The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act passed by the Indian Parliament to protect the interests of home buyers and also boost investments in the real estate sector.

Some of the important 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.
• 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.
• 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.
• 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.
• 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.
• 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.
• The Act prescribes a standard model sale agreement to be entered into between promoters and homebuyers. 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.
• 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.

The area of a property is often calculated in three different ways – carpet area, built-up area and super built-up area. Hence, when it comes to buying a property, this can leads to a lot of disconnect, between what you pay and what you actually get. Gautam Chatterjee, Maharashtra RERA chairman, explains that “It is now mandatory for the developers of all ongoing projects, to disclose the size of their apartments, on the basis on carpet area (i.e., the area within four walls). This includes usable spaces, like kitchen and toilets. This imparts clarity, which was not the case earlier.” According to the RERA, carpet area is defined as ‘the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’. Rahul Shah, CEO of Sumer Group, points out that “As per the RERA guidelines, a builder must disclose the exact carpet area, so that a customer knows what he is paying for. However, the act does not make it mandatory for the builders, to sell a flat on the basis of carpet area.”

The Maharashtra Real Estate Regulatory Authority (MahaRERA) came into existence on May 1, 2017. Deemed as one of the most active real estate regulatory authorities in India, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has over 25,000 registered projects and 23,000 registered property agents, as of February 27, 2020. The Authority has also got over 10,000 complaints, out of which 71% have been disposed of.

Aggrieved home buyers in Maharashtra, may be able to look forward to an early and amicable resolution of their disputes with their developers, with Maharashtra becoming the first state in India to initiate the conciliation mechanism under Section 32 (g) of the RERA, by way of Alternative Dispute Resolution (ADR). The conciliation process will go online from February 1, 2018 and hearings before the conciliation benches are expected to commence from the first week of March 2018. Any aggrieved allottee or promoter (as defined under RERA) can invoke the conciliation mechanism set up by MahaRERA . For this purpose, a dedicated website has been created and one can have access to it even via the MahaRERA website.

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.

• 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.

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. In the case of Chandigarh UT or Uttar Pradesh, for instance, these are placed as Form ‘M’ or Form ‘N’ (common with most other states and union territories).” A complaint under the RERA , is required to be in the form prescribed under the respective states’ rules. The complaint can be filed with respect to a project registered under RERA, within the prescribed time limit, for violation or contravention of provisions of the act or the rules or regulations framed under RERA. “For cases pending before the NCDRC or other consumer fora, the complainants/ allottees can withdraw the case and approach the authority under the RERA. Other offences (except complaints under Section 12, 14, 18 and 19) can be filed before the RERA authority,” explains Ajay Monga, partner at SNG & Partners law firm.

Registration secured through misrepresentation or fraud Breach of terms for which registration obtained

• Contravention of Section-9 & Section 10
• Contravention of orders of RERA authorities
• Contravention of orders of Appellate tribunal

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