It has been over a year since the Real Estate (Regulation and Development) Act came into effect. The Real Estate Regulatory Authority (RERA), across states, have set into motion the process for achieving transparency and dynamic changes in the real estate sphere for the welfare of homebuyers. There are still many buyers who are pondering over scenarios they might possibly find themselves in, with regards to any legal action against erring developers and so on; while some seek information about their fundamental rights under the act.
Real Estate Expert presents a comprehensive guide.
What are the rights and duties of a buyer?
An allottee, as per Section 2(d), includes a person who acquires the said apartment or plot through transfer or sale, but does not include a person to whom such plot/apartment is given on rent. Under Section 19 of the Real Estate Act, allottees are given the following rights and duties. A buyer or allottee will be entitled to:
✦ Obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information.
✦ Know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities.
✦ Claim the possession of apartment, plot or building. The association of allottees shall be entitled to claim the possession of the common areas.
✦ Claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under the Act.
✦ Have the necessary documents and plans, including that of common areas, after handing over the physical possession of the unit.
A buyer will be responsible for:
✦ Making necessary payments, as specified in the said agreement for sale, at the proper time and place, and shall pay the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any.
✦ Paying interest, at such rate as may be prescribed, for any delay in payment. The interest may be reduced if mutually agreed by promoter and allottee.
✦ participating towards the formation of an association or society or cooperative society of allottees.
✦ Taking physical possession of the property (apartment, plot or building) within two months of receiving the occupancy certificate.
✦ participating in registration of the conveyance deed of property.
What to do in case of disputes with a developer?
An aggrieved buyer can approach the RERA which will prescribe penalty or punishment by acknowledging the nature of the violation. He or she can appeal to The Real Estate Appellate Tribunal, set up by the state government if aggrieved by the decision of RERA. Further, the buyer can appeal in the High court within 60 days of receiving the decision if unhappy with the decision of the Appellate Tribunal.
According to Section 79 of the Act, civil courts are barred from entertaining disputes in respect of matters which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the Act to determine. However, consumer forums (National, State or District) will also be authorised to redress buyers’ grievances. Section 71 proviso permits the complainant to withdraw his complaint as regards matters under sections 12, 14, 18 and 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.
When can a buyer demand a refund?
It is to be noted that under the provisions of RERA, a buyer can demand penalty from developer if the project has been delayed. However, developers would be given one more chance to set a reasonable timeline for the delivery. If the promoter fails to comply yet again, then he will have to pay the penalties, as specified in the law. Buyers can demand refund of payment done for a property if the promoter:
✦ Fails to complete or is unable to give possession of an apartment, plot or building, in accordance with the terms of the sale agreement.
✦ Fails to complete or is unable to give possession of an apartment, plot or building due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason.
When should a buyer pay for the property?
The payment is based on the builder-buyer agreement. However, promoters cannot ask for more than 10 per cent of the project cost before property registration.
What are the procedures for filing a complaint against a developer?
Association of allottees or any voluntary consumer association registered under any law can approach the Real Estate Regulatory Authority or the adjudicating officer to file a complaint. A complaint filed under Section 31 of RERA against promoters, allottees or agents, is required to be in the form prescribed under the respective states’ rules. To initiate a case, the aggrieved party must file an application with necessary details like complainant name, filing complaint against – promoter or agent, relief sought, property information, etc. Some states allow online filing of application.
The fees for filing the complaint, decided by the authority, varies from state to state. The authority may direct that specific matters or issues be heard and decided by a single Bench of either the chairperson or any member of the authority. It will appoint an adjudicating officer for holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard. RERA assures buyers of transparency and fast disposal of cases, and consumers can claim compensation for delayed projects. The application for adjudging compensation will be dealt by the adjudicating officer as expeditiously as possible. The case has to be settled within 60 days from the date of receipt of the application.
What happens in case of violation of provisions of the Act or the authority or Appellate Tribunal orders?
✦ a promoter, who fails to comply with the orders of the Appellate Tribunal, will be liable to a penalty under section 64 for every day of default, which may extend up to ten percent of the estimated project cost or imprisonment for up to three years, or both.
✦ an allottee, who fails to comply with the orders of the Appellate Tribunal, will be liable to a penalty under section 68 for every day of default, which may extend up to ten percent of the plot/apartment cost or imprisonment for up to one year, or both.
✦ the penalty for violating the provisions of the Act is charged for the period during which such default continues. It may cumulatively extend up to five per cent of the plot, apartment or building cost as determined by the concerned state authority.
✦ Imprisonment awarded under the Act can be compounded if authorities decide to do so. The fine payable in lieu of imprisonment needs cannot be more than the highest limit of fine payable for that offence.
✦ If the provisions of the previous builder-buyer agreement violate the provisions of the current Act, both developers and buyers will have to follow the new rules. The rate of interest for violations would be the same as prescribed in the new Act for both parties. However, if they can follow the agreement provisions would if they are not in direct violation.
Where is your money going when you pay fees/penalties?
If the authority is established by the central government, then penalties recovered under the Act are to be deposited in the Consolidated Fund of India. If the authority is established by the state, it must be deposited in the state account. Although, grants received by the authority will be credited to the Real Estate Regulatory Fund.
What about the promoter’s responsibility regarding insurance of a project?
The promoter is required to obtain an insurance of the real estate project, as may be notified by the appropriate government, in respect of title of the land and building as a part of the real estate project; and construction of the real estate project.
What is the ‘escrow account’ and ‘separate account’?
A developer must open an escrow account in a government recognized bank. 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.
According to Section 4(2)(l)(D), seventy per cent of the amount realised by a promoter from buyers, from time to time, shall be deposited in a ‘separate account’ to be maintained in a scheduled bank to cover the cost of construction and the land cost, and shall be used only for that purpose. The account must be self-maintained and is not an ‘escrow account’ requiring the approval of the Authority for withdrawal. The withdrawal of amount from the separate account should be in proportion to the percentage of completion of the project.