Professional Documents
Culture Documents
Real Estate Act 2016
Real Estate Act 2016
Real Estate Act 2016
Professional Practice - II
01 02 03
Introduction Applicability Objectives
The Real Estate Act 2016 Applications of the Act Main objectives of the Act
04 05 06
Salient Features Pros & Cons Conclusion
Key Features Advantages and Limitations of the Act
Disadvantages of the Act
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INTRODUCTION
Over the past few decades, the demand for housing has increased manifold. Despite Government's
efforts through various schemes, it has not been able to cope up with the increasing demand. Taking
advantage of the situation, various private players have taken over the Real Estate Sector, who are
completely non-sensitive towards the interests of consumers.
The primary purpose of the Act is to restore the confidence of consumers in the Real Estate Sector by
introducing transparency and accountability. MYHOME
REAL ESTATE
The Real Estate (Regulation and Development) Act, 2016 aims to regulate and promote the real
estate sector by regulating the transactions between buyers and promoters of residential as well as
commercial projects. It also has provisions for establishing a regulatory authority at state level called
"Real Estate Regulatory Authority" (RERA) for monitoring the real estate sector and adjudicating
disputes relating to Real Estate Projects. The main aim of the Act is to protect buyers and help
investment in Real Estate Sector.
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APPLICABILITY OF RERA ACT 2016
● RERA is applicable to all the real estate projects and the Promoter (builders and
developers) needs to get such projects registered with Real Estate Regulatory Authority
except in the following cases:
● Where the land proposed to be developed does not exceed 500 square meters or the
number of apartments proposed to be developed does not exceed eight inclusive of all
phases
● Where the Promoter has received completion certificate for a real estate project before the
introduction of RERA
● Where the project is for the purpose of renovation or repair or re-development which
does not involve marketing, selling or new allotment of any apartment, plot or building.
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OBJECTIVES FOR THE RERA ACT 2016
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SALIENT FEATURES OF THE RERA ACT 2016
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KEY FEATURES OF THE RERA ACT 2016
By this provision, real estate agents are also covered in the ambit of RERA, thus ensuring accountability on their part.
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KEY FEATURES OF THE RERA ACT 2016
With this obligation of the promoters, the buyers can stay updated about the status of the
project just by visiting and checking the website of the authority.
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KEY FEATURES OF THE RERA ACT 2016
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KEY FEATURES OF THE RERA ACT 2016
5. No Diversion of f unds
● The promoter has to make sure that 70% of the
amounts realised for the real estate project from
the allottees, shall be deposited in a separate account
to be maintained in a scheduled bank to cover the
cost of construction and the land cost and shall be
used only for that project which shall be withdrawn
to cover the cost of the project, in proportion to the
percentage of completion of the project as certified by
an engineer, an architect and a chartered accountant in
practice.
● Also the promoter shall get his accounts audited within six months after the
end of every financial year by a chartered accountant in practice, and shall
produce a statement of accounts duly certified and signed by such chartered
accountant and it shall be verified during the audit that the amounts collected
for a particular project have been utilised for the project and the withdrawal has
been in compliance with the proportion to the percentage of completion of the
project. 12
KEY FEATURES OF THE RERA ACT 2016
6. Defect Liability
Any structural or other defect in workmanship, quality or provision
of services or any other obligations of the Promoter as per the
agreement for sale relating to such development if brought to the
notice of the Promoter within a period of 5 (five) years by the
Allottee from the date of handing over possession, then it shall be
the duty of the Promoter to rectify such defects without
f urther charge, within 30 (thirty) days, and in the event of
Promoter’s failure to rectify such defects within such time, the
aggrieved Allottees shall be entitled to receive appropriate
compensation.
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KEY FEATURES OF THE RERA ACT 2016
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KEY FEATURES OF THE RERA ACT 2016
The insurance shall stand transferred to the allottee or the association of allottees at
the time of entering into agreement for sale.
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KEY FEATURES OF THE RERA ACT 2016
From this we can infer that this particular provision emphasizes the fact that there are two
fundamental duties of a promoter:
● First, the promoter, after taking the advance amount from the prospective buyer, has
to execute the agreement to sell.
● Secondly, the agreement to sell should be registered before appropriate authorities.
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KEY FEATURES OF THE RERA ACT 2016
Suppose you're commencing any real estate Project such building apartments or a house and beginning any other construction
specific project. In that case, one needs to apply for or obtain the completion certificate from the concerned department or
authorities. One is supposed to give away all the details such as proper structure plan, building layout, number of buildings or
apartments to be constructed, etc. If the plan submitted is verified, then a builder can obtain their builder's completion certificate.
Once the plan is taken in cognizance and gets approved, the construction will occur according to the approved list. Any disturbance
or discrepancy may lead to the cancellation of the approval and other legal complications against the builder.
Once authorities have been ensured that the construction is being laid out as per the approved plan,
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KEY FEATURES OF THE RERA ACT 2016
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KEY FEATURES OF THE RERA ACT 2016
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PENALTIES UNDER REAL ESTATE
2.False information
Fine up to 5% of the estimated cost
of the project
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PROS & CONS THE RERA ACT 2016
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CONCLUSION
The Real Estate Act, 2016 is one robust step towards regulating the highly unregulated real estate sector and bringing more
transparency to real estate transactions. However, a closer scrutiny of the provisions of the Act would reveal that the Act has certain
loopholes, which ought to have been filled while enacting the same and which may make the consumers liable to suffer. Some of such
loopholes are as follows:
● The Act only covers new projects and the projects where completion certificate is not issued on the date when the Act is notified,
but not the existing projects i.e. the projects that are ongoing as on date or where partial completion certificate has been issued,
completed immediately before the Act is notified, or stuck as on date for any reason;
● The Act doesn't make any provision for selling flats/ apartments on carpet area basis, leaving a scope for promoters for
manipulation;
● Under the Act, it is not mandatory to register projects, which are smaller than 500 square meters and 8 apartments. It could lead to
the exclusion of a large number of small housing projects, which also have great share in the market.
However, despite the abovementioned loopholes, the Act will benefit both promoters as well as buyers. It is an initiative to protect the
interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. With a clear
intention of protecting the interests of buyers, the Act helps the consumers to safeguard themselves from any foul play or
exploitation by promoters. The legislation is considered to be a game changing step in the real estate sector.
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CONCLUSION
1. Delays in projects were one of the biggest problems faced by the buyers. This was due to range of reasons from diversion of funds to
problems in land acquisition, bad construction etc. Consequently, the courts were flooded with litigations, police registered are filled
with FIR’s against the promoters, thus choking the entire system. Therefore the coming of the RERA act will be a boon to all
home buyers who have been clamoring for transparency and accountability in the real estate sector.
2. First, the registration of projects and brokers with RERA will help the buyers not only in making informed decision but also
prevent frauds caused due to selling of projects without approval plans with developers, siphoning off money by the
brokers etc. Also it will help organize and regulate the broker segment in India. Now the broker will themselves endeavor
3. The compulsory timely compensation in case of delay of projects is expected to reduce litigations in the court.
Moreover, the mandatory mention of carpet area will not provide any room to developers to employ deceiving
tactics between what they promise to give and what they actually give. Therefore the act has laid down much responsible and larger
role for the developers, thereby, ensuring greater transparency in project-marketing and execution.
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