEATURES

1. Establish the Real Estate Regulatory Authority (RERA) for regulation and promotion of the real estate sector.
2. Ensure sale of plot, apartment of building or sale of real estate project, in an efficient and transparent manner
3. Ensure protection the interest of consumers in the real estate sector
4. Establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions.
5. Regulates transactions between buyers and promoters of residential real estate projects
6. Residential real estate projects, with some exceptions, need to be registered with RERAs
7. Promoters cannot book or offer projects for sale without registering them.
8. Real estate agents dealing in these projects also need to register with RERAs
9. Amount collected from buyers for a project must be maintained in a separate bank account and must only be used for construction of that project.
10. Right to Legal Representation on behalf of client by Company Secretaries or chartered accountants or cost accountants or legal practitioners
11. Imposes stringent penalty on promoter, real estate agent and also prescribes imprisonment.

Impact of RERA Act 2016

After the establishment of the Act, the sale deed registration of a RERA approved project can’t be put forward through the sub-registrar office. Initially you have to get Occupancy Certificates also called Completion RERA Certificates. Before its existence, these registrations used to take place without any cross checks.

It used to occur without Occupancy Certificates. No one was actually worried about the infused legal consequences. Even after the RERA Act implications, people aren’t restricting their inappropriate sale deed registrations. Here are certain impacts of the Real Estate Regulation and Development Act 2016:

• Decreased number of launched projects as the involved parties will be more indulged in understanding the impact of the Regulation and Development Act. However, the genuine promoters will get huge benefits from this Act as they won’t have to face unbiased competition. 
• Unauthentic builders will diminish because they will eventually fail to cope with the new RERA guidelines and won’t be able to sustain within the real estate market.
• The thirty-two sections added within the Act aim to encourage the overall financial discipline of the real estate sector.
• After the implementation of the RERA Act, the developers became bound to follow listed formalities to make any sort of change in the existing project. It may result in a short-term chaos, but the overall significance will be bet-fit for long run. It will help to generate buyers’ interest to invest more in the real estate domain. 

Advantages of RERA (Real Estate Development and Regulation Act)2016

1. Increased FDI
2. Customer management
3. Timely completion of the project
4. Project planning
5. Transparency
6. Reduction in litigation

RERA approval and its benefits

Some of the important RERA compliances are:

• Informing allottees about any minor addition or alteration.
• Consent of 2/3rd allottees about any other addition or alteration.
• No launch or advertisement before registration with RERA
• Consent of 2/3rd allottees for transferring majority rights to 3rd party.
• Sharing information project plan, layout, government approvals, land title status, sub-contractors.
• Increased assertion on the timely completion of projects and delivery to the consumer.
• An increase in the quality of construction due to a defect liability period of five years.
• Formation of RWA within specified time or 3 months after majority of units have been sold.

The most positive aspect of this Act is that it provides a unified legal regime for the purchase of flats; apartments, etc., and seeks to standardise the practice across the country. Below are certain key highlights of the Act:

Establishment of the regulatory authority: The absence of a proper regulator (like the Securities Exchange Board of India for the capital markets) in the real estate sector, was long felt. The Act establishes Real Estate Regulatory Authority in each state and union territory. Its functions include protection of the interests of the stakeholders, accumulating data at a designated repository and creating a robust grievance redressal system. To prevent time lags, the authority has been mandated to dispose applications within a maximum period of 60 days; and the same may be extended only if a reason is recorded for the delay. Further, the Real Estate Appellate Authority (REAT) shall be the appropriate forum for appeals.

Compulsory registration: According to the central act, every real estate project (where the total area to be developed exceeds 500 sq mtrs or more than 8 apartments is proposed to be developed in any phase), must be registered with its respective state’s RERA. Existing projects where the completion certificate (CC) or occupancy certificate (OC) has not been issued, are also required to comply with the registration requirements under the Act. While applying for registration, promoters are required to provide detailed information on the project e.g. land status, details of the promoter, approvals, schedule of completion, etc. Only when registration is completed and other approvals (construction related) are in place, can the project be marketed.

Reserve account: One of the primary reasons for delay of projects was that funds collected from one project, would invariably be diverted to fund new, different projects. To prevent such a diversion, promoters are now required to park 70% of all project receivables into a separate reserve account. The proceeds of such account can only be used towards land and construction expenses and will be required to be certified by a professional.

Continual disclosures by promoters: After the implementation of the Act, home buyers will be able to monitor the progress of the project on the RERA website since promoters will be required to make periodic submissions to the regulator regarding the progress of the project.

Title representation: Promoters are now required to make a positive warranty on his right title and interest on the land, which can be used later against him by the home buyer, should any title defect be discovered. Additionally, they are required to obtain insurance against the title and construction of the projects, proceeds of which shall go to the allottee upon execution of the agreement of sale.

