THE IFs AND BUTs OF RERA
Is RERA the game-changer it is made out to be?
Homeowners across the country heaved a collective sigh of relief with the notification of the remaining sections of RERA on April 19th this year. But is RERA really the golden child everyone imagines it to be? It has been over a year since RERA was first notified and yet problems of homeowners continue unabated. Some of the factors impeding RERA from fulfilling its true potential are listed herein:
- Although the intent of RERA is to bring about a unified law to regulate the real-estate sector throughout the nation, its actual implementation depends on regulations which are to be drafted by each State. As the Regulations drafted by each state differ considerably, the aspired unity is unlikely to be achieved.
- As of 1st May 2017, several states have yet to notify regulation under the RERA, leading to a lot of uncertainty regarding ongoing real estate projects in such states. Further, the regulations enacted by several states have diluted the otherwise stringent provisions of RERA.
- Nevertheless, RERA does make great strides in protecting the interest of home buyers, particularly by making the entire process of real estate development more uniform, transparent and overboard.
- Not only Real Estate projects, but also real estate agents facilitating the sale of units in such projects are required to be registered under RERA.
- Moreover, a combination of public and judicial activism and tough regulatory stance taken by the Government has been such, the Real Estate Developers are currently not taking any chances and despite the considerable gaps that exists in RERA itself and its enforcement regime, and have already started taking steps to comply with its provisions as far possible;
- However, certain loopholes remain that may be exploited by real estate developers, particularly, during the transition period, to their benefit. For instance, while registering on-going projects, Real Estate developers may declare the date on which they had promised the flat owners as the date of completion of the project and also the date on which they now anticipate to finish the project. For the purpose of RERA, real estate developers will be bound only by the latter date and may thereby “purge the sins” of earlier promises made to homeowners.
- Although the rights and remedies offered to homeowners under RERA are far more comprehensive, than current remedies available under consumer protection act, yet until certain lacunae relating to RERA are cleared, Consumer Courts will continue to remain the most effective forum for homeowners to agitate their rights against real estate developers.
- A novel feature of the RERA is the requirement for developers to obtain insurance in respect of the title of the land on which the project is being constructed and construction of the project (Section 16 (1)). Such insurance will be offered by insurance companies for the first time in India.
- RERA imposes a plethora of stringent compliance requirement on real estate developers without placing a reciprocal burden on authorities to be prompt in according clearances, approvals etc. to developers within stipulated time.
There are several provisions of RERA which are open to multiple interpretations. Clarity regarding the meanings of these provisions will only occur once they are subject to judicial scrutiny. Once, this happens it may just happen that the provisions of RERA will be interpreted in such a manner that what emerges is entirely different from what is being envisaged currently….
