Legal Checks, RERA and PMAY

As per RERA, “Carpet area" means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

Explanation — For the purpose of this clause, the expression "exclusive balcony or verandah area" means the area of the balcony or verandah which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and "exclusive open terrace area" means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee.

RERA is aimed at protecting the interests of buyers in the real estate sector and establishing aims to protect buyers' interests in the real estate sector and establish rating mechanism for speedy dispute redressal. It is an act to create a mechanism that effectively regulates and addresses issues like project delivery delays, property pricing, quality of construction, title, and other changes; in an efficient and transparent manner, as set out below:

Delay in delivery of possession: The developers who default in delivery of possession will be required to pay an interest rate of 2% above State Bank of India's lending rate to the home buyers. This is aside the possibility of imprisonment of up to three years.

Developers will not be able to charge for the excess area: Under RERA, ‘carpet area’ has specifically been defined. The selling of property based on super built up area has been prohibited and can only be sold based on the carpet area. Additionally, the developer will also require the consent of two-thirds of the buyers in a project before changing the project's design or any other structure.

Construction Quality: The quality of the construction has been a concern for many buyers. Under RERA, any structural defect that takes place to the property for up to five years from the date of handing over possession will have to be repaired by the developer.

Developers will not be able to use the money paid by flat purchasers for some other project: Under RERA, the developer will be required to transfer 70% of the money received from buyers to an escrow account. Post which, the money will be withdrawn as per the stage of the construction, that will be approved by architect, engineer, and chartered accountant of the developer.

Grievance redressal forum: Under RERA, regulatory bodies and appellate tribunals will be set up in each state to solve builder-buyer disputes. Any person aggrieved by any direction can expect a resolution from the appellate within 120 days (about 4 months).

Clearances required before selling: The developers and agents will have to register themselves with the regulator, disclose every detail about the project and will be able to sell projects only after the necessary clearances have been attained.

No more false promotions: Under RERA each advertisement has to carry the RERA registration number, and all the promotions and advertisements have to be completely honest without any false commitments. Developers cannot advertise a project without obtaining approval from RERA for the project.

Under RERA, in case any structural defect or any other defect in artistry, quality or provision of services or any other obligations of the promoter relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, subject to the terms of the agreement for sale, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter is unable to rectify such defects, the allottee shall be entitled to receive appropriate compensation in the manner as provided under the Act.