Standardization of sale agreement: The Act prescribes a standard model sale agreement to be entered into between promoters and home buyers. Typically, promoters insert punitive clauses against home buyers which penalised them for any default while similar defaults by the promoter attracted negligible or no penalty. Such penal clauses could well be a thing of the past and home buyers can look forward to more balanced agreements in the future.

Penalty: To ensure that violation of the Act is not taken lightly, stiff monetary penalty (up to 10% of the project cost) and imprisonment has been prescribed against violators.

RERA Benefits

Industry	Developer	Buyer	Agents
Project efficiency and robust project delivery	Common and best practices	Significant buyers protection.	Consolidation of sector (due to mandatory state registration)
Standardization and quality	Increase efficiency	Quality products and timely delivery	Increased transparency
Enhance confidence of investors	Consolidation of sector	Balanced agreements and treatment	Increased efficiency
Attract higher investments and PE funding	Higher investment	Transparency – sale based on carpet area	Minimum litigation by adopting best practices
Regulated Environment	Increase in organized funding.	Transparency – sale based on carpet area
Governance and  transparency

	Case Laws: 1. Rakesh Kumar Gupta Vs. Ansal API (2017) The RERA Act aims to protect the allottees first and only then the builders and promoters. But there have been instances, where the builders and promoters have to be protected due to a multitude of reasons. The present case relates to an instance where the allottee delayed in the possession of the property by 45 days. This cost the promoter some expenses on maintenance which was huge. 2. Jitendra Jagdish Tulsiani vs. Lavasa Corporation Ltd (2018) The contention of the present case relates to a specific type of transfer of property-lease. RERA Act does not specifically mention what type of transfer comes under its jurisdiction. Therefore, the authorities themselves dismissed the above-mentioned petition. Ratio Decidendi: RERA Act is applicable with the transfer of immoveable property and the regulation of the same. Leasing is a type of transfer and it would come under the ambit of the RERA Act.

RERA impact real estate agents

Under the Real Estate (Regulation and Development) Act (RERA), real estate agents will need to register themselves, to be able to facilitate a transaction. The broker segment in India, is estimated to be a USD 4 billion industry, with an estimated 5,00,000 to 9,00,000 brokers. However, it has traditionally been unorganized and unregulated. “It will bring a lot of accountability in the industry and the ones who believe in professional and transparent business, will reap all the benefits. Now, the agents will have a much larger and responsible role to perform, as they will have to disclose all the appropriate information to the customer and even help them chose a RERA-compliant developer,” says Sam Chopra, founder and chairman of RE/MAX India. With RERA in force,  brokers cannot promise any amenities or services that are not mentioned in the documents. Moreover, they will have to provide all information and documents to the home buyers, at the time of booking. Consequently, RERA is likely to filter out the inexperienced, unprofessional, fly-by-night operators, as brokers not following the guidelines will face hefty penalty or jail or both.

Which projects can get RERA approval?

• Commercial and residential projects including plotted development.
• Projects measuring more than 500 sq mts or 8 units.
• Projects without Completion Certificate, before commencement of the Act.
• The project is only for the purpose of renovation / repair / re-development which does not involve re-allotment and marketing, advertising, selling or new allotment of any apartments, plot or building in the real estate project, will not come under RERA.
• Each phase is to be treated as standalone real estate project requiring fresh registration.

How to register projects under RERA?

• Authenticated copy of all approvals, commencement certificate, sanctioned plan, layout plan, specification, plan of development work, proposed facilities, Proforma allotment letter, agreement for sale and conveyance deed to be given when
• Applying for project registration with RERA.
• Mandatory registration of new and existing projects with RERA before launch.
• Registration of agents/brokers with RERA.
• Dispute resolution within 6 months at RERA and RERA appellate tribunals.
• Separate registration of different phases of a single projects.
• Developers to share details of projects launched in last 5 years with status and reason for delay with RERA.
• Timely updating of RERA website.
• Maximum 1 year extension in case of delay due to no fault of developer.
• Annual audit of project accounts by a CA.
• Conveyance deed for common area in favour of RWA.
• Construction and land title insurance.
• Project completion time period.

What information does a builder need to provide under RERA

• Number, type and carpet area of apartments.
• Consent from affected allottees for any major addition or alteration.
• Quarterly updating of RERA website with details such as unsold inventory and pending approvals.
• Project completion time frame.
• No false statements or commitments in advertisement.
• No arbitrary cancellation of units by promoter.

What happens if builder delays possession, as per RERA?

