A BRIEF OF WHAT IS RERA ACT, ITS NEED, AND ITS IMPLICATION

1. REAL ESTATE REGULATORY
AUTHORITY ACT, 2016
C34 : PLANNING LEGISLATION AND PROFESSIONAL PRACTICE

2. CONTEXTUAL INTRODUCTION
Central Law
[Real Estate under
the Purview of the
State and a Subject
of State List]
Implementation
at State Level
State can make amendments before Implementation
Systematic
Approach
Enhanced
Transparency
Safeguard
Buyer Interest
Ensure
Accountability
Timely Project
Completion
Improved
Credibility in
the Long Run
Uniform
Regulations
and Guidelines
WHY RERA?
HOW WILL IT BE IMPLEMENTED?
RERA BILL : 2013
The Bill was Proposed /
Introduced in 2013
RERA ACT : 2016
The bill was passed and it
became and act in March 2016
RERA IMPLEMENTATION : 2017
The act was finally implemented
earlier this year in May 2017
RERA TIMELINE

3. SCOPE OF RERA
 Both residential and commercial real estate projects are covered under the Act.
 The real estate developer needs to register the project with the concerned State RERA Authority
and obtain a valid registration number before starting the project. On non-compliance, despite
the project meeting RERA criteria, the authority can levy a penalty of up to 10% of the project
cost.
 The registration is time bound and valid only for a specified period mentioned in application
form. It is mandatory for the real estate developer to adhere to the specified timelines,
otherwise he/she will be subjected to losses and penalties.
 The Act also applies to on-going (under-construction) projects i.e. the projects and buildings
which haven’t received their occupancy certificate
 The RERA criteria as per the Act is projects on 5000sq.mt. area or with eight flats.

4. RERA ACT CONSTITUTES
•5 Year Warranty for Structural Defects
•Liable to pay equal interests in case of default and
delays
•Bound by Law to refund payments collected in
case client exits, within 45 days
Builder’s
Liability
•Freedom to exit the project at any stage of
construction
•Is not entitles to the booking amount paid to the
builder
•Buyer can terminate the agreement in case of
delays and is entitles to refund
Home Buyers
and Exit
Clause
•Carpet Area – definition of the term and mandated
for the builder to mention Carpet Area
•Escrow Account – separate account for each
project to be used for that specific account only (70
percent)
Definitions
Establishment of State
RERA
Registration and Public
Disclosure of RE Projects
Adherence to Project
Plans (layouts / designs)
Phase-wise Project –
each phase a separate
project
Residents Welfare
Association (based on
units allotted – within 3
months)
Real Estate Agents to
Register with RERA
Advertisement and
Marketing of Projects as
per Actuals
Guidelines for Home
Buyers
ALSO IT LAYS DOWN RULES AND REGULATIONS FOR

5. RERA SIMPLIFIED
Mandatory for builders to register
projects over 5000sq.mt. before
even advertising/launching
Non-compliance will lead to 3 years
of imprisonment (maximum) or fine
up to 10% of project cost
Mandatory for developer to submit
and upload all project details
Only on compliance of these two
will the builder be allowed to
advertise and launch the project
States need to set up a Real Estate
Appellate Tribunals
In case of grievances, the consumer
can go to real estate regulator for
redressal
Provision for Escrow Account has to
be made to ensure diversion on
investors money to other projects is
restricted
Likely stabilize housing prices
Enhanced Activity in the Sector
Improved Supply
It will weed out fly-by-night
operators from the sector and
channelize investment into it
Builder Benefits from Penal Provisions
in Law against defaulting buyers /
allottees and builder can approach
the regulator

6. HOW IT WORKS IN OTHER COUNTRIES
UNITED STATES
Real estate in the US is regulated at numerous levels. There is no single regulatory body, but a series of bodies
that regulate different ownership and usage aspects. To safeguard the interest of the end-users, the US
department of housing and urban development (HUD) has rules under the real estate settlement procedures
act to protect consumer interests pertaining to residential properties. If a buyer enters a contract with the
developer, and the developer does not deliver on the terms agreed upon in the contract, the developer
can be taken to court for breach of contract. In the US, there are state real estate licensing laws and a
code of ethics in place.
UNITED KINGDOM
There is no regulator to monitor development. The financial services authority (FSA), which is now part of the
Bank of England, regulates almost all investments in real estate. The Property Misdescriptions Act, 1991,
prohibits making false or misleading statements on property matters in the course of estate agency business
and the property development business.
(Source: Realty decoded: Investing across borders by Ernst & Young and Ficci)

