The Real Estate (Regulation and Development) Act, commonly known as RERA, is an important law in India that was created to regulate the real estate industry. It was passed by the Indian government in 2016 and came into effect on May 1, 2017. The purpose of RERA is to protect people who want to buy homes and make the real estate sector more transparent and accountable.
RERA sets up Real Estate Regulatory Authorities (RERAs) in each state to oversee the real estate sector. These authorities are responsible for making sure that developers, promoters and real estate agents follow the rules of the Act.
Developers or promoters of real estate projects need to register them with the RERA if the projects are above a certain size. This applies to both residential and commercial projects. The developers must provide detailed information about the projects, such as plans, approvals, land status, completion schedule and financial details.
Key aspects from the Builder’s perspective
Here are some key aspects from a builder’s perspective:
Registration Requirement
Builders need to register their real estate projects with the respective state’s Real Estate Regulatory Authority (RERA). This registration is mandatory for projects that exceed a certain size or number of units, as specified by the state government. It is essential to ensure compliance with the Act.
Compliance with Regulations
Builders must follow the guidelines and regulations set by RERA. These include providing accurate and complete information about the project, maintaining financial discipline, obtaining necessary approvals and clearances and delivering the project within the promised timeframe.
Financial Transparency
As per RERA, builders need to maintain a separate escrow account for each project. They are required to deposit a certain percentage of the project’s cost into this account. This measure ensures that the funds collected from homebuyers are utilized only for that specific project and are not diverted elsewhere. This promotes financial transparency and helps prevent delays caused by mismanagement of funds.
Promoter’s Responsibilities
Builders, as promoters of the project, are accountable for the accuracy of information provided to homebuyers. They must disclose details about the project, including layout plans, approvals, land status, schedule of completion and financial information. Any changes or alterations made during the construction process must be communicated and approved by the homebuyers.
Builder Eligibility for RERA Registration
To be eligible for RERA registration, builders must fulfill certain criteria, which may vary slightly across states. Generally, the eligibility requirements include:
Legal Entity
Builders need to be registered as a legal entity, such as a partnership firm, company or society, before applying for RERA registration.
Clear Title
The builder must have a clear and marketable title to the land on which the project is being developed.
Financial Stability
Builders must demonstrate their financial stability and capability to complete the project. This may include providing audited financial statements or other financial documents as specified by the state’s RERA.
Track Record
Builders may be required to provide information about their previous projects, including completion status, delivery timelines and any legal disputes or complaints filed against them.
These are the main points to be considered for RERE registration eligibility for builders, these may vary from State to state, but the above-shared points will remain the same.
How can a Builder Register for RERA?
The process for RERA registration may vary from state to state, but generally, it involves the following steps:
Documentation
Builders need to gather and prepare the necessary documents, including project details, financial statements, legal entity registration documents and other required information as per the state’s RERA rules.
Online Application
Builders are typically required to submit an online application through the state’s RERA portal. The application form may require details about the project, promoter, land ownership, financials and other relevant information. Website details are also given at the end of this article.
Payment of Fees
Builders need to pay the registration fees as specified by the state’s RERA. The fee amount is typically based on the size and nature of the project.
Verification and Approval
The RERA authorities review the application and supporting documents. They may visit the project site and verify the information provided. Upon satisfactory verification, the RERA registration is granted and a unique registration number is issued to the project.
These are the points, if you kept them in mind, you can be able to register your RERA application without any hassle.
What is RERA Certificate and how to get RERA Certificate?
The RERA certificate is an acknowledgment or proof of registration granted by the respective state’s RERA authority. The registration process for Rera is already shared above. It serves as evidence that the project and the builder are compliant with the provisions of the RERA Act. The certificate typically includes the project details, registration number, validity period and other relevant.
To get the RERA Certificate, please register yourself on the relative state RERA website by following the above-shared registration process. After submitting your application, If your Registration got approved then you will get your RERA certificate.
Documents Required to Register under RERA Act
The documents required for registration under the Real Estate (Regulation and Development) Act or RERA may vary slightly from state to state. However, here are the commonly required documents for RERA registration:
Promoter Identity Details:
- Identity proof of the promoter(s), such as PAN card, Aadhaar card or passport.
