For the newly married Sharma couple, buying an apartment in Noida barely a year after their marriage was a dream come true. Having narrowed down on the apartment, the couple paid the initial amount and began thinking about the interiors of the apartment. It came as a rude shock when the builder demanded they pay an increased amount as full settlement to enable the work to go on and get completed. When asked what the increased amount was for, the couple was told that there had been some changes made to the plan and hence the change in costing. Despite asking the builders several times for the plan details, nothing was given to them.
Ultimately the builder gave the couple an ultimatum, to either pay up the entire amount or forfeit the apartment.
One wonders what gives the builder such unilateral power over the buyer.
An in-house counsel who works with a leading developer in the city, and wishes to remain unnamed, said, “These underhanded practices are usually adopted by smaller builders. The reputed ones stay away from getting their hands dirty in this manner. This is done because the value of the project once nearing completion is valued higher, and the developer feels he can make more money either from the existing buyer or a potential new buyer. This is one of the biggest reasons why they try and wriggle out of existing agreements.”
As of May 1, 2017, buyers can probably breathe easy when it comes to buying property from the builder. The Real Estate (Development and Regulation) Act 2016 (RERA) came into force and is said to not only change the landscape of real-estate buying in India but will also make it easier for the buyers to understand how the sector functions. Some of the salient features of the Act are as follows:
• Developers are now required to register their projects and obtain a certificate of registration from the Real Estate Regulatory Authority. Those developments, which commenced work one year prior to the passing of this Act and whose area does not exceed 5000 square yards or do not have more than eight apartments in all, will be exempted from this clause.
• The developer will now have to mandatorily submit along with an application all documents (plans, names of contractors, architects, location details, carpet area details, time period within which the project will be completed etc.) relating to the development and only upon getting a certificate from the RERA will be allowed to issue advertisements, prospectus, or invite potential buyers to buy or book in projects.
• RERA will establish an online portal for submitting applications within a period of one year from its establishment.
• Once the authority receives the application, within 30 days the authority will either grant the registration or reject it in writing. In cases where the authority fails to take a decision within 30 days, registration will be deemed given to the project.
• The authority under this Act also has the power to revoke the registration if the developer is found violating any of the terms or conditions on the basis of which the registration was granted to begin with.
• All real-estate agents are now required to be registered under the Act and can only sell apartments or solicit bookings for apartments that have been approved by the authority.
• A promoter under this Act is not at liberty to accept any deposit from the buyer until a written Agreement for Sale has been entered into.
• If the promoter is unable to stick to the time-lines specified then he is liable to return the amounts deposited by the buyers with an interest as is specified.
• The Act also prescribes punishments in cases where the developer wilfully refrains from registering with the authority, does something in contravention to the plan submitted, or fails to comply with the orders of the authority.
While the legislation does everything to protect the interests of the buyer it is imperative that as buyers we remember the legalese ‘caveat emptor’ – meaning let the buyer beware.
Know more about the complete Act here.