Understanding the RERA Act 2016: Rights and Regulations

Understanding the RERA Act 2016

The Real Estate (Regulation and Development) Act, 2016 (RERA) was a significant step toward regulating India's unorganized real estate sector. The Act acts as a guardian of homebuyer rights, protecting them from fraudulent builders and misleading claims.

What is the RERA Act 2016?

RERA was formulated to regulate India's previously unorganized real estate sector. In the absence of an efficient regulator, disputes between homebuyers and developers were on the rise. The Act addresses the concerns of developers, homebuyers, and realty agents. Projects registered under RERA are now preferred by homebuyers.

All real estate projects exceeding 500 sq m must be registered with the respective state authority. Builders must provide regular progress updates, adhere to timelines, and follow the rules stated in the Act.

Benefits of the RERA Act

• Transparency and Accountability: Mandatory registration minimizes misleading claims.
• Regulatory Oversight: State-wise bodies monitor development, reducing project delays.
• Homebuyer Safeguards: Penalties are imposed on developers for delays or non-compliance.

RERA Benefits for Homebuyers

• Escrow Account: 70% of project funds must be kept in a separate account for construction only.
• Carpet Area Pricing: Flats are sold based on carpet area, not super built-up area.
• Delay Compensation: Developers must pay interest for construction delays.
• Defect Liability: Free-of-cost services for construction defects for up to five years.
• Plan Alterations: Changes to building plans require consent from at least 2/3rd of allottees.

Goals of the RERA Act

• Transparency: Detailed project information must be disclosed.
• Consumer Protection: Ensuring timely delivery and adherence to specifications.
• Dispute Resolution: Real Estate Appellate Tribunals provide efficient conflict resolution.
• Accountability: Strict timelines for project completion and handover.
• Fair Practices: Curbing fraudulent dealings.

Project Registration Process

Developers must submit an application to the State RERA with:

• Company details and promoter information.
• Status of projects launched in the last five years.
• Authenticated copies of commencement certificates and sanctioned plans.
• Project location details, including longitude and latitude.
• Proforma of the sale agreement and allotment letter.
• Details of garages and carpet area.

Filing a Complaint

Complaints against builders or agents can be filed under Section 31 of the Act. The authority aims to resolve complaints within 90 days.

Penalties Under RERA

?

The RERA Act prescribes penalties for not abiding by the laws for promoters or builders. Here’s a list of penalties a builder/developer can get if a homebuyer files a complaint against him:

What are the challenges in front of RERA?

RERA is indeed a remarkable step taken in real estate and has shown results in the recent past. The RERA Act has enhanced the transparency in the real estate sector thus, providing a safe environment for investors and homebuyers by removing the non-registered players from the market. Despite this, there are several challenges and shortcomings in the RERA Act viz-

Absence of rules regarding project approvals- Despite talking in detail about the duties and rights of homebuyers’ and real estate developers, the RERA Act is silent on the issue of delay in necessary approvals due to clearance from government authorities. In general, all government approvals take up to two years from the date of application. The act does not hold government authorities accountable for the delay.

No Single Window Mechanism- real estate project developers face the daunting task of taking individual clearance from each government department, and it adds up to the overall project delivery timeline. The presence of a single-window mechanism would have expedited the project completion manifold.

Lack of clarity regarding state-specific content- The absence of clarity on certain matters of RERA is ambiguous. For instance, the RERA authorities of Delhi, Karnataka, Haryana, Gujarat and Uttar Pradesh have not released a standard format for certification by engineers, auditors and chartered accountants.

Tedious Registration Process- No uniformity in state RERA makes the registration process very tedious. For example, the presence of two RERAs or an alternate authority, such as the West Bengal Housing Industry Regulatory Authority (WB-HIRA) makes the registration of projects and real estate agents confusing and tedious.

Lack of Technical Knowledge- The online and technology-backed registration process might come in handy for metropolitan developers, but it creates a problem for developers and builders from non-metro and Tier 2 and 3 cities. RERA must start an outreach program for developers’ education and try to start the registration process in local languages.

After RERA Registration, Residential Projects are Getting Completed at a Faster Rate

According to Anarock Research, residential projects which were registered under RERA Act are getting completed at a faster rate. For projects launched in the second of 2017 and the first of 2018, 86% of residential projects were successfully completed. Despite facing issues like supply chain disruptions due to the Russia-Ukraine War and the COVID-19 pandemic, the completion has been done.   