Under Section 18 of the RERA Act, if the possession of the property is delayed on the part of the promoter, a consumer can terminate the agreement and request for refund. The promoter must return the entire amount paid by the consumer with interest. The Section 18 also allows a consumer to continue with the project and claim compensation from the developer for every month of delay until the possession of property.

The rate of interest payable by the developer and the format of such complaint are specified under the RERA Rules that vary from state to state. Consumers can file a complaint against the developer in case of delay in possession under Section 31 of the Act. According to Section 31, any aggrieved person may file a complaint with the regulatory authority for violations of the said act. The complaint can be filed by home buyer as well as Association of Allottees.

How to file a complaint under RERA?

Digbijoy Bhowmik, head of policy, RICS, explains, “Complaints can be filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the Real Estate Regulatory Authority or the adjudicating officer. Such complaints may be against promoters, allottees and/or real estate agents. Most state government rules, made appurtenant to the RERA, have laid out the procedure and form, in which such applications can be made.

Applicable penalties under RERA

For Buyers

Offence	Penalty
Non-compliance with Real Estate Regulatory Authority	The seller is liable to pay penalty which is usually 5% of the project cost
Non-compliance with – Appellate Tribunal	Up to one year of imprisonment or penalty that is 10% of the project cost or both are applicable in certain case

For Promoters

Offence	Penalty
Non-registration	10 percent of project cost as penalty
Providing false information	Percent of project cost as penalty
Violation of laws	Three years’ of imprisonment/ 10 percent of property cost as penalty , or even both for specific case scenarios

For Agents

Offence	Penalty
Non-registration of real estate projects	INR 10,000 on daily basis to 5 percent of the project cost
Non-compliance- RERA	Daily penalty which can raise to 5 percent of the project value
Non-compliance – Appellate Tribunal	One year of imprisonment/ 10 percent of the project cost as penalty and both in certain cases

Can RERA overturn ‘forced consent’ agreements procured by builders for changing project plans?

Section 14 of the RERA prohibits developers from making any amendments to the sanctioned plan of the project, without theprior consent of the home buyers. As per Section 14, any alteration in the plans and specifications of an individual apartment, is permitted only with the prior written consent of the concerned home buyer. On the other hand, alterations in the layout of the entire project and the common areas of the building, cannot be effected unless the developer obtains the prior written consent of two-thirds of all the home buyers (or allottees) in the project. The Bombay High Court, in the case of Madhuvihar Cooperative Housing Society and others vs Jayantilal Investments and others, 2010 (6) Bom CR 517, had the opportunity to interpret Section 7 of the Maharashtra Ownership of Flats Act (MOFA), 1963, which is similar to Section 14 of the RERA. It held that the consent of a home buyer must be an ‘informed consent’, i.e., one which is freely given after the flat purchaser is placed on notice by complete and full disclosure of the project or scheme that the builder plans to implement. Further, the consent must be specific and relatable to a particular project or scheme of the developer which is intended. The bench further added that blanket or general consents, obtained in advance by developers, particularly during signing of agreements, were legally invalid. As Section 7 of the MOFA is analogous to Section 14 of the RERA, the ruling of the Madhuvihar Cooperative Housing Society case will hold good for all cases that come before the Real Estate Regulatory Authority and the Real Estate Appellate Tribunal.

Rights and duties of Allottees:

Drawbacks and Apprehensions:

1). Who will ensure how much is 70% of the total project cost? Also, the state government can alter this amount to less than 70%.

2). The Bill mandates that 70% of the amount collected from buyers of a project be used only for construction of that project. In certain cases, the cost of construction could be less than 70% and the cost of land more than 30% of the total amount collected.  This implies that part of the funds collected could remain unutilized, necessitating some financing from other sources. This could raise the project cost.

3). Builders argue that it will be difficult to sell units on the basis of carpet area in an under-construction property in which many units have been already sold on the basis of super built-up area.

4). Developers say that the main cause of delay is slow approvals from government agencies.

5). Under the Act, if the registration is revoked by the regulatory authority, who will complete the construction?

6). A few consumer activists believe that the real estate regulator may not be effective in the matter of handling complaints. The complaints are already being handled by consumer courts. So they say that there is nothing new. Also, the consumer courts were not effective in the redressal of complaints. They express the same reservations about the regulatory authority also.

7).  Does not address important issues like the lengthy process for project approvals, lack of clear land titles, the prevalence of black money etc

8). Since state-level governance is very uneven, this will work patchily. Some states will set up efficient Tribunals and Regulatory Boards; others will not.

9). Many politicians have interests in real estate. That could work both for, and against the concepts of the new Act. Some smart and not-so-crooked politicians will back the new act and use it to accelerate activity. Others will try to hold up the new legislation or subvert it.