Real Estate (Regulation& Development)

Act, 2016

Yash Sunil Pawar

2119022
Construction Management
 Real Estate and the housing sectors were highly unregulated sectors

 Lack of transparency in projects

 No proper information about the builder

 Lack of remedies available to the buyers

To protect the interest of consumers in the Real Estate Sector and to establish an adjudicating mechanism for speedy dispute
redressal.
 INTRODUCTION
 The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of
India which seeks to protect home-buyers as well as help boost investments in the real estate
industry.

 The bill was passed by the Rajya Sabha on 10th March, 2016 and by the Lok Sabha on 15 March
2016.

 The Act came into force from 1 May 2016 with 69 of 92 sections notified.

 The Central and state governments are liable to notify the Rules under the Act within a statutory
period of six months.

 Applicable to whole of India except Jammu and Kashmir

 Real estate regulatory authority (RERA) is the governing authority.

 The law is not Retrospective.

SALIENT FEATURES
 Establishes the State Real Estate Regulatory Authority for that particular state as the government body to
be approached for redressal of grievances against any builder.
 Vests authority on the real estate regulator to govern both residential and commercial real
estate
transactions.
 It is mandatory for developers to post all information on issues such as project plan, layout, government
approvals, land title status, sub-contractors to the project, schedule for completion with the State Real
Estate Regulatory Authority (RERA) and then in effect pass this information on to the consumers.
 The current practice of selling on the basis of ambiguous super built-up area for a real estate project is
declared illegal.
 Carpet area has been clearly defined.
 Punishment for developer who violates the order of the appellate tribunal of the RERA is three years with
or without a fine.
 Currently, if a project is delayed, then the developer does not suffer in any way. Now, the law ensures that
any delay in project completion will make the developer liable to pay the same interest as the EMI being
paid by the consumer to the bank back to the consumer
 The developer cannot make any changes to the plan that had been sold without the written consent of the
buyer.
 This puts paid to a common and unpopular practice by developers to increase the cost of projects.
 Every project measuring more than 500 square metres or more than eight apartments will have to be
registered with the RERA.
REGISTRATION
Who is liable to get Registration from RERA?
▶ All commercial real estate projects where the land is over 500 square metres.
▶ All residential real estate projects where the land is over 500 square meters or eight apartments, to register
with the Real Estate Regulatory Authority (RERA) for launching a project.
▶ For on-going projects which have not received completion certificate on the date of commencement of the
Act, will have to seek registration within 3 months.
▶ Real estate agents who facilitate selling or purchase of properties must take prior registration from
RERA.
▶ Such agents will be issued a single registration number for each State or Union Territory, which must
be quoted by the agent in every sale facilitated by him.
What is the Process of Registration?
▶ Applicant has to file an application for registration with RERA in prescribed form along with prescribed
fees and documents.
▶ Application for registration must be either approved or rejected within a period of 30 days from the date of
application by the RERA.On successful registration, the promoter of the project will be provided with a
registration number, a login id and password for the applicants to fill up essential details on the website of
the RERA.
What is the penalty for failure to get register?
 REGISTRATION

4. Consequence
1. Debar the promoters from accessing the its website in 1. Time limit for registration
relation to that project
For ongoing Projects – 3 months from commencement of this
2. Specifying his name in list of defaulters Act
3.Display his photograph on its website and inform the other For new projects - 30 days
RERA.
4. Direct the bank to freeze the account

Registration

3. Revocation 2. Exceptions
1. On complaint 1. Area of land < 500 Sq. Meters
2. Suo moto
2. No. Of apartments < 8
Where promoters makes default or violates any terms or
conditions of the approval or promoters involved in any kind 3.In case of Renovation/ Repair/Re-development
of unfair practice.
 PROTECTION OF BUYERS

 The Act prohibits unaccounted money from being pumped into the sector.

 As now, 70 per cent of the money has to be deposited in bank accounts through
cheques.

 A major benefit for consumers included in the Act is that builders will have
to quote prices based on carpet area and not super built-up area

 Carpet area has been clearly defined in the Act to include usable spaces like
kitchen and toilets.
 REAL ESTATE REGULATORY
AUTHORITY AND APPELLATE
TRIBUNAL

 Establishment of State-level Real Estate Regulatory Authorities (RERAs) to regulate

transactions related to both residential and commercial projects

 RERAs will ensure timely completion and handover of projects.

 Appellate Tribunals will now be required to adjudicate cases in 60 days as against the
earlier provision of 90 days

 Regulatory Authorities has to dispose of complaints in 60 days while no time frame was
indicated in earlier Bill.
The Union Ministry Of Housing And Urban Poverty
Alleviation issued a notification on April 19, 2017
announcing that sections 3-19, 40, 59-70, 79 and 80 of the
Real Estate (Regulation and Development) Act, 2016, shall
come into force on May 1, 2017....
FUTURE IMPLICATIONS OF THE
AMMENDMENT
These measures are expected to boost domestic and foreign investment in the sector and help achieve the objective of
the Government of India to provide ‘Housing for All by 2022’, through enhanced private participation.

The Bill ensures mandatory disclosure by promoters to customers through registration of real estate projects as well as
real estate agents with the Real Estate Regulatory Authority.

The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and
accountability in real estate and housing transactions. This in turn will enable the sector to access capital and financial
markets essential for its long term growth.

The Bill will promote orderly growth through consequent efficient project execution, professionalism and
standardization.

The Bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and
delays.

The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and
standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions.
 SALIENT FEATURE OF THE AMMENDMENT

(a) Applicability of the Bill: The proposed initial Bill was applicable for residential real estate. It is now proposed to cover both
residential and commercial real estate;

(b)Establishment of Real Estate Regulatory Authority: Establishment of one or more ‘Real Estate Regulatory Authority’ in each
State/ Union Territory (UT), or one Authority for two or more States/UT, by the Appropriate Government for oversight of real estate
transactions,
To appoint one or more adjudicating officers to settle disputes and impose compensation and interest;

(c)Registration of Real Estate Projects and Registration of Real Estate Agents: Mandatory registration of real estate projects and
real estate agents who intend to sell any plot, apartment or building, with the Real Estate Regulatory Authority;

(d)Mandatory Public Disclosure of all project details: Mandatory public disclosure norms for all registered projects such as details
of promoters, project, layout plan, plan of development works, land status, status of statutory approvals and disclosure of proforma
agreements, names and addresses of real estate agents, contractors, architect, structural engineer etc.;

(e) Functions and Duties of Promoter:

· Disclosure of all relevant information of project;
· Adherence to approved plans and project specifications;
· Obligations regarding veracity of the advertisement for sale or prospectus;
· Rectify structural defects;
· Refund money in cases of default;
 SALIENT FEATURE OF THE AMMENDMENT

(f)Compulsory deposit of 50 percent: To compulsorily deposit 50 percent (or such lesser percent as notified by the Appropriate
Government) of the amounts realized for the real estate project from the allottees in a separate account in a scheduled bank within a
period of fifteen days to cover the cost of construction to be used for that purpose;

(g)Adherence to declared plans: To bar the promoter from altering plans, structural designs and specifications of the plot, apartment or
building without the consent of two-third allottees after disclosure; However, minor additions or alterations permissible due to
architectural and structural reasons;

(h) Functions of Real Estate Agents: Real estate agents to sell properties registered with the Authority;
· Maintain books of accounts, records and documents;
· Not to involve in any unfair trade practices;

(i). Rights and Duties of Allottees: Right to obtain stage-wise time schedule of project;
· Claim possession as per promoter declaration and refund with interest and compensation for default by the promoter;
· Allottees to make payments and fulfill responsibilities as per agreement;

(j)Functions of Real Estate Regulatory Authority: The Authority to act as the nodal agency to co-ordinate efforts regarding
development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a
transparent, efficient and competitive real estate sector;

(k) Fast Track Dispute Settlement Mechanism:

· Fast track dispute resolution through adjudicating officers (District Judge);
· Appellate Tribunal to hear appeals;
 SALIENT FEATURE OF THE AMMENDMENT

(l) Establishment of Central Advisory Council: To advise the Central Government on implementation of the Act, recommend policy,
protection of consumer interest and to foster growth and development of the real estate sector;

(m)Establishment of Real Estate Appellate Tribunal: Real Estate Appellate Tribunal to hear appeals from orders of the Authority and the
adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court, with one judicial and one
administrative/technical member;

(n) Punitive Provisions: Punitive provisions including de-registration of the project and penalties in case of contravention of provisions of
the Bill or the orders of the Authority or Tribunal;

(o) Bar of Jurisdiction Courts: Provision for barring jurisdiction of court and any authority from entertaining complaints in respect of
matters covered under the Bill;

(p) Power to make Rules and Regulations: Appropriate Government to have powers to make rules over subjects specified in the Bill;
· Regulatory Authority to have powers to make regulations;
Case Study
1. Mr. Gupta had been looking to buy a new apartment in a prime location in Mumbai. He had visited
several real estate projects, but was hesitant to invest in them due to the lack of transparency and
accountability in the sector. He had heard about the RERA act and decided to check whether the
projects he was considering were registered under the act.
2. To his surprise, he found that many of the projects were not registered with the RERA authority. He
also found that some of the developers had made false promises about the amenities and completion
dates of their projects. He was relieved to know that he had the option of filing a complaint with the
RERA authority if he encountered any issues with the projects he eventually invested in.
3. Mr. Gupta finally invested in a project that was registered under the RERA act. The developer had
to provide all the necessary information about the project, including the timeline for completion, the
amenities provided, and the total cost of the project. The developer was also required to deposit
70% of the funds received from buyers in a separate account, which could only be used for the
specific project.
4. The RERA act has brought about a significant change in the real estate sector in India. It has
increased transparency and accountability in the sector and provided a mechanism for the resolution of
disputes between buyers and developers. The act has also encouraged many developers to complete
their projects on time, as they are required to provide a timeline for completion to the RERA authority.
Conclusion
 The RERA act has had a positive impact on the real estate sector in India by bringing about
transparency and accountability. It has protected the interests of home buyers and provided a
mechanism for the resolution of disputes between buyers and developers. The act has also
encouraged developers to complete their projects on time, thereby reducing delays and
increasing buyer confidence.
 The act has introduced a regulatory framework to govern the real estate industry, which has
increased transparency and accountability, and protected the interests of homebuyers.
 The act has also brought about a shift in the industry's approach towards timely delivery of
projects and ensuring quality standards. It has restored trust in the real estate sector and
improved the buyer's experience by streamlining the project delivery process.
 Overall, the RERA act has been instrumental in creating a more efficient and customer-centric
real estate market in India.