The generally accepted basic need of every person is food, shelter, and clothing. When these needs are realized other desires may be pursued in other to more effectively enjoy the actualization of the three basic need of a person.
It is the responsibility of parents and adult members of the family and society at large to ensure that these three basic needs are made available to the young ones at birth until they become adults.
It is assumed that every adult after affording the basic amount food which will sustain him for the day is expected to seek refuge or shelter either by acquiring his own house, renting an apartment or at least staying in another person’s (who may be a friend or a relation) shelter.
The rise in the demands for shelter as one of the three basic needs of humans has led to an increase in the cost of acquiring landed properties in India and the world at large. This has led to various intervention schemes targeted at reducing the cost of owning land and houses.
The government in the United States, the United Kingdom, and private investors are creating various mortgage schemes to ensure adequate housing facilities for the teaming population.
In the same vein, the government India made a remarkable intervention by introducing the Real Estate Development and Regulatory Act of 2016 which is aimed at availing and protecting the rights of private homeowners.
This study shall concentrate on the meaning of and purpose of the Real Estate Development and Regulatory Act of 2016, its applicability and the overriding benefits afforded to people seeking to own houses from the commencement of this Act.
Meaning of Real Estate Development and Regulatory Act 2016
This is a law made by the central government of India. The Real Estate Development and Regulatory Act of 2016 is alternatively called RERA. It was enacted to protect house buyers from the exploitation of builders or real estate developers.
In a bid to protect the house buyers in India the Real Estate Development and Regulatory Act of 2016 gives a minimum standard practice which must be followed by the real estate builders and developers. Where these minimum standard practices are observed the house buyers are ultimately protected in real estate transactions.
True to the idea of protecting the interest of various buyers in real estate transaction the Real Estate Development and Regulatory Act of 2016 created a Real Estate Regulatory Authority and a tribunal. The Real Estate Authority and the Tribunal are created with the aim of enforcing the objective of the Real Estate Development and Regulatory Act, 2016.
Also, various housing development schemes are mandated to be duly registered in the RERA portal of the given state in India where they intend to operate.
Applicability of the Real Estate Development and Regulatory Act, 2016
The Real Estate Development and Regulatory Act of 2016 came into operation in the month of May of 2016. The RERA Act of 2016 strictly applies to the development of real estate including shops, commercial building. This Act shall govern the activities of builders and developers in all transactions relating building houses except in the following instances:
- If the expanse of land to be developed is not in excess of 500 square meters and the building to be erected on the said piece of land must not exceed eight (8) in numbers.
- If the promoter of the housing development scheme is only certificated before the enactment and coming into force of the Real Estate Development and Regulatory Act of 2016.
- Where the improvement is either renovation or repair provided it does not extend to any form of marketing or creation of commercial awareness on the project.
The Benefits of Acquiring Property under the Real Estate Development and Regulatory Act of 2016.
The advantages which a person seeking to own a home under the regime of the Real Estate Development and Regulation Act (RERA) of 2016 will enjoy are as follows:
- The real estate developer or builder is by the provisions of the Real Estate Development and Regulatory Act of 2016 mandated to keep at least 70 % of the client’s money in an escrow account.
It was a usual occurrence before the RERA to see cases where the developers or builders become bankrupt and unable to complete the projects which are fully paid.
Therefore, the perceived reason for this requirement is to ensure that the developer or builder does not apply the client’s funds in things other than building the desired home which the client has paid for.
- The RERA also provides that a client is entitled to know the full specification of the property (which may include the number of housing units in a given expanse of land) which the developer is offering to build.
This requirement will also ensure that the developer or builder does not build houses which are below the agreed specification.
Where the there is a non compliance with the agreed specification between the developer and the buyer, the buyer is entitled to withdraw from the transaction. Also, the buyer is entitled to the refund of all the money paid to the developer or builder.
- The developer or builder under the Act is allowed to make changes in the plan of the project but it must be done with the consent of the buyers and the minimum standard of the basic amenities must be provided under the amended or altered plan.
- The builder or developer may ask for an advanced payment while executing or entering into a contract to sell a real estate.
However, by the provisions of the Act, the developers or builders cannot demand or receive more than 10% of the entire sum meant for the real estate to be sold prior to the sale.
- By the provisions of the Act, even when possession of the development and a defect is observed by the client. The developer at no further cost on the client must within a period not exceeding thirty (30) days correct the defect in the building.
- It is also a remarkable innovation that the Real Estate Development and Regulatory Act of 2016 made it mandatory for developers to promptly transmit the essential title documents to the buyers upon completion of the contract.
This was a clear departure and improvement on the bad practice of merely handing over a deed of sale to the buyer while the builder or developer still retains the title document to the land where the house is constructed.
In addition to the title documents which are meant to be given to the buyer, following document are also required to be delivered to the buyer: a copy of a brochure which will show in detail the drawing of the building and the project where the client is investing.
- The Real Estate Development and Regulatory Act of 2016 further protect the right and the money of the client against defect in the title of the developer.
This means that if there is a defect in the title of the developer or builder the client is authorized by law to claim damages against the developer. The issue of lapse of time will not limit the right of the client to seek damages against the developer.
- It was stated earlier that the RERA 2016 introduced the Real Estate Development Authority. The duty of the Real Estate Authority is to receive and decide on the grievances of parties especially the client in a real estate development contract.
- If a builder uses materials of inferior quality in the development of a property which is not as contained in the list of essential materials. With use of such inferior material, earlier depreciation of the property occurs.
The Real Estate Development and Regulatory Act make the builder liable for any loss or damage which may arise from the use of such inferior material by the builder or developer.
- It was a usual practice among the developers and builders to transfer their interest in a given project to other developers or builders without the knowledge or consent of the buyer.
Where a buyer encounters any challenge in the use of the developed property he is left confused or stranded as to whom to approach among the series of developers and builders for redress.
This, in no small measure, discouraged buyers from venturing into real estate transactions. But the Real Estate Development and Regulatory Act of 2016 has made it that any form of transfer of interest in a project the buyer, the investors, the real estate development authority and other stakeholders must be given adequate notice.
And where the required procedure for the transfer is not followed, the first developer remains liable to any claim which may arise from the project.
- The Real Estate Development and Regulatory Act gives a minimum period of 5 years liability on the developer/ builder for any defect in the housing structure from the time of possession is granted to the buyer.
- The Act also makes it compulsory for the developer or builder pay interest to the buyer on the default in completing the real estate project within the agreed time. This also equates the penalty or interest to be paid by a buyer the same with what the developer is to be paid in the event of default.
The making of the Real Estate Development and Regulatory Act of 2016 is a great feat and a legislative accomplishment for entire India. It is clear that the creation and actualization of various housing scheme by the government are not realistic.
In the same manner, if the task of providing adequate housing is left for the builders and developers who are private investors, then the exploitation of the citizens will be the order of the day. This is the basis for the appreciation of the RERA, 2016.
With effective implementation of the provisions of the RERA, 2016 one may be tempted to boast that the one of the three generally accepted basic need of humanity (Housing) has been solved in India.