Chennai has the highest completion rate, nearly 90%, and Kolkata stands at the last position with a 70% completion rate. The lag in Kolkata completion could be because RERA in West Bengal was not enforced till 2023.  

Short Questions

RERA Act was implemented in 2016 to regulate the Real Estate sector to enhance transparency, remove discrepancies and safeguard the interest of home buyers and real estate developers.  RERA has massively helped in regulating the real estate sector across India.

Full form of RERA is the Real Estate (Regulation and Development) Act. States have established Real Estate Regulatory Authority (RERA) under this act.

All the residential and commercial real estate projects of 500 sq m or projects with a number of proposed apartments of more than eight must be registered with the RERA.

It is not safe to buy a property from a project not registered with RERA as it is mandatory for projects above 500 sq m area.

You can appeal against a RERA order in the Appellate Tribunals of RERA.

If a project or an agent doesnt abide by the rules of the RERA Act, they will have to pay. Developers will have to pay 10 per cent of the projects estimated cost, and they will be charged 5 percent of the projects estimated cost if they are found guilty of providing any false information about the project. If any rule is violated, they must pay 10 percent of the cost or three years imprisonment.

Real estate agents are liable to pay Rs.10,000 per day or up to 5 percent of the project cost if they are found doing construction or sales on their project without a valid RERA registration.

Under the RERA Act 2016, online project registration can be done. Many states have launched their own online RERA websites.

The Indian Parliament enacted RERA as a statutory body to monitor and track the advancement of the Real Estate Sector in India. The legislation states that a regulatory body be established in every state to oversee if the rules are being implemented.

Some of the prominent goals of RERA include consumer protection, transparency, standardisation, dispute resolution and accountability.

ESTABLISHMENT IN P.W.D.

The officers, officials and other workers, working in the Public works Departments can be divided into the following classes of establishments.

1. Regular Establishment

It consists of:

(i) Permanent Establishment.

(ii) Temporary Establishment.

2. Work charged Establishment

3. Contingent Establishment

4. Daily Labour

1. Regular Establishment:

(i) Permanent Establishment:

This class of establishment is meant for general purposes of a division or a sub-division or for general supervision of work and is an establishment permanently, employed having rate of pay without any time limit. Its strength depends upon the work that the respective Public works department has to carry. The strength of this type of establishment can neither be increased nor decreased during busy and slack months like the seasonal labour.

The salary of such an establishment is charged to the expenditure head 'Establishment'. Payment to this is made on pay-bills drawn on treasuries. The service conditions of the establishment as regards in the matter of pay, allowances, leave, T.A. (travelling allowance), General provident fund (G.P.F.) and pension etc. are governed by the Civil Service Rules Vol. I, Vol. II. and Vol. III.

Usually three monthnotice is required on either side to leave or to terminate the services.

(ii) Temporary Establishment:

This type of establishment is employed to supplement the permanent establishment in order to meet the requirements of extra work or when department has to handle more works of construction or repairs in excess to its normal load.

It has rate of pay with some time limit and usually half yearly or yearly sanction is attained from the competent authority for the continuity of the services.

Like the permanent establishment their pay is also drawn on pay bills by representing them to the treasury.

Also the service conditions of this type of establishment are governed by the civil service rules Vol. I, Vol. II, and Vol. III as regards pay, allowances, leave, T.A. (travelling allowance) general provident fund (G.P.F.) etc.

The members of temporary establishment are monthly servants and they are not entitled to any pension. Their services are liable to be terminated with one month notice and in case they want to resign their post similar notice of one month is required to be given by them.

10 days causal leave is admissible upto 10 years service, 10 days upto 20 years and 20 days for more than 20 years of service both for permanent and temporary establishment.

2. Work Charged Establishment:

The work charged establishment is engaged directly on the work for the actual execution of a specific work (as against the general supervision for which regular establishment is there) or for the super- vision of the departmental labour, store and machinery etc. Usually work-supervisors,chowkidars, storekeeper, peon, surveyors,draftsmanetc. employed as work charged establishment. Their pay is charged direct to the work for which they are employed and a provision is made in the estimate of work at the rate 1 to 3% of the total cost of the work while framing an estimate. Normally they are employed on monthly basis and the prior sanction is taken from the competent authority i.e. Executive Engineer. Wages of work charged establishment are prepared, drawn and paid on prescribed form D.F.R. (P.W.) 29. Pay Bill of work charged Establishment. The bill is prepared by Sectional Officer/Sub-Divisional Officer and passed by the Executive Engineer. A certificate at the bottom of bill is recorded by the S.D.O. that each person is actually employed on the work and remained on duty for the period claimed according to sanction.

