News: The Tamil Nadu Real Estate Appellate Tribunal (TNREAT) has upheld a ruling by the Tamil Nadu Real Estate Regulatory Authority (TNRERA) that projects such as SEZ and estates involving sale of industrial plots to investors come under the purview of the Real Estate Regulatory Authority (RERA) Act.
About Real Estate (Regulation and Development) Act (RERA)
- RERA is a Central Legislation that seeks to regulate the real estate sector. It seeks to empower and protect property consumers and make transactions fair and transparent. Further, it also aims to boost investment in the Real Estate sector.
- The RERA Act was enacted under Entry 6 and 7 (dealing with contracts and the transfer of property) of the Concurrent List of the Constitution of India.
- Objectives of RERA:
- Enhance transparency and accountability in real estate and housing transactions
- Provide uniform regulatory environment for fast-track dispute regulation
- Promote orderly growth through efficient project execution and standardization
- Offer single window system of clearance for real estate projects
- Protect the interest of consumers
- Boost domestic and foreign investment in the real estate sector
Salient Features of RERA:
- Applicability: The Act is applicable to all real estate projects where:
- The area of the land proposed to be developed exceeds 500 sq. meters or
- The number of apartments proposed to be developed exceeds 8, inclusive all the phases
- Bodies to be established: The Act proposes to establish three agencies. They are:
- Real Estate Regulatory Authority (RERA): The Act provides for the concerned government to establish more than one RERA in each state or UT
- Real Estate Appellant Tribunal: Decisions, directions and orders of RERAs can be appealed in these tribunals.
- Central Advisory Council: The Act provides a discretionary power to Central Government to establish a council. The function of the council would be to advise and recommend the Central Government on the growth and development of the real estate sector and implementation of the provisions of the Act
- Registration: The Act makes registration of the following mandatory:
- Real Estate projects: All projects with plot size of minimum 500 sq.mt or eight apartments (both commercial and residential). Further, all the details of a proposed real estate project which is approved by the Authority are made available for on public portal for public access.
- Real Estate agents: The Act makes it mandatory for all real estate agents to get themselves registered with RERA before facilitating sale/purchase of any real estate
- Deposits: Developers needs to keep 70% of the money collected from a buyer in escrow account to meet the construction cost of the project.
- Liability: The promoter has to rectify any structural defect or any other defect in workmanship, quality or provision of service as per the agreement for sale relating to such development occurring within five years from the date of handing over possession to the consumer
- Cap on Advance Payments: A promoter cannot accept more than 10% of the cost of the plot, apartment or building as an advance payment or an application fee from a person without first entering into an agreement for sale
- Penal interest in case of default: Both promoter and buyer are liable to pay equal rate of interest in case of any default from either side
- Carpet Area: The Act mandates that a promoter can only sell the projects on the criterion i.e. ‘the carpet area’- net usable floor area of an apartment.Buyers will be charged for the carpet area and not super built-up area.
- Punishment: 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