By Krishna Kant Choubey

Published on: February 15, 2024 at 09:40 IST

The Real Estate (Regulation and Development) Act, also known as RERA, emerged as a major regulation in the real estate sector, with the objective of addressing persistent problems and protecting purchasers of housing’ interests. RERA, enacted in the year 2016, provided detailed guidelines and procedures for supervising the actions of builders and developers, promoting transparency, responsibility, and fairness in the real estate market.

The Real Estate Reform Act (RERA) is an legislation that requires builders to register their projects and adhere to strict rules in order to protect the interests of house buyers.

The Act also encourages transparency and accountability by mandating builders to reveal project specifics, financial information, and development progress. RERA also strives to reduce project delays by establishing strict timeframes and assuring possession. It also develops a standard set of practices for the real estate sector, which promotes consistency and dependability, resulting in a more structured and trustworthy market.

RERA is an essential part of legislation in the real estate sector that addresses a variety of transactional issues, including registration requirements, financial management, and dispute resolution. It creates a balance between the interests of developers and buyers, creating a business-friendly climate and protecting against unfair activities.

RERA also creates an enforceable system for resolving disputes between builders and homebuyers by creating the Real Estate Regulatory Authority (RERA) and the Real Estate Appellate Tribunal (REAT) for speedy adjudication. The Act’s definition, purpose, and relevance all contribute to its role in transforming the real estate sector by promoting openness, accountability, and a consumer-centric environment.

This article gives a complete explanation of the major violations committed by builders under RERA, with the goal of informing homeowners, educating builders, and advocating regulatory compliance.

Offences committed by Builders

The Real Estate (Regulation and Development) Act, 2016 (RERA) aims to protect homebuyers’ interests and ensure fair practices by builders. However, some builders still violate the law, leading to various offenses. Here are some major ones:

• Registration Violations

One of the primary requirements under RERA is for builders to register their projects with the regulatory authority. Failure to do so or providing false information during registration is a major offense that can lead to significant penalties. Section 3 mandates builders and developers to register their real estate projects with the Real Estate and Development Authority (RERA). This registration process promotes transparency and provides homebuyers with essential details. Non-registration can have substantial implications, such as penalties, fines, and imprisonment. Section 59 of RERA allows the regulatory authority to impose various penalties, which may vary by state. If a builder continues to breach the registration requirements, further penalties may be applied for each day that the violation occurs. Non-registration may also lead to the project being ruled illegal under Section 3(2) of RERA, making it difficult for the builder to put up for sale the units.

• Misleading Advertisement and and Practices

Section 11 of RERA talks about transparency in advertising, delivering accurate information and avoiding false impressions. Builders must give correct information regarding the project, such as specifications, facilities, and dates. The Real Estate Reform Act (RERA) prohibits builders and developers from giving incorrect information or applying misleading practices in the promotion and marketing of their real estate projects. Any omission from this information may result in legal consequences.

Violations of Section 11 can result in serious consequences such as regulatory penalties, fines, and imprisonment. The severity of these sanctions is determined by the magnitude of the offense and its impact on potential homebuyers. Also, adverse publicity to the builder’s brand can be severe, resulting in financial losses or dissatisfaction among homebuyers.

• Construction Quality and Specification Violation

RERA illustrates the necessity of builders fulfilling agreed-upon demands with homebuyers. Builders must finish projects in accordance with the standards outlined in the selling agreement, which include building quality, design features, and amenities. This is important in preserving transparency, trust, and avoiding variations that might harm the project’s overall quality. Homebuyers have the right to expect the completed product to match the parameters given during the sale, and any change may constitute a breach of RERA regulations.

Substandard construction or violations of agreed-upon standards can have serious consequences for builders, as detailed in Section 14(3) of RERA. If the builder fails to match the specifications, the homebuyer has the right to seek redress, such as rectification, compensation, or alternative solutions. Repeated violations of building quality and requirements may result in penalties imposed by the regulating body, as per Section 59 of RERA, in order to prevent builders from compromising construction quality.