The services of work charged establishment may be terminated at any time without giving any notice, however for those who are employed on monthly basis, are given ten days notice if the services are terminated earlier then the period of sanction.

They are not entitled to travelling allowance and other allowances except with the permission of the Executive Engineer, in which case, the actual expenses are paid and charged to the work on which employed, provided they travel in the interest of the work.

They have no claim for pension, gratuity etc.

They are given alternate sundays off and ten days casual leave per calendar year, but no earned leave or half pay leave is allowed.

3. Contingent Establishment

Sometimes certain category of employees like Driver, Operator, Mechanic etc., are not provided in the permanent establishment or if provided they are not in sufficientnumbers. Thus the Executive Engineer engages these persons who are paid from the head office contingencies on the Contingent Rolls. Such employees are known to belong to the Contingent Establishment. Their leave, T.A. and other allowances may be allowed by XEN as per rules.

4. Daily Labour

It includes all the persons, such as Masons, Carpenters,Mazdoors, Painter, Bar bender, Fabricator, Coolies and Bhisties etc., engaged on daily wages forthe execution of work departmentally. Their attendance is recorded daily on the Muster Roll. Work done by them measured and also entered. The labourers are paid weekly, fortnightly, monthly or at the completion of work if the work is small one. The muster roll is passed for payment either by the XEN or the S.D.O. Their wages are debited to the estimate of works on which they are employed.

These person are let off at the completion of a work. However their services can be dispensed with at any time without notice. Daily labour is not entitled to any leave and any allowance.

QUESTIONS FOR REVISION

1. Show the organization of Engineering departments? Define briefly the different branches of engineering departments.

2. Name the officer whose jurisdiction is (a) Circle (b) Division (c) Section.

3. Write down the jurisdiction duties of the following officers.

(a) Chief Engineer (b) Superintending Engineer.

4.What are the duties of the following officers ?

(a) Executive Engineer. (b) Sub-Divisional Officer. (c) Assistant Engineer/Sectional Officer.

EASEMENT

The easements are the restrictions on the use or utility of a particular property. They are to be carefully examined while valuing the property. These easements may either be self-imposed or legally created.

The self-imposed easements are created by the consent or agreement between the parties concerned.

Following are the instances of the self-imposed easements:

(1) The members of a family while dividing the property among themselves may agree that no member can sell out his portion without the consent of the other members.

(2) A housing society may make a resolution stating that its members shall be of a particular caste or community.

The legal easements are controlled by the provisions of the Indian Easements Act, 1882.

Following are the instances of the legal easements:

(1) Right of common passage of  adjoining properties. It includes Footway, crossing way, cable way or vehicle way.

(2) Right to lay, cross or construct pipe lines, ducts or cables over or under the land or property.

(3) Right of light and ventilation through an open space or an opening appurtenant to the adjoining property.

(4) Right to project in the premises of an adjoining property for disposalof rain water.

(5) Right to pollute i.e., right of disposal of rain or other type of water through the other property.

(6) Right to use a chimney of a neighbour for disposal of smoke.

(7) Right to fix advertisement over another property.

(8) Right to use latrine, water closet or bath room of other property.

(9) Right of a property to have its building supported by other property.

(10) Right to take water from a well or a reservoir or a flowing stream of water situated or passing through another property.

(11) Sometimes, a right is acquired over other property whereby this other property owner is bound to repair the hedges and fencings of the first property. This is acquired where or when cattle of the other property cause damage to the hedges and fencings and cross over and enter inside the first property.

DEFINITION:

In the Indian Easements Act, 1882, the easement is defined as follows:

Easements

An easement is a right which the owner or occupier of certain land, possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own.

The land which enjoys the right holds commanding influence or position like a master or lord and hence, from the latin word dominus which means a lord, this land is termed a dominant tenement or a dominant heritage.

The land over which the right is imposed is in a submissive position like a servant or an inferior and hence, from the latin word servus which means a slave or a servant, this land is termed a servient (subordinate)tenement or a servient heritage. Practices that are handed down from the past by tradition.

The respective ownerships of these different lands are termed as dominant ownership (Exercising influence or control) and servientownership.

