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The RERA was enforced to ensure efficiency and transparency in the real estate sector and provide a speedy redressal mechanism for protection of the interest of consumers. The act adds in addition to the existing laws such as the Maharashtra Ownership of Flats Act, 1963 (MOFA), Indian Contract Act, 1827 and Specific Relief Act, 1908.
The act defines a promoter in a wide approach. It basically covers any person who develops or is associated with the development of a real estate project for commercial benefit. The person can be a builder, contractor, estate developer, coloniser etc..
The Real Estate (Regulation and Development) Act,2016 (RERA) bill was passed by Rajya Sabha on 10 March 2016 and by the Lok Sabha on March 15, 2016. The act came into force on May 1, 2016. The Bill was passed to overcome the difficulties faced by the home buyers and promote the investments in the real estate sector. Therefore to promote equal and fair dealings in the primary market between the the buyer and seller and reduce the real estate transactions to majorly favour the developers, the government enacted this law.
Objective of RERA:
The main objective of RERA is to fill up the faith of the buyers again in the real estate and bring more clarity and transparency in dealings. By establishing the real estate authority it aims to secure the rights of the buyers.
Further, it aims at increasing the trustworthiness of the developers, promoters, brokers and agents which will avoid delays in completion of a project and compensate soon if they cross the deadline. It establishes a Appellant System for Grievance Redressal which gives the penalties for the defaulters
Scope of RERA:
This act has an enlarged scope and a wide reach. It encompasses all the new as well as ongoing projects that is under construction projects and it also includes both the residential and commercial buildings. The brokers and agents are also covered by this Act.
As the main motive is ease to the home buyers, hence every state is required to set up an Appellate Tribunal for addressing the grievances of the homebuyers.
The builders have to register with the Tribunal before the commencement of the project. The registration makes it compulsory for the builders to disclose the details of the project and the deadline for the completion of the project and if the deadline is not met, the builders have to face the penalties and criminal charges.
Before the Act the builders used to divert the funds of the present project to start a new project because of which delay occurred in the completion of individual project. But now, the builders must deposit 70% of the fund in a different account so that it is only used for the allotted project and not diverted to others.
Current status:
The Act has been flawlessly built and if followed strictly it will change the focus of the real estate business from favouring developers to establishing a equilibrium of interests of the buyers and sellers. But non-compliance of the rules by some of the states and the developers, it becomes very difficult to fulfil the exact purpose of RERA.
Presently, Out of all the states in the country (excluding Jammu and Kashmir), 15 states have not yet set up websites with information regarding the status of real estate projects. The operational status of it varies in different states even though it was enacted long back.
After a poll conducted by Magicbricks, that about 74% of buyers are still not aware that, under the regulations they are required to check if the project has been registered with the RERA or not. In states like Maharashtra, websites have been set up and are working effectively and in Harayana builders have to physically go to the RERA offices to verify their registration and the status of their projects.
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