Before you learn about RERA and how it empowers a homebuyer, you should understand the background that made the Government of India promulgate the Real Estate (Regulation and Development) Act, of 2016.
Why was RERA promulgated?
For many Indians, buying a home is a dream and involves lifetime savings. Most homebuyers stay in rented housing and avail up to 90% of the property value as a home loan to buy a property. Thus, homebuyers incur monthly rent and Pre-EMI till they get possession of the property to enjoy. When the possession gets delayed, the financial burden increases on the homebuyers.
Some promoters launched new projects to take money from homebuyers and invest in other projects. When promoters faced a cash crunch, they slowed construction progress which resulted in delayed possession.
Some promoters were modifying the architectural design and material specifications without taking consent from the homebuyers and without making any amendments to the construction agreement. Homebuyers were forced either to accept the modification by paying an extra amount or to cancel their allotment by paying a cancellation fee.
Some promoters do not get all approvals, NOCs, and clearances required for the project. Many homebuyers get to know only when a show cause notice is issued by the concerned authority for probable violation or deviation. By then, time and money are lost for the homebuyers.
In the urge to buy a property, several homebuyers do pay attention to the clauses on the delayed possession, late payment penalty charges, and cancellation fees that were drafted favorable to the promoters.
There was also no standard format across the industry for the clauses on the allotment conditions, cancellations, penalty charges, execution of the sale deed, and execution of the construction agreement. Hence, homebuyers had to engage legal experts for due diligence.
When there arises a dispute between the promoters and the homebuyers, homebuyers were left lurching with long emotionally and financially draining legal battles. Homebuyers were having no authority whom they can approach for quick redressal of their concern/grievances.
This forced the Government of India to promulgate a Real Estate (Regulation and Development) Act, 2016, which was passed in the house of Parliament on March 10, 2016, effective from May 1, 2016.
How does RERA help buyers?
This Act helps bring the transparency to real estate sector, protecting the homebuyers from misleading advertisements, non-disclosure of property details, lopsided agreements, inordinate delays in the project handover, and resolving disputes between the homebuyers and the promoters in a time-bound manner.
When RERA is applicable for a project?
If the area of the land proposed for development exceeds 500 sq.m or if the number of apartments in all phases exceeds 8 units, then a promoter must register the project with the respective state authority for RERA.
RERA is applicable for layout developments, and residential as well as commercial property developments.
What documents need to be submitted for RERA authority?
To obtain a RERA registration number, a promoter must apply with the following details and documents to the concerned RERA authority.
- Names, addresses, and photographs of the Promoter(s)
- Firm/Company Registration Certificate
- Names, addresses, and photographs of the Landowners (in case of Joint Venture)
- Sale Deed, Patta, Encumbrance Certificate of the Land
- Copy of Planning Permit
- Copy of Building Plans certified by the Local Body / Authority
- Copy of No Objection Certificate (NOC) from the Civic and Defense Establishments
- Structural Stability Certificate
- Geo-technical Report and Certificate
- Details of the Plots / Flats / Villas signed by Architect / Project Engineer
- Details of the Projects launched in the last five (5) years
- Project Completion Date
- Details of the dedicated Bank Account for the Project
- Copies of Allotment Letter, Sale Deed, and Construction Agreement
- Latitude and Longitude of the Project Location
- Details of the Architect, Structural Engineer, Contractors
- Details of the Amenities, Facilities, Infrastructure
- Audited Balance Sheet of the Promoter for the preceding financial year
How RERA ensures on-time project handover?
Through this Act and the Rules framed thereof, every promoter must deposit at least seventy percent (70%) of money realized from the homebuyers in a separate bank account in a scheduled bank.
Promoters can withdraw the money from the bank account only on certification by a project engineer, an architect, and a chartered accountant that the withdrawal is in proportion to the percentage of completion of the project.
If there is a delay in the project handover due to unforeseen conditions such as labor unavailability, material unavailability, war, earthquake, etc, Promoters can enforce the force majeure clause and can apply for an extension of the project completion date from the concerned RERA authority.
Thus, RERA ensures the interest of the homebuyer for the timely handover of the project.
How RERA ensures transparency and uniformity in the Carpet Area of the Property?
Before RERA defined Carpet Area, there was a practice to include areas that were exclusively meant for the homebuyer such as kitchens, living rooms, bedrooms, toilets, exclusive private terraces, exclusive balconies, exclusive staircase, and service utility, and to exclude external walls and internal partition walls of the property.
To bring uniformity across the real estate sector in India, RERA defined Carpet Area as the net usable floor area of a villa/apartment including the internal partition walls of the property but excluding external walls, exclusive private terraces, exclusive balconies, exclusive staircase, and service utility. These areas must be shown separately along with the RERA carpet area for transparency.
Thus, at the time of application for RERA registration, Promoters must declare the carpet area of each villa/apartment along with the area of the exclusive balcony/verandah/open terrace areas for sale, the UDS area, and the Number of Car Parking for each property.
Tamil Nadu Real Estate Regulatory Authority (TN RERA):
As revenue land is a state subject as per List II of the Seventh Schedule in the Constitution of India, every State has to frame rules as per provisions of the Real Estate (Regulation & Development) Act, 2016, and notify the same.
The Government of Tamil Nadu vide G.O.Ms.No.112, Housing & Urban Development Department, dated 22.06.2017 has approved the Tamil Nadu Real Estate (Regulation & Development) Rules, 2017 to carry out the provisions of Real Estate (Regulation & Development) Act, 2016.
How to check RERA approval for projects in Tamil Nadu?
One can access the details of TN RERA registered projects, RERA rejected projects, the list of registered real estate agents, various Forms to raise and monitor complaints, judgments of the appellate tribunal, etc through https://www.rera.tn.gov.in/
Happy homebuying!