Thus, the dominant owner will be in a commanding position as compared to the servient owner with respect to the enjoyment of an easement right over an immovable property.

It may be noted that an encroachment indicates an intrusion on the property and it may be in the form of an illegal possession such as foundation walls beyond the property line or in the form of overhanging construction such as cornices, fire escapes, roofs, beams, porches, sills, etc.

CREATION OF EASEMENTS:

An easement can be created or acquired either by an owner or a person in possession on his behalf or by a co-owner, if any, for the beneficial enjoyment of the property.

A lessee of a leasehold property cannot create or acquire an easement for the beneficial enjoyment of his own property.

In a same way, a tenant with permanent rights of tenancy cannot create or acquire an easement by prescription in other lands of his owner. An easement is created or acquired in many ways.

Following are the different methods of creating or acquiring an easement:

(1) By grant: An easement granted by a deed is governed by the conditions of the deed e.g. a right of light and ventilation through a certain specified space or a right of footway only through a defined boundary. This is called an express grant of easement.

(2) By necessity: When a property is divided into several parts, an easement becomes essential to enjoy the parts so formed. When the easement is absolutely essential, it is known as an easement of necessity. The division of property may take place either by transfer or gift or partition or by operation of law and it may be either in ownership, possession or in both. Thus, the two or more parts formed by division are so relatively situated that one cannot be enjoyed without the exercise of a particular privilege in or over or in respect of the other and such a privilege is called an easement of necessity. It should, however, be remembered that mere convenience is not the test of an easement of necessity.

(3) By quasi-necessity: The term quasi-necessity is used to indicate qualified necessity i.e., without which the property, though enjoyable otherwise, is not enjoyable in the same way as it was enjoyed before the division of property took place. Thus, the qualified necessity means nothing more than mere necessity to continue prior user. Hence, for establishing the right of a quasi-necessity easement, it must be proved that the said easement was enjoyed before the property was divided. Thus, an easement of quasi-necessity is apparent, continuous and necessary for enjoying the property as it was enjoyed before the transfer took place.

(4) By prescription: This is the most usual way of creating an easement. When the right of an easement is enjoyed over a property by a person, peaceably and without interruption, for a period of 20 years or more, an easement is imposed on the property. If property involved belongs to the government, the prescriptive period is 60 years.

EASEMENTS AND NATURAL RIGHTS:

An easement is an acquired right and it is taken out from the ownership of one rights which are secured to the owner of land by the common law of the land.

The natural rights are inherent in the land and they are respected by law as the ordinary incidents of property. For instance, every owner of land has right to enjoy the light and air passing through his land or has right to develop his land as he likes by respecting the provisions of the prevailing bye-laws of the locality, etc. These are called or known as the natural rights and they do not require any special treatment for their creation. On the other hand, the easements are the artificial rights and they are not given to every owner of land, but they are acquired or created by special human acts or incidents.

The cases in which the natural rights of the owner to enjoy his property exclusively are restricted can be summarized as follows:

(1) Every owner of a plot at high level has right to drain rain water from higher plot to lower plot. But the right to discharge polluted water in the neighbouring plot is not a natural right.

(2) Every owner has right to support of adjacent land in natural condition. For instance, if the owner of the land digs a pit and fills it with water, it will interfere with the support of adjoining land.

(3) Every owner of land has right to receive the natural light which falls vertically upon the land, but not the light through adjacent plot.

(4) The fresh air should not be polluted.

(5) The formation of unreasonable noises, vibrations, etc. which would cause physical discomfort to the neighbours are not treated as the natural rights.

(6) The owner cannot develop his land in the manner as he likes. But he has to respect and comply with the prevailing rules and regulations of the local bodies.

EFFECT ON VALUATION DUE TO EASEMENT:

The impact of existence of easement on the valuation of real property concerned will depend on the degree of obligation thrown on the property to be valued. The higher the obligation, the higher will be the reduction factor from the value arrived at on the basis of non-existence of the easement and vice versa.

The appendage of an easement to a property reduces the attraction to that property to a certain extent and hence, the degree of competition for purchase also diminishes as compared to that of a property without any easement. The valuer has to carefully examine the nature of easement attached to the property for which he is determining the fair market value.

The reduction factor to be applied to the value of a servient heritage will depend upon the hardships, inconveniences and other disadvantages a purchaser will be expected to bear due to the existence of easement. Same considerations will also govern the valuation of dominant heritage. But in general, it may be stated that lower reduction factor should be applied for the dominant heritage as compared to that for the servientheritage.

