Legal Compliances for Real Estate Development

Effects of mandated RERA legal compliance for real estate developers

India has always faced a scourge of black money, and the real estate industry has been notorious for its involvement in the same. Many real estate developers are paid in cash, which promotes use of untraceable cash, but not anymore! Due to mandated legal compliance of the Real Estate Regulation and Development Act, developers and buyers both face some major changes and for the better like compliance in real estate.

Real Estate (Regulation and Development) Act, 2016

It came into effect on 1st May, 2016. It is an act passed by the Parliament of India to protect home buyers and to increase investments in the crashing real estate industry. This regulatory act that hopes to envelope all real estate projects in a digital format, speed up the dispute resolution system and lower turnaround times for real estate business registrations.

The regulatory authority associated with the act is termed RERA or Real Estate Regulatory Authority.

Compulsory Registration Business registration and digital money trails have made the real estate act a true champion of the people, protecting buyers in the following ways:

●        All commercial and residential real estate projects, new or in develop/ment, need to be registered with the RERA. The only exception is for projects with land under 500 sqmetres or under 8 apartments.

●        70% of money paid to developers has to be deposited in a bank account through cheques. This creates a digital trail of the money.

●        Prices quoted are now based on carpet area and not the built-up area. This prevents buyers from being overcharged.

Digital Repository

Initially, real estate projects would be carried out mostly on paper that would create various discrepancies such as fake title deeds, zero accountability and misquoted property values. This new digital format can keep track of all new projects in a single, easy to access repository. Digitization also helps speed up associated processes of dispute resolution and application turnaround times.

Applications

As per the real estate act, the RERA must grant an application within 30 days of submission of all necessary documents. Within half a month, real estate developers will know whether their application was approved/rejected!

Dispute Resolution

The Real Estate Regulation Authority (RERA) is the new platform for all dispute resolution. Furthermore, the authority has been instructed to resolve all complaints within 60 days, pending which they will have to clearly mention a reason for the delay in real estate compliance.

Note that states with a RERA in place, generally won’t let you file a motion regarding real estate disputes at a civil court or high court. RERA is now the defining authority for real estate complaints.

For more information regarding  real estate compliance and legal compliance in other industries and for free legal advice, visit the Lawyered website here