Buying home is one of the most important part of a home buyer’s life especially when an individual’s lifetime hard-earned money is involved. In order to safeguard the rights and money of the homebuyers, the Government has launched two key measures namely RERA and Insolvency and Bankruptcy Code.
While Insolvency and Bankruptcy Code (IBC) is a one-stop solution for resolving insolvencies in the real estate sector in the later stages, the Real Estate (Regulation and Development) Act (RERA) was established in 2016 to protect home-buyers as well as to help boost investments in the real estate industry.
Today more than 30,000 realty projects and 25,000 agents across the country have been registered under RERA, thus helping home buyers to take a wise decision while purchasing a property. So, here are six RERA rules which a homebuyer must adhere while planning to buy a flat:
Understanding the Importance of RERA
Established in 2016, RERA led to the formation of Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. Apart from it, this act also helps in safeguarding the monetary interests of homebuyers which were not that strong before its establishment.
Projects must be registered under RERA
RERA mandates all the real estate projects, whether commercial or residential, larger than 500 sq mtr to register under the Act governed by their respective states. This goes without saying that the registration under RERA will need all the necessary documentation, clearances and approvals. No project, therefore, will come in the market, unless it is in compliance with all the legalities.
Till date, more than 30,000 real estate projects have been registered under the act. In case of non-registration of a project, builders will have to pay 10 percent of the project cost as a penalty.
Mandatory Escrow accounts
The act has mandated real estate developers to maintain separate escrow accounts for each of their projects in order to resolve the long-standing issue of fund diversion. Under this, developer has to deposit at least 70 percent of the total amount collected from the property buyers of the project in that separate account and that amount has to be used only for the purpose of payment of land cost and construction.
Full information on Real estate projects
Under the act, it is mandatory for builders to provide set of additional details at the start of the project. These details include types of buildings to be sold, blueprints and maps, payment schedules and details of each and every promoter of the project and a quarterly report on the status of the project.
RERA also helps in protecting the rights of home buyers in cases when a developer fails to deliver their projects on time. For example, the developer has to pay mentioned rate of interest to the home buyer as written in the ‘agreement of sale’.
Faster money refund
It’s an important rule of the act which a home buyer must know and that is also helpful to them. In this case, if a builder fails to deliver the flat as per the date mentioned on the ‘Agreement of Sale’, they have the right to claim refund along with interest as mentioned. Many a time, a promoter or builder may have his license cancelled.