- Address proof of the promoter(s), such as an Aadhaar card, passport or utility bills.
- Certificate of incorporation or partnership deed, depending on the legal entity of the promoter(s).
- In the case of a company Memorandum of Association (MOA) and Articles of Association (AOA).
Project Details:
- Project layout plan, including the total area, number of units and unit-wise details.
- Development plan and floor plans of the project.
- Details of land ownership or lease agreement.
- Encumbrance certificate to establish the absence of any legal disputes on the land.
- Building and layout approval plans obtained from the competent authorities.
- Environmental clearance, if applicable.
- Commencement certificate obtained from the local development authority.
Builder Financial Details:
- Audited financial statements of the promoter(s) for the last three years.
- Sources of funding for the project, including loans, own capital or any other investments.
- Details of the separate escrow account where funds collected from homebuyers will be deposited.
Project Timeline and Completion:
- Schedule of completion for the project, including timelines for each phase.
- Details of the stage-wise completion of the project.
- Any proposed extensions or modifications in the project timeline.
Legal and Compliance:
- Self-declaration by the promoter(s) stating that there are no pending legal cases or disputes related to the project.
- Details of any past or ongoing litigation involving the promoter(s).
Other Documents:
- Details of real estate agents, if any, associated with the project.
- Declaration of the carpet area and saleable area for each unit.
- Consent letters from the architect, engineer and other professionals involved in the project.
It is important to note that the specific documents required may vary based on the state’s RERA rules and regulations. Builders should refer to the respective state’s RERA website or consult with legal experts to ensure compliance with the specific documentation requirements.
What is an Escrow account in RERA?
In RERA, an escrow account refers to a dedicated bank account that builders are required to establish for each real estate project. The purpose of the escrow account is to ensure financial transparency and protect the interests of homebuyers.
Here are the key aspects of the escrow account in RERA:
Project Specific Account
Builders must open a separate escrow account for each project registered under RERA. The account is specifically designated for that particular project and cannot be used for any other purpose.
Fund Collection and Utilization
The escrow account serves as a repository for the funds collected from homebuyers for that project. Builders are prohibited from diverting or misusing these funds for any other project or personal use.
Controlled Withdrawals
Withdrawals from the escrow account can only be made for purposes related to the construction and development of the project. These may include land acquisition, payment to contractors and suppliers, and other project-related expenses.
Percentage Allocation
RERA specifies that builders must deposit a certain percentage of the project’s total cost into the escrow account. The exact percentage may vary between states, but it is typically a substantial portion of the project’s funds.
Financial Audits
Builders are required to conduct periodic financial audits of the escrow account by a qualified chartered accountant. The audit reports provide transparency and reassurance that the funds are being utilized appropriately.
Homebuyer Protection
The establishment of an escrow account helps protect the interests of homebuyers. It ensures that their funds are secure and can only be utilized for the development of the specific project they have invested in.
Regulatory Oversight
The regulatory authorities, such as the state’s RERA authority, have the power to monitor and inspect the escrow accounts to ensure compliance with the Act’s provisions. This helps prevent fund diversion and promotes financial discipline.
It acts as a mechanism to ensure that the funds collected from homebuyers are utilized solely for the development and completion of the registered project, enhancing accountability and protecting the interests of all stakeholders involved.
Penalties and Consequences to Builders under RERA Act.
The Real Estate (Regulation and Development) Act or RERA, imposes penalties on builders for non-compliance with the provisions of the Act. These penalties aim to ensure that builders fulfill their obligations and protect the interests of homebuyers. Here are the penalties that can be imposed on builders under RERA:
Registration related Penalties:
If a builder fails to register a real estate project with the respective state’s RERA, they may face a penalty of up to 10% of the estimated project cost.
Continuing violations may result in additional penalties, which may extend up to a certain percentage of the project cost or imprisonment.
Misrepresentation or False Advertising:
If a builder provides false or misleading information regarding the project, amenities or other aspects, they may face penalties, which can be up to 5% of the project cost or imprisonment.
Project Delays and Compensation:
If a builder fails to complete the project within the agreed timeline, they may be liable to pay compensation to the homebuyers.
