For years, the Indian real estate market was a wild west for homebuyers. Delays, false promises, and unclear titles were common nightmares. Then, in 2016, the government introduced a sheriff: The Real Estate (Regulation and Development) Act, or RERA.
Touted as a revolutionary shield for homebuyers, it has indeed transformed the landscape. But is it a flawless, all-powerful shield? Let’s break down what RERA truly protects you from and, just as importantly, where its authority ends.
How RERA is Your Powerful Shield: The Protections
RERA’s primary goal is to bring transparency and accountability. Here’s how it actively protects you:
1. Mandatory Project Registration:
- What it is: No builder can advertise, sell, or book a project without first registering it with the state’s RERA authority.
- How it protects you: This ensures the project is legally vetted. You can verify all approved plans, layouts, and the builder’s track record on the official RERA website before writing a cheque.
2. The Builder’s Escrow Account:
- What it is: A critical rule where 70% of the money collected from homebuyers must be deposited in a separate bank account.
- How it protects you: This money can only be used for construction and land costs. It prevents builders from diverting your hard-earned money to launch new projects, drastically reducing the risk of stalling.
3. No More False Promises:
- What it is: The builder must upload all details – carpet area, layout, specifications, completion date, to the RERA portal at the time of registration.
- How it protects you: What you see is what you get. You cannot be sold on a fancy brochure; the legal agreement is based on these uploaded details. Any major change requires the consent of 2/3rd of allottees.
4. Penalty for Delay:
- What it is: If the builder fails to hand over possession on time, they are liable to pay the same interest rate to you that you pay on your bank loan for every month of delay.
- How it protects you: This puts financial pressure on the builder to complete the project on schedule. It compensates you for the delay.
5. A Quick Grievance Redressal Forum:
- What it is: RERA establishes a dedicated authority and appellate tribunal to handle disputes.
- How it protects you: It provides a faster, cheaper, and more specialized legal avenue than traditional civil courts.
The Limits of the Shield: What RERA Doesn’t Do
Understanding RERA’s limitations is crucial for a homebuyer.
1. It’s Not a Quality Control Authority:
- RERA ensures the builder delivers what was promised in the agreement. However, it does not guarantee high-quality construction. If the quality is poor but as per the agreed specifications, it becomes a contractual dispute.
2. It Can’t Fix a Builder’s Bankruptcy:
- If a builder goes bankrupt, RERA can penalize them but cannot magically produce funds to complete the project. The ongoing construction from the escrow account is the primary safety net.
3. Legacy Projects Are a Grey Area:
- While RERA covers ongoing projects, getting justice for projects that were severely delayed or abandoned before RERA came into effect can be more complex.
4. It Doesn’t Replace Due Diligence:
- RERA is a powerful tool, not a substitute for your research. You must still:
- Verify the RERA number on the official website.
- Check the builder’s past record.
- Understand the property’s title and legal history.
Conclusion: A Powerful Tool for the Informed Buyer
The RERA Act is undoubtedly the strongest weapon in a homebuyer’s arsenal, bringing much-needed accountability and structure. It empowers you with information and legal recourse.
However, it is not an all-encompassing guarantee. It works best when combined with your own due diligence. Use RERA as your foundation for trust, but always build upon it with thorough research and professional legal advice before making one of life’s biggest investments.
