The Real Estate (Regulation And Development) Act, 2016: Meaning, History And Structure

The Indian Parliament passed RERA in May 2016, which went into force on May 1, 2017.

The Real Estate (Regulation and Development) Act, 2016, often known as RERA, is a significant legislation in India that seeks to regulate the real estate business and safeguard homebuyers’ rights. The Indian Parliament passed RERA in May 2016, which went into force on May 1, 2017. 

History

Before the implementation of RERA, India’s real estate business was mostly unregulated. The lack of effective regulation has resulted in several malpractices, including project delivery delays, budget diversion, and unfinished projects. Homebuyers have no recourse against such methods, leaving numerous people with unfinished constructions. The government realised the need for a regulator to regulate the real estate business, so the RERA was created. The primary goal of RERA is to promote openness, accountability, and timely completion of real estate projects.

Structure

RERA is a core piece of law that applies throughout India. Nonetheless, each state and union territory has a separate RERA body enforcing the act’s terms in their respective jurisdictions. The state authority selects the chairman of the RERA authority.

The RERA authority is responsible for the following:

  • Registering real estate projects

RERA requires developers to register their projects with the authority before they can advertise or sell them. The registration process is online, and developers must provide details such as project location, layout, land status, approvals, and completion schedule.

  • Monitoring project progress

RERA requires developers to provide regular updates on the project’s progress, including the status of approvals, construction work, and completion timelines. The RERA authority monitors the project’s progress to ensure it is completed on time.

  • Dispute resolution

RERA provides for establishing an adjudicating officer responsible for resolving disputes between the developer and the homebuyer. The adjudicating officer has the power to impose penalties on the developer for non-compliance with the provisions of RERA.

  • Protection of homebuyers

RERA provides several provisions for the protection of homebuyers. For instance, developers must maintain a separate bank account for each project, and 70% of the funds collected from homebuyers must be deposited in this account. This ensures that the funds collected for a specific project are used only for that project.

Principal Provisions

  • Project registration: Developers must register a project with the RERA authorities before promoting or selling a project. The registration procedure is done online, and developers must supply all project facts, such as land status, layout, permissions, and completion date.
  • RERA compels developers to publish all project-related information, including the floor space, the number of dwellings, the status of permissions, and the complete timetable. This guarantees that before making a purchasing choice, homeowners get comprehensive information about the project.
  • Separate bank account: RERA mandates developers to keep a separate account with the bank for each project. 70% of homebuyer money must be put in this account, and monies can only be accessed for project-related costs.
  • Project completion on time: RERA requires developers to complete projects on time. In the event of a delay, the developer must compensate the homebuyer.
  • Creation of a residents’ association: According to RERA, the developer must organise a residents’ association within three months of selling most units.