RERA FAQ

General FAQs

Q1. What is Real Estate (Regulation and Development) Act (RERA), 2016?

Ans: The Real Estate (Regulation and Development) Act, 2016 (the Act, from hereon) is an initiative by Indian Government to enhance transparency in the real estate related transactions by creating a systematic and a uniform regulatory environment, thereby protecting consumers’ interest and making real estate developers liable for timely completion of projects.

Q2. When was the bill proposed?

Ans: The RERA bill was drafted in the year 2013 and was passed by the Rajya Sabha on 10th March 2016 and by the Lok Sabha on 15th March 2016. It received the Presidential nod on March 25th 2016 and came into force on 1st May 2016 with 69 of 92 sections notified.

Q3. What are the objectives of RERA, 2016?

Ans: These are the five major objectives of RERA, 2016.

  1. To establish the Real Estate Regulatory Authority (RERA)
  2. To promote transparency and efficiency in the sale of real estate projects
  3. To protect the interest of consumers in the real estate sector
  4. To establish an adjudging mechanism for speedy dispute settlement
  5. To set up an Appellate Tribunal to hear appeals from the decisions, directions or orders of the RERA

Q4. Is RERA act, 2016 applicable to all Indian States?

Ans: Yes, this act is applicable to all Indian states excluding Jammu & Kashmir.

Q5. Is the Act applicable to both residential and commercial projects?

Ans: Initially, the bill was supposed to cover only residential projects. On further amendments, commercial projects including shops, offices and buildings were also included.

Q6. Are there any supporting government bodies set up to assist the RERA?

Ans: Yes, A Central Advisory council will be set up to advice the Central Government on the implications of the Act to recommend policies in order to protect consumers’ interest and to supervise the growth & development of the real estate sector. In addition, there will be a dedicated Appellate Tribunal set up for RERAs to hear appeals from orders of the RERAs and the adjudicating officer.

FAQs by Consumers

Q1. How RERA secures consumers’ interest and empowers them?

Ans:

  1. As per the RERA rules, the consumer is entitled to receive information about the sanctioned plan, approved layout plan, stage wise progress of the project, carpet area and facilitation of basic amenities & services such as drinking water, electricity, sanitation etc.
  2. The consumers can claim possession of the unit and the association of consumers can collectively claim possession of the common areas as declared by the real estate developer
  3. In case the real estate developer fails to meet the timeline or does not deliver what was promised then the consumer has the right to claim refund of amount paid with prescribed interest and compensation for the same

Q2. What are the responsibilities of a consumer?

Ans:

  1. It is mandatory for the consumers to make payments on time to the real estate developer as per the agreement. He/she is also liable to pay the share of registration charges, municipal taxes, maintenance charges, ground rent, electricity charges, water supply charges etc.
  2. Once the real estate developer issue the occupancy certificate, the consumer is required to take possession within two months
  3. The consumer is liable to pay prescribed interest if he/she fails to make timely payments for his purchase
  4. It is mandatory for a consumer to actively participate in the formation of an association, a consumer federal or any cooperative society
  5. A consumer must participate towards the registration of the conveyance deed of the unit

Q3. What is an escrow account and what is its use?

Ans: An escrow account is a bank account to which an account holder makes periodic deposits, and permit the bank to withdraw funds to pay for certain fixed obligations. As per RERA regulations, a real estate developer is required to open an escrow account in a government recognized bank. As per the Act, to prevent siphoning or using of funds collected from one project for business expansion, it is mandatory for the developer to deposit 70% of all collections in an escrow account maintained with a scheduled commercial bank. The real estate developer can withdraw the funds solely for the purpose of the construction of the said project in proportion to the stage of work. The request for withdrawal of the funds is to be certified by an engineer, architect or a chartered accountant. This will give relief to the consumers from the pain of project delays and will assure them that their payments to the real estate developer are being used for the development of the project where he/she owns a unit/units.

Q4. How can an aggrieved consumer lodge a complaint in the case of dispute with the real estate developer?

Ans: It is mandatory to set up an Appellate Tribunal by the state government within one year of the commencement of the Act. So, the aggrieved consumer is required to approach the RERA in the case of disputes and the RERA will prescribe penalty or punishment by acknowledging the nature of the violation. If in case the consumer is aggrieved by the decisions of the RERA or an adjudicating officer then he/she can appeal to the Appellate Tribunal. This setup will speed up the process of dispute settlement because it minimizes the involvement of the existing judicial system. Further, if the consumer is not satisfied with the decision of the Appellate Tribunal then he/she can appeal in the High court within 60 days of receiving the decision.

