What is RERA in Real Estate? Its Full Form, Benefits and More

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What is RERA in Real Estate? It's Meaning, Full Form & Benefits

What is RERA and its Full Form?

RERA full form is Real Estate Regulatory Authority. The Indian government introduced this Act in 2016. It brings efficiency, transparency, and accountability to the real estate sector. It is enacted at the state level, making government bodies responsible for regulating the sale and purchase of residential and commercial properties in their vicinity.

With the RERA Act, the government aims to achieve the following:

Maintain transparency to reduce fraud
Protect the allottee’s interest
Give responsibilities to investors and builders
Standardise the system across India
Ensure correct flow of information between buyers and sellers
Enhance reliability in the real estate sector

RERA became the first regulator of the Indian real estate sector. According to the Act, each state and UT must frame the rules and regulations under its regulator.

What is RERA Registration?

After understanding the RERA meaning, it's important to learn the registration process. Although it varies for each state, the general process involves the following:

Fill Out a Registration Form: The applicant must fill out the prescribed form according to their state and submit it to the state authority with all the necessary details and documents.
Submit the Documents: The documentation requirements vary by property and applicant type. They often include the sanction plan, location details, layout plan, encumbrance certificate, legal title deeds, etc. Along with these documents, submit the applicable fees to the regulatory authority through a cheque, demand draft, or online payment.
Verification: The authority takes around 30 days to review and accept or reject the application.
Certificate Issuance: If the authority accepts the application, they issue a RERA certificate to the applicant confirming the registration.

Since the registration process varies between states, one must refer to their state's official website or RERA authority for clear guidelines.

Benefits of RERA

After understanding RERA, let’s look at its benefits for homebuyers:

Standardises the Carpet Area: RERA standardises the way a builder calculates a project’s price. It has a standard formula to calculate the carpet area without any inflated areas with higher prices.
Reduces Insolvency Risk: Under RERA, developers and promoters working on multiple projects must deposit 70% of the raised amount in a single bank account and withdraw it only after approval by architects, engineers, and chartered accountants.
Advance Payment: A builder cannot demand more than 10% of the project’s cost as an application fee.
Rights Against Defects: If the buyer identifies any structural defects in the property within five years of possession, the builder must rectify it free of cost.
Interest Payment: Under the RERA Act, if the promoter delays the property's possession, the buyer receives a higher interest.
False Promises: The RERA indicates that a regulatory authority foresees the builder's promises. If there is a difference, the buyer might get a full refund of their advance, sometimes with interest.
Defect in the Title: If the buyer discovers a defect in the title of the property at the time of possession, the buyer can claim compensation from the promoter. This amount is not limited.
Right to Information: The RERA Act gives the buyer a right to know about the project, including its status, layout, and execution.

How do I ensure that a property is RERA compliant?

Check the following to ensure that the property is RERA compliant:

Legal Title: Check the land’s legal title. If it is in another person’s name, ensure that the developer has the valid documents to use it for development.
Encumbrances: Look for encumbrances, including details about the owners, rights, titles, other parties involved, and their shares.
Possession Date: Under RERA, the builder must give a possession date before which they must complete the project and provide possession. Look for this possession date in the application form.
Escrow Account: Check the developer’s escrow account and ensure they deposit the money in it.
Find Details on the RERA Website: Review the project details on the RERA website.

Key Provisions and Components of RERA

After understanding what is RERA, let’s look at the key provisions and components of the Act:

Mandatory Registration: The builder must obtain a RERA certificate if the property exceeds 500 sq.m. of area.
Project Delays: The developer must provide a project completion date.
Transparency: Developers must post regular project updates on the RERA website, including their project status, financial information, and approvals.
Carpet Area Definition: The concept of carpet area becomes the basis for property pricing.
Quality Assurance: Developers should maintain the construction quality and stick to the approved project plans.
Property Title: The property title should be clear and marketable.
Penalties: Developers who fail to comply with the RERA provisions face penalties.
Real Estate Agents: RERA in real estate also covers registered real estate agents.
Redressal and Complaints: RERA authority is responsible for resolving disputes between parties.

How RERA Enhances Transparency and Trust in Real Estate

RERA guarantees a transparent real estate sector for buyers and investors. It primarily aims to safeguard the buyer’s interests. The regulations it sets for property sales ensure the developer’s compliance with specific standards. Moreover, it holds developers accountable for any operational irregularities and delays. It requires developers to post proper records on the RERA website, keeping buyers aware of their rights.

Conclusion

Prospective home buyers must select RERA-registered projects to ensure a safe investment. Understanding the RERA meaning and choosing compliant projects eliminate the chances of fraud or loss. Finally, apply for a low-interest Home Loan to simplify the home-buying process. To get started, choose the property you want to buy and check the RERA website for its registration details.

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Frequently Asked Questions

How does RERA benefit homebuyers?

Developers must follow the rules set by the RERA Act to complete projects under specific guidelines. Compliance ensures that homebuyers get a good-quality property in time according to the agreed-upon terms.

How can I obtain a RERA certificate?

Visit your state’s official RERA website to obtain a RERA certificate.

How does RERA impact real estate transactions?

RERA makes real estate transactions more transparent, protecting the rights of both buyers and developers.

How can a real estate developer obtain a RERA certificate?

To obtain a certificate, they must fill out a RERA registration form and submit it to their state's RERA authority.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

What is RERA in Real Estate? It's Meaning, Full Form & Benefits