Section 18 of RERA describes the repercussions for builders who do not complete the project within the specified time frame. If a builder fails to deliver possession of the house to the homebuyer on time, the regulatory body may apply penalties to compensate the homebuyers for annoyance and financial losses. Also, homebuyers have the opportunity to withdraw from the project and demand a refund if the builder fails to meet the completion deadlines.

Unlawful alterations to a real estate project can have substantial implications, as addressed in Section 14(3) of RERA. Builders must perform the project in accordance with the requirements specified in the sales agreement. Unauthorized alterations can cause disagreements between builders and homebuyers, potentially leading to legal action. Homebuyers are entitled to seek remedies such as rectification of modifications, reimbursement for damages, or alternative options recommended by the regulating authority.

• Financial Accountability

The Real Estate Reform Act (RERA) demonstrates the significance of properly allocating funds raised from purchasers for real estate projects. To avoid financial mismanagement and protect purchasers’ interests, builders must establish a separate bank account for each project and deposit a certain amount of the total cash into it. Financial mismanagement is a significant offense under RERA, and the consequences can range from fines to the cancellation of the builder’s registration. Section 14(3)(b) applies where financial mismanagement results in inadequate construction or variations from agreed on requirements. Homebuyers can claim compensation for any financial losses experienced as a result of such mismanagement.

Several cases of fund misuse have been revealed, emphasizing the requirement of strict financial accountability under RERA. Builders have moved cash raised for a certain project to other endeavors, causing delays, unfinished construction, and unexpected expenses for consumers. In these circumstances, legal action is often taken in the form of sanctions and orders to correct financial mismanagement.

• Non-Compliance with RERA Orders

Non-compliance with RERA rules can have serious implications, as described in Section 63 of RERA. Non-compliance may result in monetary fines, imprisonment, or both, depending on the type and seriousness of the offense. Section 63(2) authorizes the regulatory body to impose a penalty for each day of constant noncompliance. Section 64 allows for the imprisonment of builders who fail to comply with instructions for up to three years, as well as additional fines.

The Residential Real Estate Act (RERA) authorizes regulatory agencies to issue orders and directions to builders to ensure compliance with the Act’s provisions. Section 37 empowers the authorities to issue orders about construction faults, compensation to homebuyers, and other required steps. Once issued, builders are legally obligated to comply within the term specified, ensuring openness, accountability, and preserving home buyers’ rights.

• Buyers Rights Violations

RERA is an Act that protects home buyers’ rights during real estate acquisitions. It contains sections 19-20, 19(4), and 19(4), which give homebuyers the right to seek timely possession of property, compensation for losses caused by the builder’s failure to meet the possession date, and withdrawal from a project if the builder fails to complete or provide possession within the specified time frame. Violations of these rights can have serious consequences for builders, such as monetary fines, jail, or both.

Section 63(2) empowers the regulatory body to apply additional penalties for each day of persistent noncompliance, highlighting the importance of resolving issues immediately. Homebuyers can also seek remedy and enforcement of their rights through the Real Estate Appellate Tribunal (REAT) or other suitable channels. The legal remedies available to homeowners provide a strong foundation for addressing infractions and assuring builders follow RERA requirements.

Conclusion

The Real Estate (Regulation and Development) Act (RERA) is a regulatory framework that influences the real estate industry. It lists key violations committed by builders, including registration violations, fraud, project delays, financial mismanagement, construction quality violations, non-compliance with RERA regulations, and abuses of buyer rights. RERA provides transparency, accountability, and justice in real estate transactions, while promoting ethical practices, protecting home buyers’ rights, and developing a trustworthy atmosphere. Compliance with RERA criteria is more than simply a legal responsibility; it also represents a commitment to good conduct and respect for homebuyer rights.