The model builder-buyer pact
- Recently, the Supreme Court stepped in to protect homebuyers from exploitation by builders who delay transfer of possession and often redraft delivery schedules.
- The petition cited that the Real Estate Regulatory Authority (RERA) Act of 2016 had hardly been implemented.
- The petitioner drew court’s attention to Section 41 and 42 of the RERA.
Real Estate Regulatory Authority (RERA) Act of 2016
- RERA, 2016 is a central legislation which aims to regulate the real estate sector. It seeks to empower and protect property consumers and make transactions fair and transparent.
- The RERA Act was enacted under Entry 6 and 7 (dealing with contracts and the transfer of property) of the Concurrent List of the Constitution of India
- Enacted in March 2016, RERA came into effect from May 2017
Objectives of RERA
- Enhance transparency and accountability in real estate and housing transactions.
- Boost domestic and foreign investment in the real estate sector.
- Provide a uniform regulatory environment to ensure speedy adjudication of disputes.
- Promote orderly growth through efficient project execution and standardization.
- Offer a single-window system of clearance for real estate projects.
- Empower and protect the rights of home buyers.
- Timely delivery of flats
- Furnishing of accurate project details
- Specifying carpet area: Generally, builders sell flats on the basis of built-in area, which includes a common passage area, stairs and other spaces which are 20-30% more than the actual flat area.
- All clearances are mandatory before beginning a project: Builders often attract buyers with huge discounts and pre-launch offers. And, the buyer, enticed by the offers, does not bother about the clearance.
- Each project should have a separate bank account: Developers raise funds through pre-launch offers and use them to purchase some other land or invest it in other projects.
- After-sales service: As per an interesting clause in the Act, if the buyer finds any structural deficiency in the development of the building, the buyer can contact the builder for after-sales service.
- Past real estate projects not included
- Only new projects are covered by the Act.
- Delay from government agencies
- No compulsory regulation for projects less than 500 square meters:
- New project launches expected to be delayed:
- State governments regulated real estate before RERA as land and land improvement are in the State List of the Seventh Schedule of the Constitution.
- RERA has been enacted under the Concurrent List.
- This has increased the tussle between various states and centers over the implementation of RERA.