SC verdict on real estate Act benefits homebuyers

Context:

The Supreme Court affirmed that the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA) are applicable to projects that were ongoing and for whom completion certificates were not obtained at the time of the enactment of the law, in effect interpreting that the law is retroactive.

Relevance:

GS-III: Industry and Infrastructure, GS-II: Governance (Government Policies and Interventions)

Dimensions of the Article:

1. Provisions of Real Estate Regulation and Development Act, 2016
2. Real Estate Regulatory Authority (RERA)
3. Why was the Real Estate (Regulation and Development) Act Needed?
4. About the SC’s views on Retroactive Implementation issue

Provisions of Real Estate Regulation and Development Act, 2016

• The Act provides for State governments to establish more than one regulatory authority with the following mandate:
  • Register and maintain a database of real estate projects; publish it on its website for public viewing,
  • Protection of interest of promoters, buyers and real estate agents
  • Development of sustainable and affordable housing,
  • Render advice to the government and ensure compliance with its Regulations and the Act.
• The Act provides for State governments to establish more than one regulatory authority with the following mandate:
• Register and maintain a database of real estate projects; publish it on its website for public viewing,
• Protection of interest of promoters, buyers and real estate agents
• Development of sustainable and affordable housing,
• Render advice to the government and ensure compliance with its Regulations and the Act.

Real Estate Regulatory Authority (RERA)

• Real Estate Regulatory Authority (RERA) is a Statutory Body established in each state by the Real Estate (Regulation and Development) Act, 2016, which came into effect fully from 1st May, 2017.
• The Act seeks to protect home-buyers as well as help boost investments in the real estate sector by bringing efficiency and transparency in the sale/purchase of real estate.
• The Act requires any project that has 8 dwelling units or is at least 500 sq m in area to be registered with the RERA. (Only the Projects coming up after the act was passed are covered).
• RERA is established in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute resolution.

The Mandatory Functions of RERA are:

1. Registering and maintaining a database of real estate projects
2. Publishing the database on its website for public viewing
3. Protection of interest of promoters, buyers and real estate agents
4. Development of sustainable and affordable housing
5. Render advice to the government and ensure compliance with its Regulations and the Act.

Decisions of RERAs can be appealed in Real Estate Appellate Tribunal.

Why was the Real Estate (Regulation and Development) Act Needed?

• Until RERA Real estate sector had been largely unregulated and there was no standardization of business practices and transactions.
• Issues like delay in delivery of flats, pricing issues, quality of construction problems were prevalent.
• Cases where developers cheated property buyers were rampant and there was No grievance redressal mechanism.
• There was also the issue of generation of black money in real estate sector.

About the SC’s views on Retroactive Implementation issue

• The SC affirmed that the provisions of the RERA 2016 are applicable to projects that were ongoing and for whom completion certificates were not obtained at the time of the enactment of the law.
  • Under the Act, registration of real estate projects was mandatory.
  • It mandated that for projects that were ongoing on the date of commencement of the Act, specifically projects for which the completion certificate had not been issued, the promoters shall be under obligation to make an application to the authority for registration of the project.
• SC also held that the amount invested by the allottees, along with interest as quantified by the regulatory authority or the adjudicating officer, can be recovered as arrears of land revenue from the builders.
• It is mandatory for real estate developers to deposit at least 30% of the penalty ordered by the regulator, or the full amount as the case may be, before they challenge any RERA order. This is expected to ensure that only genuine appeals are filed and homebuyers’ interests are protected.

-Source: Indian Express