The Real Estate (Regulation and Development) Act, or RERA as it is more popularly known, recently completed two years of its existence.
RERA is slowly making a difference in the previously chaotic real estate world. Homebuyers have a voice finally. But are homebuyers aware of how much they can benefit from RERA? In this post, find out how you can understand RERA’s laws to bring errant developers under its ambit.
Find out the various penalties that can be levied on developers or builders:
Offence-wise penalties for developers
For non-registration of a project: Under Section 59 of the Act, it is mandatory for a developer to register a project with the RERA Authority of that state. If he fails to do so, he shall be liable to a penalty of up to 10% of the estimated cost of the project.
In case the developer consistently defaults or does not comply with the orders of the Authority, an additional fine of 10% of the estimated cost of the real estate project will be levied.
For violation of other provisions of the Act: Under Section 61 of RERA, if the developer defaults any other provision of the Act, he shall be liable to a penalty of up to 5% of the estimated cost of the project.
For non-compliance of the orders of the Authority: If the developer fails to comply with the orders of the Authority, he is liable to a penalty for every day of default, which may cumulatively extend up to 5% of the estimated cost of the project.
For non-compliance of the orders of the Appellate Tribunal: If the developer fails to comply with the orders of the Appellate Tribunal, he is liable to pay a penalty for every day of default, which may cumulatively extend up to 10% percent of the estimated cost of the project or with imprisonment for a term which may extend up to three years or both.
State-wise penalties
Karnataka
If a real estate developer is found to be marketing a project without registering with RERA, he shall be liable to a penalty which may extend up to 10% of the estimated cost of the real estate project.
Further, if any developer does not comply with the orders, he shall be punishable with imprisonment for a term, which may extend up to three years, or with a fine, which may extend up to a further 10% of the estimated cost of the real estate project, or both.
Till now, the state authority has collected a penalty amount of Rs 7 Crore from over 500 building projects in the state. At present, the number of rejected projects stands at 175 while projects under investigation are 936.
Telangana
In Telangana, if the developer doesn’t register a project with the authority, he is liable to pay 10% of the estimated cost of the real estate project.
Maharashtra
The Maharashtra Real Estate Regulatory Authority (MahaRERA) recently slapped a penalty of Rs 2-10 Lakh on eight builders in Mumbai for advertising a non-registered project. The penalty in the state may extend up to 10% of the estimated cost of the real estate project.
Goa
For ongoing projects that are not registered, the state RERA authority has increased the fine from Rs 2 Lakh to Rs 3 Lakh. The new rate has been made effective for the period from July 2 to October 1, 2018
Penalties for other states
Interest payable by the developer
The rate of interest payable by developers to buyers is the State Bank of India’s (SBI) highest Marginal Cost of Lending Rate (MCLR) plus 2%.
In case SBI’s MCLR is not in use, it will be replaced by such benchmark lending rates which SBI may fix from time to time for lending to the general public.
Timeline for refund
The refund of any amount which is payable by the developer to the buyer shall be made within thirty days from the date on which such refund along with applicable interest and compensation becomes due and payable to the buyer.
Word of advice
While there are stringent laws to safeguard the interest of homebuyers, it is still advisable to be vigilant. Below are a few points to remember.
- Make sure that the agreement includes a compensation clause for delay in possession.
- Buyers must read the contract carefully and look for a delay and compensation clause, which will give buyers additional protection against delays.
- In case you want to file a complaint for any dispute, do it within two years from the date of the dispute.
- Ensure that all the terms and conditions agreed with the builder are in the Sale Agreement to avoid any misunderstanding later.
What a wonderful article. It has well elucidated the penalties. Thanks for making us aware of these intricate details.
I have purchased a flat during 2019. As per approved plan only 6flats allowed. But he constructed a 2BHKflat in stilt floor and studio flat in the open terrace . And also not earmarked with clear demarcation for car parking for the approved flat owners. We have mutually agreed to have car parking area but the builder try to grab my car parking area allotted in front of the unauthorised stilt floor. Can I approach TNRera for redressal. I am also insisting that promoter solely responsible for wilful/international deviations to regularise . Unfortunately there is no such regularisation scheme as on date. Kindly advise me TNRera will consider my complaint through a lawyer. My complaint notice to Chennai corporation and CMDA not yielded any response.
I purchased a land in Coimbatore, while seeing the soil only I came to know that it was a well and it was filled up soil. The promotor deliberately sold me this land. I bought this land through sbi loan.what should I do now ?