The compensation can range from simple interest on the amount paid by the homebuyer to a full refund of the amount paid with interest and additional compensation as determined by the RERA authority.
Fund Mismanagement:
If a builder diverts funds collected from homebuyers to other purposes, they may face penalties, which can be up to 10% of the project cost or imprisonment.
Builders are required to maintain a separate escrow account for each project and any violation of this requirement can lead to penalties.
Violations of RERA Orders:
If a builder fails to comply with the orders or directions issued by the RERA authority, they may face penalties, which can be up to 5% of the project cost or imprisonment.
Continuing violations may result in additional penalties on a daily basis for the period of non-compliance.
It’s important to note that, as each state has its own RERA rules and regulations, the specific penalties may vary from state to state in India. The penalties imposed under RERA are intended to ensure that builders the Act and fulfill their obligations towards homebuyers, promoting transparency and accountability in the real estate sector.
Penalties and Consequences to Homebuyers under RERA Act.
Under the Real Estate (Regulation and Development) Act or RERA, the focus is primarily on protecting the interests of homebuyers. As such, the Act does not impose specific penalties on homebuyers. Instead, RERA provides various provisions and remedies to empower homebuyers and ensure their rights are safeguarded.
Official Website for RERA in Uttarakhand
The official website of the Real Estate Regulatory Authority (RERA) in Uttarakhand is http://www.ubrera.uk.gov.in/. This website provides information about RERA rules, regulations, registration processes and other related details specific to Uttarakhand. It is the authoritative source to access official information and resources regarding RERA in Uttarakhand.
Conclusion
RERA has brought significant changes to the Indian real estate industry by promoting transparency, protecting homebuyers’ interests and enhancing accountability. Its provisions have strengthened consumer rights, improved project delivery timelines and boosted investor confidence.
Builders and real estate agents must comply with RERA’s regulations to maintain credibility and uphold the trust of homebuyers. With its continued implementation and enforcement, RERA is expected to further contribute to the growth and development of the real estate sector in India.
FAQ’s
Q: What is RERA and how does it impact builders?
A: RERA stands for the Real Estate (Regulation and Development) Act. It impacts builders by introducing transparency, accountability and consumer protection measures in the real estate sector.
Q: Is it mandatory for builders to register their projects under RERA?
A: Yes, it is mandatory for builders to register their real estate projects with the respective state’s RERA authority before marketing, advertising or selling any units.
Q: What are the documents needed for the RERA registration?
A: The documents required for RERA registration include project details, approvals, title deed, layout plans, financial information and builder’s background information, among others.
Q: Can a builder advertise or promote a project without RERA registration?
A: No, builders cannot advertise, market or sell any units in a project without obtaining RERA registration.
Q: What are the consequences of non-compliance with RERA regulations?
A: Non-compliance with RERA regulations can result in penalties, fines, imprisonment or even cancellation of the project’s registration. It is essential for builders to adhere to the Act’s provisions.
Q: How does RERA protect homebuyers’ interests?
A: RERA protects homebuyers’ interests by ensuring timely project delivery, transparency in transactions, disclosure of project details and the establishment of grievance redressal mechanisms.
Q: What are the penalties or consequences of project delays under RERA?
A: RERA holds builders accountable for project delays. If a builder fails to deliver the project within the agreed timeline, they may be liable to pay compensation to homebuyers, including interest on the amount paid and additional compensation determined by the RERA authority.
Q: Can a builder make changes to the project after RERA registration?
A: Builders can make changes to the project, but they must inform and obtain the consent of the homebuyers and the RERA authority. The Act ensures transparency and protects the rights of homebuyers in such cases.
Q: What is an escrow account? Are builders required to maintain a separate bank account for each project?
A: An escrow account is a project-specific account used to collect and manage funds related to that project, it prevents builder the misused project fund for personal or other purposes.
Yes, RERA mandates builders to maintain a separate escrow account for each project. This ensures that funds collected from homebuyers are utilized only for the specific project and prevents fund diversion.
Q: What steps can builders take to ensure compliance with RERA?
A: Builders can ensure compliance with RERA by understanding the Act’s provisions, adhering to registration requirements, maintaining financial transparency, providing accurate project information and promptly addressing homebuyer grievances.
