How RERA Act protects the dreams of first-time home buyers
Most of us look forward to the day we can finally own our dream homes. Yet, it can be intimidating for first time home buyers since it is a big financial decision. This is especially true for those who have moved to the cities from other towns and villages, to invest in big real estate projects can seem a bit daunting.
To address this issue, the central government in 2016 passed the Real Estate (Regulation and Development) Act. This has empowered home buyers to pursue legal action if they have any grievances regarding their home purchase in real estate projects. With better regulations, first time home buyers can be assured that their investment is safe.
Here are some of the benefits of RERA for first time home buyers:
Transparency in real estate:
One of the major obstacles for first-time owners looking to invest in real estate was the lack of transparency and clarity in the ecosystem. Earlier when builders reneged on promised deliverables, home-owners were left without options. Some buildings also had incomplete registrations and property documentation and other issues that put a lot of first-time homebuyers in doubt.
RERA is designed to safeguard these homebuyers from such practices. Now it is mandatory for all real estate projects to be registered with the Regulator, even if it is a residential project. Moreover, builders have to share detailed information at every stage with the customer, so any deviation from the promised schedule is immediately brought to notice. The main goal of the act is to bring accountability of the builder/ developer to individual homeowners.
RERA also safeguards against major structural changes in the real estate project against what has been promised to the buyers.
Strict Guidelines and Regulations:
One of the major customer complaints was that there was no proper regulatory authority for real estate customers. There was no statutory authority to oversee the developers who would demand more and more funds in the name of expansion and faster development. RERA’s deployment in every state and union territory means that there will be redressal forums in the nearest capital for any real estate disputes.
The RERA Authority expressly forbids developers from taking more than 10% of the project price as a downpayment or as a booking advance unless there is a registered sale agreement. This is another necessary safeguard for first-time homebuyers against future harassment. There are stringent rules that every real estate project with more than 8 apartments has to be registered with that state’s RERA Authority.
Standardised Sale Agreements:
There have been instances of builders fraudulently inserting fake clauses against homebuyers. This is why RERA makes it compulsory to follow a standard sale agreement between promoters and homebuyers.
The RERA Act ensures that developers will deposit at least 70% of the funds collected for a real estate project in a single account. They will be allowed to access these funds only towards the costs of that particular project and nothing else. This landmark judgement will prevent real estate developers from diverting the project funds for any reasons other than for the benefit of those who have invested in the project.
Real estate developers will have to update their project details including approvals from other government authorities, information about the land on which the project is being developed, layout plans, etc. Wherever there is a discrepancy between what was promised and what was delivered, the homebuyer is entitled to a full refund of the amount paid in advance.
All the information is to be submitted to the RERA authority who will make it available on the RERA website. The developers and the promoters have to make periodic submissions to the authorities regarding the progress of the project.
RERA makes the promoter/ developer responsible for the homebuyers’
title and interest on the land. If there is any defect in the land title, the promoter is directly liable to the homeowner. The RERA Act also makes it mandatory for promoters to obtain insurance against the title and construction of the projects, whose proceeds will go to the allottee upon the sale agreement’s execution.
There is a Defect Liability period of five years and the maximum period for rectifications in case of defects is 30 days.
This landmark regulation Act restores homeowners right to fair redressals in the real estate sector. This is why it’s a wonderful time for professionals to invest in buying their own homes as they grow their careers and personal lives.