In the recent past years, the real estate industry has witnessed a paradigm shift in India. Remarkably, it is contributing 6-7% of the country’s economy, and continues to be the second largest employment generators in the nation. The Real Estate (Regulation and Development) Act, 2016 came into effect on May 1, 2016, but it came into implementation on May1, 2017. Undeniably, the legislation plays an imperative role in the development of this sector, by regularizing the various unchecked areas of this domain. There is an important provision in the Act that a Real Estate Regulatory Authority, hereinafter referred to as RERA, would be established in each state that deals with the real estate matters prevailing in the particular area.
RERA is responsible for transparency in the real estate industry. Every developer, builder and real estate agent needs to register themselves under RERA website; non registration will attract penalties for the same.
What are the compliances for builders under the RERA Act in Punjab?
- Updation on Website: The RERA regulation makes it mandatory for the developers and promoters to upload their agreements, plans, approval, advertisement, prospectus etc on their website regularly for the public.
- Escrow Account: It is mandatory for the developer and promoter to open an escrow as per RERA regulations and keep 70% of the amount received from allottees in that separate account in the schedule bank.
- Updating Quarterly Compliances with RERA: After the registration of a project on the website, it is necessary to update that project report on quarterly basis. Failure to do so will attract heavy fines and penalties according to the Act.
- Booking and Allotment: The developer must comply with the rules regarding the bookings and allotment of buildings and units. The transaction must be done with RERA registered agent and no developer will take advance more than 10% of the unit cost while booking flat. Moreover, copy of plan, layouts and other documents must be provided to all the buyers.
- Welfare association: It is mandatory to form a welfare association of promoters and developers and it will vary from state to state, as the rules for forming such association are governed by the state government.
- Timely completion and delivery including common area: Every builder/ association is under the obligation to complete the project on time and give possession within 3 months from the date of such completion. Moreover the common area will also be transferred to the association of allottees.
- Review: The developer and the promoters are under the obligation that they will review the quality of transferred building and if there is any defect in structural quality it should be repaired by the developer within 30 days of intimidation without any additional cost.
What penalties can be imposed on builders in Punjab in case of non-compliance?
- Non Registration: If any builder fails to register himself under the RERA Punjab then he is liable for the fine of 10 % of project estimated cost.
- False Information: If any builder gives false information regarding the projects then he is liable for the fine of 5% of project estimated cost.
- Violation of law: If any builder violates the law provided under the RERA Act then the imprisonment of up-to 3 year can be imposed or fine of 10% estimated cost of project or both.
The main objective of RERA Act is to protect the interest of customers and making them free of fear of fraud and cheating from builders and developers. It can be said beyond a shadow of doubt that fully compliance with the necessary provisions of the law of land can help the business owners. Since as per RERA, the builders are strictly required to fulfil all the stipulations, and failure to do so can invite litigation. Therefore, it is highly recommended to fully adhere with all the prevalent rules and regulations in real sector, so that future legal hassles may be eliminated.
Associate at Aggarwals & Associates, S.A.S. Nagar, Mohali