Q5. What happens if there is no Appellate Tribunal established for a particular jurisdiction during the time of appeal?

Ans: In this case, the state Government will appoint any other body as Appellate Tribunal that currently exists to hear the appeals in the interim. If in case the Appellate Tribunal is established during the course of hearing then the particular appeal will be transferred to the same under and will no longer be with the interim body.

Q6. How will the project be completed if the real estate developer is revoked after the registration of the project?

Ans: In the given case the RERA can consult the Government to employ a competent authority to complete the project.

FAQs by Real Estate Developers

Q1. What are the roles and responsibilities of a real estate developer as stated in the Act?

Ans: In order to escalate the responsibility and accountability of real estate developers towards consumers, the RERA has made the following compulsory for them:

  1. It is mandatory for the real estate developer to register the project with the RERA and obtain a valid registration number before proceeding
  2. Any kind of marketing, advertising or selling of units is strictly prohibited before the registration of the project
  3. The real estate developer is required to submit all documents related to the project which is considered necessary by the RERA
  4. The real estate developer must deposit 70% of the payment received from the consumers in an escrow account and ensure that the amount is solely used for the development of the project for which it was taken
  5. Must adhere to the project plan at all times
  6. Refund the money taken from the consumers with an applicable interest in case the project cannot be completed.
  7. Compensate the consumer for the time delay if any
  8. To repair any structural defects in the construction even after 5 years of handover of the project

Q2. What are the documents that are required by a real estate developer while registering a project with the RERA?

Ans: The following documents are required while registering a project with RERA -:

  1. Details of the project such as name, address, type, names and photographs of the promoters etc.
  2. Details of the project already launched by the real estate developer and their status (in the preceding 5 years)
  3. Approval and commencement certificates obtained from the competent authority for each phase of the project separately. This is to the benefit of both consumer who will firmly know that no changes in the particular phase will be further allowed and the real estate developer who will enjoy the flexibility of changing plans for future phases of the entire project
  4. Sanctioned layout plan, the development plan for the project and details of basic facilities being made available like drinking water, electricity etc.
  5. Pro forma of allotment letter, agreement for sale and conveyance deed to be signed with the consumers
  6. Location of the project with clear demarcation of the land for the project
  7. Number, type and carpet areas of units to be sold
  8. The details of open areas if any like terraces, balconies etc.
  9. Details of associated engineers, contractors, architects and intermediaries in the project
  10. A declaration stating that the land of the project is verified &authenticated and the developer has a legal title to it
  11. A written declaration stating that the project will be completed within specified period of time and 70% of the received funds from the consumers will be deposited in a dedicated escrow account and this amount will be used only for that particular project

Q3. Why has the Act mandated the real estate developers to specify the ‘carpet area’ rather than the ‘super built-up area’?

Ans: Carpet area is the net usable area which excludes common areas, balconies, verandas, terraces etc., whereas the super built-up area could be the addition of both. Therefore, to let the consumer know what he/she is paying for, it is mandatory for the real estate developer to specify the carpet area thus enacting a straight forward definition to be adopted across the country.

Q4. What actions will be taken by the RERA after an application has been submitted for project registration?

Ans: Following actions will be taken by the RERA after an application has been submitted for project registration:

  1. The RERA is required to either grant registration or reject the application within 30 days of its submission
  2. On acceptance of application, the real estate developer will be provided with a login id and password to access the RERA portal for the submission of documents and details
  3. If the application is not in conformation with the guidelines then the RERA may reject it after hearing the applicant’s plea

Q5. Is there any validity period for a particular project registration?

Ans: The real estate developer has to specify the project completion time in the RERA application form. Hence, the real estate developer is accountable to follow the timelines otherwise, he will suffer losses/ penalties.

Q6. What counts in the penalties when a real estate developer violates the order of the Appellate Tribunal of the RERA?

Ans: The real estate developer who will violate the order of the appellate Tribunal of the RERA may face imprisonment up to three years with a fine of up to 10% of the total estimated cost of the project in question.

Q7. Can RERA extend the validity of the registration?