7. ALL THINGS GOOD…
 All approvals need to
be taken prior to the
project launch
 For any structural
changes, post the
project start, consent
from 2/3rd of the buyers
is required
 Compulsory defect
liability period of 5
years
 In case of delayed
possession, builder is
liable to pay 2% interest
above SBI lending rate
The good news: India’s cabinet has cleared a much-delayed real
estate regulation Bill that is expected to help consumers move
towards an accountable, transparent and fair deals in a sector
notorious for delays, short-changing, overpricing and worse
- Narayanan Madhavan, Hindustan Times, New Delhi
RERA is good for small time developers because it has reduced the
differences between a branded established builder and a builder
like (us)… with the supporting body for the customers.
- Karunesh Jain, owner of a small construction firm in Maharashtra
SINGLE WINDOW CLEARANCES FOR
PROJECTS
DIGITIZATION OF RECORDS
DEVELOPER GRADING TO RESULT IN
QUALITY MAINTENANCE
EQUALITY AMONG BUYERS AND
BUILDERS FOR DELAYS IN DELIVERANCE

8. AND NOT SO GOOD…
The bad news: It still leaves room open for unforeseen problems of the
kind we have witnessed this year in the floods that have ravaged
Chennai.
- Narayanan Madhavan, Hindustan Times, New Delhi
Non-integration between approving bodies and Ministry of Environment and
Forest and National Green Tribunal leading to unforeseen issues of non-
possessable housing because of clash in the decisions of both the parties
The fact that real estate industry is treated in isolation from larger urban issues
which include provision of clean and fresh water and air, traffic congestion and
cleanliness because of which controversy arises between environmental
approvals and real estate decisions
RERA Act applies to projects above 5000sq.mt. i.e. there is no regulation in place
for projects smaller than that
If there is any delay in approval by government agencies for any reason, the
builder will have to face heavy losses
EVEN THOUGH RERA ACT
CLAIMS TO BE BENEFICIAL
FOR BOTH BUYER AND THE
DEVELOPER BY BRINGING
IN EQUALITY IN TERMS OF
FINES FOR NON-
DELIVERANCE, THE ACT IS
HEAVILY PITTED AGAINST
THE BUYERS WHILE
FAVOURING THE
CONSUMERS TO NO END –
THUS ONLY A PARTIAL
ACCEPTANCE OF THE ACT
IS BEING OBSERVED

9. CONCLUDING REMARKS
Srikanth Reddy, in his article: Real Estate Regulations &
Development Act (RERA) | Key points & Review (published on 8th
May 2017), explains this point with the example of regulation for
inclusion of ongoing projects in the scope of RERA. But state
government of Uttar Pradesh has modified this rule and added
few exclusions in their respective State RERA (U.P. govt approved
State RERA on 27th Oct, 2016). So, it really depends on how the
States are interpreting and forming the rules for their respective
state
RERA Act is looking to bring some organization, transparency and fairness into the highly unorganized real
estate sector. But whether it accomplishes that or not, depends on how the state government adopts the Act as
it is allowed to modify the Act because of land being a state matter.
And thus, a bigger question emerges:
“Whether India is really ‘READY’ for the Real Estate Law and its Implementation”

10. REFERENCES
 http://www.freepressjournal.in/india/rera-all-you-need-to-know-about-the-real-estate-
act/1055591
 http://www.financialexpress.com/money/rera-act-2017-10-things-to-keep-in-mind-while-buying-
a-home/752112/
 https://www.relakhs.com/real-estate-act-rera-key-points-review/
 http://www.hindustantimes.com/business-news/real-estate-act-comes-into-effect-all-you-need-
to-know-about-new-law/story-V6S6PyVhwYCzT1TwRpkYiM.html
 http://www.hindustantimes.com/india/the-pros-and-cons-of-the-real-estate-regulation-bill/story-
GIocvfKJrJazrTVI2642fK.html
 http://www.worldblaze.in/advantages-and-disadvantages-of-real-estate-regulator-bill-rera/

11. PREPARED AND PRESENTED BY:
KHYATI GULATI TEWARI
SUBMITTED TO:
ASST. PROF. SHREYA DALWADI
FIRST SEMESTER || MURP II