Consumer VOICE
Rera Act 2018

RERA – What, Who and How

Karamjeet Kaur is one of the homebuyers who bought homes after the implementation of the Real Estate (Regulation and Development) Act (RERA). She invested her hard earned money in an under-construction project but decided to withdraw the booking amount owing to project layout inconsistencies.

The builder refused to return her booking amount. Her friend advised her to file a complaint with the RERA authority but none of them knew how to do go about it. Many buyers know that RERA has been implemented and it protects the consumers’ rights but only a few know how to file a complaint .It is possible to file a complaint against delay in handing over flat under RERA.

Remarks Cecil Philip, a real estate lawyer in Mumbai, “RERA has streamlined and disciplined the real estate sector. All information related to projects are in the public domain now and easily available. Transparency has increased significantly which has instilled confidence in buyers. ” However, situation varies from state to state. There is no mechanism to verify documents uploaded by builder on RERA website.

The real estate (regulation and development) Act, 2016 (RERA) has been implemented across all the states from 1 May 2017. Many of the states have established a Regulatory Authority, except West Bengal.

Builders tried to get for Occupancy Certificates to duck the new Real Estate law in early 2017.  A plausible reason could be that they may not project to fall under the purview of RERA.

Setting up a robust IT Infrastructure for RERA along with effective monitoring structure and quick redressal of complaints in case of violation is necessary for the success of the legislation. Regulations have given it the status of an Industry governed by RERA and state regulations.

Which are the projects covered?

The Act under Section 3(2) states that no registration of real estate project would be required:

  1. Where the project admeasures 500 or less than 500 sq m. of land, the number of apartments inclusive of all phases proposed to be developed is less than 8.
  2. Where promoter has received completion certificate for real estate project prior to commencement of the Act.
  3. For the purposes of repair or renovation which does not require marketing or any new allotment under the project.

Lack of Standardisation in Construction and delivery has also been a serious constraint to legality :-

Though the Consumer Protection Act,1986 is available as a platform to the buyers in the Real Estate Market, the recourse is curative and inadequate to address all the concerns of buyers and promoters. Past experiences also highlight inadequacy of consumer forum/commission to ensure timely completion.

RERA it may be understood by the implementing authorities is a Regulation and not merely a guideline. Being a State subject, states have introduced local rules as required for proper implementation and misuse of RERA in their respective states. Reference may be made amongst others to the state of Andhra Pradesh which ensures that the schemes contained in the policy and tenements planned do not merge with existing tenements to create larger tenements by the developer in the course of construction/development phase. If done otherwise will lead to penal action and the MR&TP will be amended to include the provisions.

Jaxay Shah, of realty developers' apex body The Confederation of Real Estate Developers’ Association of India (CREDAI) lends its support and submits "We have already directed all our member developers to register their projects under RERA and they have committed to do so."

RERA provides action if the buyer also defaults. Penalty shall be at the same rate of interest as the builders are to pay as penalty to the buyers in case of delay in granting possession from the due date.

RERA has two major goals:-

(1) Bringing in transparency in the marketed projects in all aspects :- Title, Plans, Approvals, Unit plans, Amenities areas in standard measures.

Carpet Area:- definition of carpet area and prices to be quoted of Carpet area not Super area.

Earlier the area of a property was often calculated in  three different ways :-

(a) carpet area, (b) built-up area and (c)super built-up area.

Hence, when it comes to buying a property, this can lead to a lot of disconnect, between what you pay and what you actually get.  Not surprisingly, the maximum number of cases registered in the consumer courts, are against developers on the issue of cheating, vis-à-vis the size of the flat. According to the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), it is now the duty of the developer, to make buyers aware of the carpet area and quote prices based on this and not the super built-up area.

(2) Mortgage Details:- In a publicly available digital platform/website of RERA and also in company website.

Who can Petition under RERA or CPA or Insolvency Code?

The petitioner to the Consumer who can file under RERA or Consumer Protection Act:-

RERA : A Purchaser/Home Buyer or prospective purchaser/Home Buyer offered flat can file Complaint irrespective of the fact that such person is Corporate Entity or Individual.

SUO MOTU action can be taken by RERA which power is entrusted with the Regulating Authority.

CPA: A Consumer i.e. a person who satisfies the requirement under Section 2(d) of CPA can file complaint. Thereby only a person, typically Individual who enters into agreement for purchase of Flat can file complaint when he purchases the same for his individual use and residence.

Judgements

RERA has been formed recently and few published judgments are available. Also time taken in deciding a case is not yet clear.

CPA :"It takes about 5-6 Years for Redressal of Grievance or adjudication of dispute by Consumer Forum". Cecil Philip, a real estate lawyer in Mumbai.

Appropriate Regulator before whom the Application/Complaint to be filed:-

RERA:  Complaint is to be filed before Real Estate Regulatory Authority established in each state by respective State government where the project is situated. There should be no case pending in any consumer court.

CPA :  Complaint is to be filed before Consumer Forum having territorial and pecuniary Jurisdiction to hear Complaint. To file case under RERA the case pending in any consumer case needs to be withdrawn.

Non Consumer: RERA is for compensation/relief for non consumer decided by the civil court.
Non Consumer:  If a person is not a consumer and seeks specific performance of statutory obligations from Developer, his only remedy would be to file a regular suit. However, for compensation and other reliefs he may approach RERA.

Return of money :-If Person, whether consumer or not, is seeking only return of his money, especially when Developers financial position is deteriorating, then Insolvency Application before NCLT would be appropriate remedy more so when its redevelopment of property that does not involve many flat in sale component.

CPA in case of Insolvency of builder:- If terms cannot be executed due to Insolvency since being process to liquidate the assets there is high probability that Developer may not be in position to return the money invested. All cases before consumer courts are stayed in NCLT proceedings.

Consumer Forum since having power to enforce their own orders also provide great remedy in case where (i) builder on completion delays possession or (ii)not has complied with statutory obligation to obtain reliefs in respect of both.

The Flat Purchaser/Home Buyer can always initiate criminal proceedings under Indian Penal Code against Developer against fraud or other criminal offences or acts committed by it. It has been observed in UP that FIRs filed by lawyers against errant builders are not being properly investigated. UP government and police appears to protect builders rather than helping buyers.

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