Ans: The RERA, under given force majeure events, may extend the validity of the registration:

  1. In the event of a natural calamity like flood, cyclone, drought, fire etc.
  2. In the case of war

However, the developer is still required to make a presentation to the RERA by paying the applicable fee and such extension will be valid for a period of one year in aggregate.

Q8. Will the on-going projects have to be registered as well?

Ans: Yes, if the project in question meets the criterion for registration then the application for the same has to be submitted within 3 months of commencement of the Act.

Q9. I am a real estate developer and my project will be developed in phases? Should I get a single registration or multiple registrations?

Ans: In such cases, every phase will be considered a standalone real estate project and the developer have to obtain registration under this Act for each phase separately.

Q10. Do all projects fall under the radar of RERA? Are there any exceptions?

Ans: Every project measuring more than 500 square meters or more than eight apartments will have to be registered with the RERA.

Q11. On what grounds can RERA revoke a registration?

Ans: Upon receiving a complaint against the real estate developer, the RERA can revoke registration under certain conditions:

  1. If it is satisfied that the real estate developer has not complied with the rules and regulations stated under the Act or rules & regulations
  2. If he has violated the terms & conditions of approval given by competent authority
  3. If he is involved in unfair practices to sell, market or advertise his project

Q12. What is the role of RERA after revocation of registration?

Ans: The roles of RERA after revocation of registration are:

  1. RERA will prohibit promoter from accessing its website for that project, specify his name in list of defaulter, display his photograph on its website and also inform RERAs in other States & Union territories about such revocation or registration
  2. RERA will direct the bank holding the project back account, to freeze the account, and take necessary actions including consequent de-freezing of the said account to facilitate remaining development work in accordance with provisions of section 8
  3. RERA may issue necessary directions to protect interest of allottees

Q13. Does the Joint Venture Agreements where landlord and developer are two different parties but both are beneficiaries of the sale of the project are liable to adhere to the RERA act?

Ans: Yes, both the developers and the landlord or any such party which is the beneficiary of a sale of a project & receive payments from consumers as real estate developers (Promoters) are liable to adhere to the Act.

Q14. How does it affect the real estate developer’s arrangements with the real estate agents, contractors, architect, structural engineers and similar parties?

Ans: As per the government rules, only registered agents are legally allowed to function in the real estate business. Also, the RERA makes it mandatory for a developer to make a declaration about the real estate agents, architects, structural engineers and similar parties to the appellate Tribunal of the RERA.

Q15. What are the norms by RERA on advertisements or promotions of real estate projects?

Ans: The RERA have strict guidelines for the marketing of the projects. As per the rules, anything shown in the marketing material must be same with the final product or else real estate developer will be liable to penalties under the Act. Also, the advertisement or prospectus issued or published by the developer must mention the website address of the authority, where all details of the registered project have been entered along with the registration number obtained from the authority.

Q16. What are the things that a real estate developer need to share with the consumers with regards to the project?

Ans: The real estate developer must share the progress report of the project, receipt of pending approvals and other such declarations which are related to project delivery on a regular basis.

Q17. Can a real estate developer leave the project mid-way by selling to another developer or party?

Ans: Yes, a developer can do so by taking written approval of 2/3rd of project’s consumers and also the prior approval of the RERA. If a consumer or his family holds more than one unit in the project then he/she will be considered as one consumer only.

FAQs by Real Estate Agents or Intermediary

Q1. What are the mandatory rules for the intermediary?

Ans: As per the RERA act, 2016, an intermediary is required to be registered with the RERA and retain a valid registration number before facilitating any real estate deal on the behalf of any real estate developer. He/she is also required to maintain and preserve account logs and other documents as prescribed by the Act. Also, he/she have to facilitate all information and provide any further assistance as prescribed by the Act to the consumer.

Q2. On what grounds RERA can revoke the registration of an intermediary?

Ans: The Act promotes professionalism in conducting real estate business and prompts intermediary to adopt ethical means of dealing with consumers.

Fraud, misrepresentation, breach of any terms & conditions of the Act and any sort of unfair practice can cause the registration to be revoked by RERA after not getting a satisfactory reply from the intermediary.

Q3. What are the penalties an intermediary would face if he fails to adhere to the instructions prescribed by the RERA?

Ans: In case if an intermediary violates the rules prescribed by the RERA, he/she will be liable to a penalty up to 5% of the estimated cost of the unit in question.

Also, the intermediary can face imprisonment up to one year if he/she breaches any orders, decisions or directions given by the Appellate Tribunal.

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