The Supreme Court has upheld orders of a state consumer commission and the national consumer commission.The commission had asked the developer to refund the payment with interest to a homebuyer for over seven years delay in handing over possession of the flat.The court said a buyer cannot be required to wait indefinitely for possession of his house.
The Supreme Court verdict was welcomed by an association of home buyers called Fight for RERA.Earlier,government had enacted the Real Estate (Regulation and Development) Act in 2016.RERA came into effect from May 2017.
The Real Estate (Regulation and Development) Act,2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry.The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal.
The act makes it mandatory for all builders who are developing a project where the land exceeds 500 square metre to register with RERA before launching or even advertising their project.
The developers needs to keep 70% of the money collected from a buyer in escrow account to meet the construction cost of the project.An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.
The act provides for an Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.Further,the act says that both promoter and buyers are liable to pay equal rate of interest in case of any default from either side.