Why was RERA introduced

Housing is one of the basic needs of humans. Among other basic human rights such as, safety, education, food and social security, it is also necessary that focus be put on providing a safe, secure and adequate housing facilities. With the same approach the right of housing has been recognized as a right of an individual under the international human rights law. The same right has been recognized by the Supreme Court of India in various cases as a part of the right to life under Article 21 of the Constitution of India.

In India various concerns have been raised from time to time addressing the problem of poor housing facilities. The major problems that have been seen in matters relating to housing problems are 

1. Forced Evictions 

2. Violations of pro poor housing provisions within the Master Plan 

3. Legal, administrative and policy barriers to the right to adequate housing 

4. Impact of globalization on the housing situation of the urban poor. 

The Supreme Court has subsequently come forward to address these problems and to provide the consumers with a remedy, to ensure their protection of the right of adequate housing. 

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What is the scope under which the consumer protection act can be applied to a dealing of Real Estate? What were the problems faced under such dealing while RERA was not introduced?

The Consumer Protection Act in Indian Kanoon is one such act that includes real estate in its purview, when it comes to transaction of a service. Housing has been covered under the ambit of ‘service’ under this act and not under ‘goods, which meant that the rights that the consumer had with respect to damages against goods were not available under the act while dealing with real estate.

Housing being a service excused the seller from giving warranty thus, making the consumer responsible for anything that happens after sale. These lacunas made it easier for the builders and private real estate dealers to misguide/mislead the consumers. The consumers also had to face problems regarding the construction of the buildings and houses because the builders were able to easily able to take advantage of the ‘not-so-stringent’ laws with respect to the real estate sector. The consumers were being faced with a lot of unfair and one-sided conditions left in the terms of contract in dealings of the property. The consumers were also unable to procure complete information or even enforce accountability against erring developers in the absence of an effective mechanism. Thus, the need for a legislation to regulate Real Estate Sector was felt badly for establishing an effective mechanism to enforce accountability against the Real Estate Sector and providing expeditious adjudication machinery, which ultimately led to passing of “Real Estate (Regulation and Development) Act, 2016”.

What were the objects with which the Real Estate (Regulation and Development) Act (RERA) was introduced? How has RERA made a difference in the dealing of Real Estate?

The Real Estate Regulation (and development) Act was introduced in the year 2016 by the Indian government with a vision to provide transparency and accountability. The main objective behind it was to provide relief to the buyers from the mistreatment of unfair builders. The act imposes obligations and responsibilities over the builders and sellers when it comes to the construction and transaction of real estate in the country. 

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Some of the rules and regulations that RERA defines to regulate the real estate transactions are:

1.  Standardized carpet area

2. Rate of interest

3.  Reduce the risk of builder insolvency and bankruptcy

4. Right of the buyer in case of false promise

5. Advance payments

6. Rights in favour of buyers in case of defects after possessions, delay in possession, defect in title, buyer shall be entitled to get all information related to the project, its plan out, execution, stage wise completion status and so on.

7. Establishment of authority for grievance redressal.

RERA covers under its ambit, all the commercial and residential projects of real estate. It binds under its regulations the Builders, the Sellers and the Promoters.  This creates a narrower opportunity for them to harass the consumer by implementing rules and obligations.  The scope also extends to any renovation/ re-development plan which is assumed to be promoted, sold or rented at any point after.

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RERA has established a reasonable part to facilitate the consumers. It has limited the amount which the seller can demand as advance to 10% of the cost of the estate under contract. It has made a mandate for projects over 500 sq. mtrs. or 8 apartments to be registered under RERA to even be promoted. The act also binds the constructors by implying a mandate for the registration of the property within a specified time. Failing this will lead to the loss of the project for that constructor or promoter. In addition to this, the establishing of a regulatory authority namely, Real Estate Regulatory Authority, has also been legislated under the act. The authority is responsible for handling matters that concerns the breach of contracts under the real estate transaction, and to provide any damages that the buyer has suffered as a result of non-compliance of the seller with the regulation given under this act.

Redressal for matters of Real Estate

While the consumers face a lot of confusion as to where should they present their complaints that relating to the real estate contracts. Post the introduction of RERA, the Reals Estate regulatory authority handles matters with this respect.

A consumer may also approach the consumer court in specific conditions. The level of the consumer court to be approached shall be decided upon the pecuniary jurisdiction as applicable to all the matters of consumer courts. The situations where the consumer court shall have jurisdiction to decide on real estate matters include:

1.  Construction and maintenance defects

2.  Escalation clause problems

3.  Misuse of common areas

4.  Delay compensation charges

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CONCLUSION

The Real Estate Regulation Act has introduced the market for Real Estate dealings, to a new set of rules and guidelines that limit the dealer and brokers to fairly performing the contracts. The statement of objects of the act makes it clear the importance that the real estate industry holds in fulfilling the housing and infrastructure needs and demands of the society. Even though the Consumer Protection Act of 1986, provides for the transactions of real estate, it failed to cater to the details of the immovable property that form a major part of such contracts. The Real Estate regulation act brought to light these details and further bound the sellers with specific obligations. It also facilitated the consumers in securing their investment in real estate by providing for rights and setting up of the regulatory authority to look after the fairness of transactions.

The only aspect that o feel has not been dealt with in the real estate regulation is with regard to the transaction of the immovable property that already existed prior to the introduction of this act. Does this aspect still come under the consumer protection act or does any other statue regulate such transaction?

The author of this blog is Adv. Uday Bedi having an experience of 4+ years in handling Property or documentation related matters from his experience he wants to share this beneficial information for the individuals having any issues with respect to property related matters.

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