Understanding RERA: Key Provisions and Benefits for Homebuyers

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to address the persistent issues of project delays, lack of transparency, and unfair trade practices in the Indian real estate sector. It has significantly empowered homebuyers, ensuring that their rights are protected while enhancing accountability among developers. This blog explores the key provisions of RERA, its benefits for homebuyers, and references notable case laws and recent developments.

RERA introduced several provisions to regulate the real estate industry, making property transactions more transparent and secure. Some of the most critical provisions include:

• Mandatory Registration of Real Estate Projects and Agents
  • Builders and developers must register their projects with the respective State RERA Authority before advertising or selling.
  • Real estate agents also need to be registered to conduct transactions legally.
• Standardization of Carpet Area
  • Developers must sell properties based on the carpet area (the actual usable area within the walls) rather than the super-built-up area.
  • This eliminates misleading sales tactics and ensures homebuyers pay only for the usable space.
• Advance Payment Restriction
  • Developers cannot demand more than 10% of the total property cost as an advance or booking amount before signing a formal agreement for sale.
• Escrow Account for Project Funds
  • Builders must deposit 70% of the project funds into a separate escrow account, ensuring that the money is used only for construction and land-related expenses.
  • This prevents fund diversion and reduces project delays.
• Timely Project Completion and Compensation
  • If a project is delayed, homebuyers are entitled to compensation, including refunds or interest for the period of delay.
  • Developers are legally obligated to complete the project as per the promised timeline.
• Five-Year Defect Liability Period
  • If a buyer finds structural defects or poor construction quality within five years of possession, the developer must fix them at no extra cost.
• Right to Information
  • Buyers have the right to access complete project details, including construction progress, approvals, and legal status, via the RERA portal of their respective states.
• Dispute Resolution through RERA Tribunals
  • Homebuyers can file complaints with the State RERA Authority for violations by builders.
  • If unsatisfied with the ruling, they can appeal before the Real Estate Appellate Tribunal (REAT) for further resolution.

The implementation of RERA has provided significant benefits to homebuyers, making property transactions more secure and transparent:

• Increased Transparency and Accountability
  • Homebuyers can verify project approvals and developer credibility through RERA’s online portals.
• Protection Against Delays
  • Buyers no longer suffer from indefinite delays, as strict penalties are imposed on developers for non-compliance.
• Financial Security
  • The escrow account provision ensures that funds are used only for the designated project, preventing financial mismanagement.
• Legal Remedies for Homebuyers
  • Buyers now have a dedicated forum for grievances, ensuring faster dispute resolution.
• Standardization in Property Transactions
  • Clear regulations on pricing, carpet area, and construction quality help buyers make informed decisions.

• Puneet Kaur v. TDI Infrastructure Ltd. (2021)
  • The Punjab RERA ruled in favor of the buyer, directing the developer to refund the entire amount with interest due to excessive project delays.
• Bikram Chatterjee v. Union of India (2019) – Amrapali Case
  • The Supreme Court ordered the cancellation of Amrapali Group’s RERA registration and handed over the unfinished projects to NBCC (a government entity) for completion. This judgment reinforced RERA’s authority in addressing large-scale builder fraud.
• Imperia Structures Ltd. v. Anil Patni (2020)
  • The Supreme Court ruled that homebuyers can approach both RERA and the Consumer Protection Act for grievances, strengthening consumer rights.

• Digitalization of RERA Registrations and Complaints
  • Many states have enhanced their online RERA portals, allowing buyers to track project progress, file complaints, and access legal rulings efficiently.
• RERA Amendment Proposals
  • Some states are considering amendments to reduce project size thresholds for RERA applicability, covering smaller housing projects.
• Strict Action Against Non-Compliant Developers
  • Several state RERA authorities have started imposing heavy fines and blacklisting developers who fail to comply with regulations.
• Focus on Affordable Housing Projects
  • RERA authorities are prioritizing affordable housing projects, ensuring that budget-friendly properties meet all legal requirements

RERA has revolutionized the Indian real estate sector, offering homebuyers greater protection, transparency, and legal recourse against fraudulent developers. The act ensures that buyers receive their homes on time, as promised, without falling victim to misleading advertisements or financial mismanagement. Landmark case laws and recent developments indicate that RERA is evolving to become even more robust in safeguarding homebuyers’ interests. For anyone considering a property investment, checking RERA registration should be the first and foremost step to ensure a safe and secure purchase. With continuous legal improvements and strict enforcement, RERA is steadily reshaping the future of real estate in India