The Real Estate Regulation Act, 2016, a legislative measure aimed at safeguarding homebuyers and enhancing investment in the real estate sector.
The Rajya Sabha and Lok Sabha passed a bill on March 10th and 15th this year, aiming to eliminate the scope of agreements favoring either party.
The new Act grants developers and home-buyers the right to terminate a sale agreement in case of default, and allows them to amend the agreement with written consent from the other party.
The total price of an apartment or plot can only be increased by competent authorities, not developers, providing relief for home-buyers.
If a home-buyer consistently defaults on payments, the developer can terminate the agreement and cancel the allotment made to the buyer. The developer can also deduct the booking amount and interest liabilities from the repayment amount. If the developer fails to provide the apartment or complete the project on time, the buyer can terminate the agreement and receive a refund of the paid amount with interest within 45 days. If the buyer does not want to withdraw, they must pay interest until the project is completed.
The rules do not apply if a project’s development is delayed due to uncontrollable conditions like war, floods, cyclones, or drought.
Developers who default will be required to refund money or compensate allottees at the State Bank of India’s highest marginal cost of lending plus 2% within 45 days of the due date.
Builders must deposit 70% of advances with the real estate regulatory authority within three months of project registration to ensure project completion.
Home buyers can rectify structural defects by the builder within five years of issuance of occupancy certificate, while builders can be interested in cases of payment delays.
Every state must establish Real Estate Regulatory Authorities by April 30, 2017, before the full Act takes effect on May 1, 2017.