DEFINITION: ​

The clauses related to the work are written in a separate contract document, known as the general provisions or conditions ofcontract. (A separate section of a legal document)

OBJECT:

The main object of framing the conditions of contract is to avoid dispute between the parties concerned and thus, to keep them out of the court of law.

IMPORTANCE:

The conditions of contract are framed in the legal phraseology.

In case of complicated contracts, the lawyers are apportioned to frame the conditions for the contract.

They carry more weight and any breach of them will lead to serious legal formalities.

PECULIARITIES: means characteristic

The conditions of contract have the following peculiarities:

(1) Number of the clauses:

There is no definite rule regarding the number of clauses to be included in each type of the contract.

It mainly depends on the character of the work and clauses which are found suitable for one contract may not fit in the skeleton of the other contract.

The engineer, therefore, should make careful study of the work before framing the conditions of contract.

(2) Relation with the technical provisions:

There is no sharp distinction (Difference) between the technical provisions and the general provisions.

As a matter of fact, few clauses may well fit into either group.

Under such condition the engineer decide whether a particular clause is to be inserted in the technical provisions or in the general provisions.

(3) Use:

The provisions in the technical specifications are used at any stage of the work.

But it is likely that a clause contained in the general provisions may not be used at all during the contract period.

This is due to the fact that the situation for which it was framed may not have arisen during the period of contract.

GENERAL PROVISIONS:

The conditions of contract to be included in any particular project will depend on the nature of work. In case of most of the civil engineering contracts, the following groups of conditions of contract are generally accommodated:

(1) Conditions relating to documents:

These pertain to:

(i) Bill of quantities and schedule of prices;

(ii) Drawings;

(iii) Indian standard specifications;

(iv) Notices;

(v) Provisional and prime cost sums; etc.

(2) Conditions relating to the general obligations of the contractor:

These pertain to:

(i) Access to works;

(ii) acts, bye-laws and regulations;

(iii) Fencing, watching and lighting;

(iv) Instructions of engineer;

(v) Insurance;

(vi) Setting out;

(vii) Site; etc.

(3) Conditions relating to labour and personnel:

These pertain to:

(i) Accidents to workmen;

(ii) Contractor's representative;

(iii) Engineer's representative;

(iv) First aid;

(v) Rates of wages;

(vi) Removal of the employees of the contractor; etc.

(4) Conditions relating to assignments and sub-letting:

These pertain to:

(i) Assignments;

(ii) Sub-letting;

(iii) Specialist contractors; etc.

(5) Conditions relating to the execution of the work:

These pertain to:

(i) Alterations, additions and omissions during progress of work;

(ii) Amount for extra items;

(iii) Damages;

(iv) Defective work;

(v) Defects;

(vi) Materials;

(vii) Protection of trees and shrubs;

(viii) Public travel;

(ix) Safety by shoring and during blasting;

(x) Water for construction;

(xi) Work at night and on holidays;

(xii) Workmanship; etc.

(6) Conditions relating to measurements and payments:

These pertain to:

(i) Method of measurement of completed works;

(ii) Method of payment;

iii) Payment to sub-contractors; etc.

(7) Conditions relating to default and non-completion:

These pertain to:

(i) Abandonment of the work by the contractor;

(ii) Bankruptcy of contractor;

(iii) Engineer during construction;

(iv) Failure to complete the work in time;

(v) Right to suspend the work by the owner;

(vi) Time of completion; etc.

(8) Conditions relating to settlement of disputes:

These pertain to:

(i) Arbitration:

(ii) When engineer's decision is to be final; etc.

(9) Special conditions:

These pertain to:

(i) Equipments;

(ii) Names of firms supplying materials;

(iii) Pollution of streams;

(iv) Use of intoxicants; etc.

TYPICAL CLAUSES OF THE CONDITIONS OF CONTRACT:

Some of the clauses of the conditions of contract which are normally found in all engineering contracts are given below.

A brief description regarding the contents of each clause is given in the beginning.

The clauses are written in simple language so as to make them easier. It is hoped that after studying the typical clauses for the conditions of contract, the reader will be in a position to frame other clauses of the conditions of contract.

(1) Definitions: This clause contains the definitions of the words which are frequently used in the specifications. Thus, its purpose is to avoid confusion and to fix the meaning of a particular word. The usual definitions contained are those of Engineer, Owner, Contractor, Site, Drawings and Works.