People generally put in their life long savings to build a house. In past, the real estate market was dictated by terms and conditions formulated by the builders or promoters. To the property buyer’s plight, there were no norms, and hence, all the agreements were made favoring the builders. RERA (Real Estate Regulations Act) was introduced for protecting and safeguarding the interest of the property buyers. The intent was to ensure that property buyers were not exploited at the hands of the developers or builders.
As per the provisions of the Act, all ongoing and upcoming projects must be registered with RERA mandatorily. All projects which are under process or which await issuance of completion certificate as on May 1st, 2019 would fall under the purview of this Real Estate Act. The benefits which would accrue to the property buyers due to implementation of the new provisions of this Act have been discussed below.
The Act subjects both the builder/developer and the buyer to the same rates of interest payable in case of defaults. If the buyer defaults in making timely payments or the builder defaults in handing over possession of the property on time, both of them would be liable to pay interest to the other party at the same rate of interest. Before RERA came into the picture the buyer was liable to far higher rates in the event of delay of payments while the builder enjoyed delays in giving out possessions with minimal penalties. Thus your PNB Home Loan is more transparent than before.
This is one of the biggest advantages of RERA coming into picture. The developer is responsible for sharing all the relevant information with the buyers. These details would include:
Stage wise completion status
Status of competition
Government approvals related information
All the other important details
Property prices are corresponding to their carpet areas. RERA has introduced a standardized definition of carpet area thereby eliminating chances of any manipulation on this front. In absence of any defined guidelines, developers and builders had devised their own mechanisms of measuring carpet area, and hence property valuations were inflated which used to act against the interest of property buyers. With standardizations coming in, builders will not be in a position to cheat innocent buyers. Besides, you also enjoy more leverage in choosing the Best Home Loan.
Before the RERA Act came into the picture, it was normal for developers to use funds raised for one project for another project as per their discretion. This used to result in funds deficit for completion of projects for which payments were actually received. The property buyers used to face harassment and delay in possession because the builders used to run short of funds and go paupers.
As per new RERA rules, a builder will have to keep 70% of the funds received for any project in a separate Escrow Account and the usage of these funds would be restricted for purposes of the property for which the payment has been made. This provision would ensure that funds raised for one project are not used in any other project by the builder and utilization of proceeds is made for the correct purpose only. This would also facilitate the timely completion of projects.
A builder cannot demand more than 10% of the total cost of the villa or apartment as application money or advance before an agreement for sale is entered into.
In case there is a gap encountered between the commitments made by the builder with regard to the property and the actual delivery, the property buyer would be entitled to refund of full amount paid till that time. The buyer may also claim interest or compensation depending on the prevalent circumstances.
As per the provisions of this Act, the buyer would be entitled to rectification of defects free of cost if he encounters any of the below mentioned defects within a period of 5 years from the date of handover of possession.
Defect in quality, service or provision
Further such defects would have to be rectified within a period of 30 days once they are detected. The buyer can claim compensation if the builder fails to carry out the repairs properly within the stipulated time.
In event of delay in handing over possession of a property at the due date, the buyer shall be in a position to exercise any of the below options.
He may decide to continue with the project till completion thereof. In such a scenario he would be entitled to interest from the due date of completion to the actual date of completion of the property. He would also be able to claim compensation from the developer.
Optionally he may want to withdraw from the project. In such a case he would be entitled to full refund along with interest from the due date of completion to the date of refund.
After possession, if the buyer detects that there is a defect in title of the property, he is in a position to claim compensation from the developer. This is not even “barred by limitation”, which would ideally mean no capping on the time frame within which such claim has to be made.
If property buyers have any grievances against the builder, they may approach the state authority which is set up under RERA. This is powerful body capable of taking actions and calls. In case the buyer is not satisfied by their order, they may exercise the option of approaching the Appellate Tribunal which would have to offer redressal within 60 days ad record reasons in case they are unable to do so.
If the buyer is not satisfied with the decision of the Appellate authority, he may further appeal to them. However, the appeal would be heard only after deposition of,
Or a higher percentage as determined by the Appellate Tribunal.
Or total amount to the allottee, including interest and compensation if any.
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