By Hemanth Gorur
Despite the promulgation of the Real Estate (Regulation and Development) Act 2016 (the Act), many home buyers remain unaware of their rights with respect to a home purchase from a builder or developer. Let us look at some of these salient rights
Registration of property
Under the Act, builders or promoters cannot market or sell real estate projects without first registering with the Real Estate Regulatory Authority (RERA). Even projects that were ongoing at the time of promulgation of the Act need to have applied for registration within three months of promulgation of the Act. Homebuyers can and should ask forthe RERA registration number of the project. Promoters are liable to be fined a penalty of 10% of project cost if any of the above registration requirements are violated.
Every homebuyer needs to have a detailed construction agreement with the promoter of the real estate project they are investing in. Once the development plans and specifications are sanctioned by concerned authorities and communicated to the homebuyer through a construction agreement as part of the home purchase process, the promoter cannot alter any aspect of the plan, including structural changes, and changes to fittings, fixtures, or specifications pertaining to the homebuyer’s individual unit without his consent.
The promoter cannot make any alterations with respect to the common amenities without the consent of at least two-thirds of the home buyers invested in that project. If the promoter attempts any such alterations in either the individual unit or the common amenities, home buyers are well within their rights to question it.
As per Section 4, the promoter is required to deposit at least 70% of all amounts received from the home buyers into a separate bank account or escrow account. The withdrawals from this account shall be in proportion to the percentage of project completion, which is to be certified by a chartered accountant, architect, or engineer.
Homebuyers should ascertain this to be true before proceeding with their purchase or further payment instalments. They should also be aware of implications of schemes like interest subvention schemes, which are sometimes used by promoters to sell at inflated prices by promising to pay the pre-EMI interest or EMIs on home loans. The National Housing Bank (NHB) has, in 2019, directed all housing finance companies to refrain from lending under subvention schemes.
Completion of project and dispute resolution
As per Section 19, homebuyerscan take possession of their units and common amenities based on the schedule committed to by the promoter in the agreement, and have the right to withdraw their application and ask for a refund of their money in case the promoter has not been able to complete as per such schedule or has defaulted.
Homebuyers should note that, in case of any disputes, they are not bound by any arbitration clause in the agreement signed with the promoter, and can seek other legal remedies as convenient. They should be aware that, under Section 69, all officers of the promoter’s company in charge of the company’s affairs when the dispute arose are accountable for the company’s conduct.
* Ask for the project’s RERA registration number
* Check if there’s an escrow account to deposit your payments
* You can ask for a refund if project is not completed as per agreed schedule
The writer is founder, Hermoneytalks.com