RERA Rules That Will Bar Real Estate Developers from Delaying Delivery of Homes

RERA Rules That Will Bar Real Estate Developers from Delaying Delivery of Homes

By Apna RERA

In today’s world, everyone wants to have their own home that suits their budget. Considering their pockets, home buyers’ go for pre-launch housing projects that generally costs less as compared to ready-to-move-in projects. Most of the builders promise to build futuristic homes by engaging their extensive domain expertise. The reputed ones fulfil their promise, but some fail to do so and the buyers get trapped in the web of delays in the delivery of their homes. To help buyers come out of this trap, the Indian government implemented the Real Estate (Regulation & development) Act on May 1st, 2016. This Act aims at protecting consumers’ interests, empowering realtors & buyers by infusing much-needed transparency & efficiency and developing the Indian real estate sector.

On 1st May 2017, nine states and six Union Territories notified the RERA rules and other states will notify and set up the tribunal soon.

In order to cope up with the delayed delivery of homes, the RERA have special provisions in the store that will mandate developers to bring efficiency in their business and will bar them from making flaws.

  1. Clear land title: Many housing projects get delayed due to disputes over the land on which the project is supposed to be developed. According to the RERA rules, the developers have to give a written affidavit stating that the title of the land on which the project will be developed is legal and authentic. Also, the developer has to provide a written affidavit stating that the land is free from all hindrances.
  2. Written affidavit: Most of the time it happens that the promoter fails to deliver what he promised in the sales agreement. Now, the RERA mandates every developer to submit a written affidavit in which he has to declare that he will complete the project or phase at the specified time while fulfilling all promises done with the consumers.
  3. Fixed possession date: As per the RERA, the builder has to specify (in the agreement of sale) the possession date and pay interest to the consumers on a fixed rate in case of delay. The rules also give certain rights to the consumers under which they can opt not to buy the project in case of delay delivery and the builder has to return the amount paid by the consumer with interest.
  4. Maintaining Escrow account: The RERA mandates all developers to deposit 70% of the amount received by the consumers to develop the project in a separate account know as Escrow account. The Escrow account must be maintained in a scheduled bank to cover the cost of the land and the construction cost for the said project. The promoter can withdraw the amount from the escrow account as per the extent of the work completed and that too after taking written permission from the engineer, a chartered accountant and an architect. This will minimize the diversion of funds which is one of the main reasons for project delays.
  5. Penalties for breaching rules: The RERA has strict rules for those developers who will not adhere to the specified rules in the Act. In case a developer fails to comply with the RERA rules, he/she may lose the registration of the project along with imprisonment up to 3 years or a fine up to 10% of the estimated cost of the project or both. However, some states have multifaceted the rules to avoid the imprisonment of the developers.

Although, the RERA have provisions to protect buyers’ interest, but it can only help when states will notify the rules on the lines of the Central Government’s recommendations. Even though the rules are in line, the state’s RERA authority has to ensure its fair implementation and take suo moto action. If this happens, the buyers will be the king and the Indian real estate will become one of the top reliable sectors in the world.


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