A property buyer invests his hard-earned money and lifetime savings in buying a home. And the least he expects is possession on time. However, with builders launching numerous projects simultaneously and failing to provide possession way after possession date, buyers end up losing a lot of money in the form of EMI and house rents.
Thanks to the Real Estate Act 2016, all under-construction properties are under scrutiny now. It will not only safeguard the interest of homebuyers but will also usher transparency into the sector. You may have read about and might be familiar with popular provisions of the law. However, here are few lesser known rules that are binding on every seller:
On-going project builders to provide one last deadline
In the light of new real estate laws, the developers of ongoing projects have been given one last chance to regularise delays. They can set a newer reasonable deadline failing which they will have to pay heavy penalties. And what is even better is the fact that developers who fail to comply this rule may even receive imprisonment.
Developers will have to maintain 70% of project funds in a dedicated bank account
This will ensure that the developers are using the money meant for a specific project for that project only. It will also prevent developers from investing the booking money for one project in numerous projects, thus delaying completion and handover to customer
A penalty of 10% on developers for project delays
Until now, most sale agreements would keep a penalty of Rs 5-10 per sq. ft. on developers for project delays. However, the Real Estate Regulatory Authority (RERA) has now prescribed a rate of 10% for the tenure of project delays. A rate of 10% is also applicable to buyers who delay payment or dues from their end.
Builders have to share complete project information with RERA and consumers
The new real estate law has made it mandatory for developers to post complete information about an upcoming (or ongoing) project such as project plan, layout, government approvals, land title status, project completion schedule, sub-contractors if any, with both RERA and consumers. The builder cannot make any amendment to the plan without the written consent of the buyers.
Developers liable to correct structural flaw up to 5 years after possession
As per the new real estate laws, developers are bound to fix any structural flaw or fixation problems up to 5 years after giving possession without charging anything. Click To Tweet Earlier developers used to provide a 2 to 5 years of warranty, but it was on a voluntary basis. To demand after sales service, the buyer can contact the developer in writing within one year of possession.
No more super-area sales allowed
The central law makes it illegal to sell a real estate project based on ambiguous super built-up area. Now sales will be by carpet area which has been clearly defined in the law.
Developer must obtain lease certificate
If the project is being developed in a leasehold land, it is the developer’s responsibility to obtain the lease certificate. The certificate should have the period of lease and other details clearly mentioned. And then the developer should make it available for the buyers.
Promoter cannot raise more than 10% of project cost without proper documentation
Any transaction for a sum beyond 10% of the project cost can happen only with a proper agreement of sale. This agreement should specify work details, possession timeline of the project, and date for next payment. It should also contain a rate of interest on payments in case the possession is delayed.
No transfer of rights to the third party without allottees consent
Earlier, promoters used to transfer their majority rights to a third party without bothering about allottees consent. However, as per the new law, any transfer of rights needs approval from at least two-third of the allottees. And regardless of the number of units one family holds in a project, every homebuyer can cast just one vote.
Developers must clear all outstanding bill till possession
It is the developer’s duty to clear all the dues and payments until the property is transferred to a buyer. If the developer fails to comply, the real estate act makes it mandatory for developers to pay even after the transfer of property to buyers or home buyers association. They will also be liable to pay late payment charges, if any.
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RERA rules are binding not only on builder / promoter, they are binding on real estate agent and buyer too.