The homebuyers have been suffering the delay in possession since a long time and it is one of the biggest worries in the real estate sector. The delay has even extended to as long as 6 years, for many homebuyers. The delay in possession for homebuyers and their fights seemed futile as there was nobody to regulate and make rules between both the parties – homebuyers and builders.
But, post implementation of RERA (Real Estate Regulatory Act) from 1st May 2017, the real estate sector has got its regulator. Every Union Territory and state will have their own Regulatory Authority (RA) which is going to make rules and regulations as per the framework of the Act.
The important point to be noted for the ongoing projects which are still waiting to get completion certificates is that, the developers will have to get these projects registered too. When they are registered, they will also fall under the ambit of RERA and will have to follow the rules and regulations of RA. But, we need to understand what RERA is all about and what provisions is it providing to homebuyers so that they get their possessions timely. There are six significant and imperative provisions by RERA that will ensure that builders are not delaying the projects and are following the deadlines.
1. The land clearance – Many a times it happens that the land on which the construction is to be done is a part of some litigation or some legal disputes. As a result, these disputes result in a long delay in construction and ultimately delay in possession. Therefore, a proper written affidavit has to be submitted by the developer making it clear that the land in concern is free from any disputes and has all the legal valid documents.
2. Affidavit in written – This is the most powerful provision provided by RERA. The promises made by the promoter will not go in vain and will hold immense amount of value as the promoter will have declare the time duration in which the project will be completed with a written affidavit that states and supports the same.
3. Liability-Free – It is very commonly seen that the projects face delays because of the liabilities attached to them. This hinders the process of transferring title to the property by the promoter. Therefore, for this also, a written affidavit has to be prepared by the promoter stating the property is free from any kind of liability.
4. The date of possession is inviolable – The ‘agreement of sale’ which will be prepared will have to categorically mention the date of possession. The time period can be different among the various builders. As far as the new projects are concerned, the date of delivery will completely depend on the developer and it is upon the customers to decide that whether the date of delivery suits them or not. If they think that the date of delivery of is too far, they can choose some other project.
5. A separate account should be maintained – diverting the money taken by the customers to other projects is one of biggest problems in the real estate sector. Therefore, now, according to RERA, 70% of the money taken from the customers will have to be deposited in scheduled banks in separate accounts. This will be done to cover the land cost and cost involved for construction.
The withdrawal will be on the basis of the work completed on the project at the site, as per the audit run by an architect, engineer and a Chartered Accountant. This audit will be conducted after every six months.
6. Not following rules will invite action – if the developer is not following the rules and regulations, along with his registration being cancelled, he will also be punishable by law in the form of imprisonment for up to three years, or a huge amount of fine or maybe both.
The biggest hindrance in delay in delivery is the specification of compensation to be paid to the homebuyer if there is any delay of delivery of the flat. Also, if the date is exceeded after the promised date, the authority is going to strictly ask for explanations of the delay.
If the developers are still at default?
By RERA, the promoters will have to hold certain kind of credibility and in case of defaults or violation of any provision; they will be liable to pay penalty and compensation.
If the developer is delaying the possession by violating the ‘agreement of sale’, the buyer will have the full authority to get the amount refunded which he has paid, along with the interest. Even if the registration of the promoter gets cancelled, the buyer can still claim the refund.
If there is a case where the buyer wants to stick to the project and doesn’t want the refund, then he will be liable to receive the interest (every month) till the possession is handed over.
Interest in case of delay
If there is any kind of default from either of the parties (the buyer and the builder), they will be charged the same rate of interest. It is not that only the builders are at default in delaying the possession, but the buyers also become defaulters in making the payments on time. in both the cases, they will have to pay the same amount of interest.
The benefits of RERA lies in the fact that its rules don’t get weakened. And if the situation demands, the central government should also look into the matter. The Regulatory Authorities have to keep a constant check on the implementation of the rules framed by it. If the builder is not sticking to the provisions, then RA is most likely to take action against them.
Now the homebuyers will, hopefully, not suffer in the hands of the builders and hence, RERA becomes one of the important policies reshaping Indian Real Estate.