Overview
The Real Estate (Regulation and Development) Act, 2016, or RERA, was enacted by the Government of India to regulate the real estate sector and ensure transparency and accountability. Under RERA, all builders, developers, and real estate agents engaged in selling, advertising, or developing residential or commercial properties must register their projects with the respective state RERA authority before marketing or selling them. This registration applies to both ongoing and new real estate projects.
Overview
The Real Estate (Regulation and Development) Act, 2016, or RERA, was enacted by the Government of India to regulate the real estate sector and ensure transparency and accountability. Under RERA, all builders, developers, and real estate agents engaged in selling, advertising, or developing residential or commercial properties must register their projects with the respective state RERA authority before marketing or selling them. This registration applies to both ongoing and new real estate projects.
Benefits of RERA Registration
- Enhanced Transparency: RERA mandates full disclosure of project details, including timelines, layout, and approvals, increasing transparency for buyers.
- Increased Buyer Confidence: RERA registration ensures that developers adhere to regulatory standards, building trust with prospective buyers.
- Standardized Practices: RERA provides a standardized process for handling real estate transactions, reducing discrepancies and disputes.
- Timely Project Delivery: Developers must adhere to timelines specified in the RERA-registered agreement, reducing project delays.
- Accountability for Developers: Developers are held accountable for project quality and timely delivery, with penalties for non-compliance.
Documents required for RERA registration may vary slightly by state, but commonly include:
Project Details:
Plan layout, sanctioned plan, and location details.
Project completion schedule and phases.
Land Title and Legal Documents:
Land ownership documents or title deed.
Encumbrance certificate showing no pending dues or disputes.
Development Approvals:
Copy of project approvals from local authorities.
Commencement certificate for under-construction projects.
Financial Statements:
Audited financial statements of the developer.
Builder’s Profile:
Past project details and developer’s profile, including projects completed in the last five years.
Architect, Engineer, and CA Certifications:
Certificates from architects, engineers, and chartered accountants confirming project details, costs, and timelines.
Agreement Drafts:
Draft copies of sales agreements with buyers.
- Quarterly Updates: Developers must regularly update the project status, including construction progress, approvals, and financial details, on the RERA portal.
- Adherence to Timeline and Budget: Developers are required to adhere to the project timelines and budget declared during registration. Deviations must be reported to RERA and may lead to penalties.
- Escrow Account Maintenance: 70% of the funds collected from buyers must be deposited in an escrow account to ensure they are used solely for project development and land costs.
- Transparent Advertising: All advertisements and marketing materials must display the RERA registration number. Misleading claims or non-compliance can attract fines.
- Project Completion and Occupancy Certificates: Developers must ensure they receive completion and occupancy certificates from local authorities before offering possession to buyers.
- Refund and Compensation Policies: If a developer fails to complete the project on time, buyers have the right to withdraw from the project and claim refunds or receive compensation for delays.
- Yearly Audit and Financial Reporting: Developers must submit annual financial statements to RERA and are subject to audits to ensure compliance with RERA norms.
Penalties for Non-Compliance
- Project Delay Penalty: Developers face fines for failing to complete the project within the declared timeline.
- Misleading Advertising: Non-compliance or misleading advertising can lead to fines up to 5% of the estimated project cost.
- Non-Registration Penalty: Carrying out project activities without RERA registration can attract up to 10% of the project cost as a fine, and even imprisonment for repeat offenses.
- Non-Maintenance of Escrow Account: Misuse of funds in escrow accounts leads to penalties and possible legal action.
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