Most buyers are unaware of basic Rera rules: Consumer organisation survey

While visiting Ghaziabad, Abhay Upadhyay, national convenor at Fight For Rera, came across a newspaper advertisement of a real estate project that surprised him. At the bottom of the ad was a note that said: ‘Mentioned features and amenities are indicative and are subject to change without prior notice as may be decided by the company or competent authority’. The project was registered under The Real Estate (Regulation and Development) Act or Rera. “Once registered under Rera, the developer cannot change anything as he wishes. Buyers’ consent is mandatorily needed,” says Upadhyay.

It’s been a year and a half since the Centre asked all the states to implement Rera. But many buyers are unaware of even basic norms that benefit them. Despite the regulations in place, they continue to remain at the mercy of the developer. Recently, a consumer organisation Mumbai Grahak Panchayat did an online survey of homebuyers in Maharashtra. It found that out of 707 homebuyers who participated, 374 (53 per cent) reported that their developer has not registered their on-going project with the real estate regulator (MahaRera). Of these, 62 per cent did not even complain to the regulator about the non-registration. About 35 per cent were not even aware that the project had to be registered. Not registering project is a violation of the laws and the builder can be penalised under up to 10 per cent of the project cost.

Similarly, almost 56 per cent did not know that the builder cannot accept more than 10 per cent of the flat cost without executing the Agreement for Sale. The realtor can be penalised up to five per cent of the project cost for not following this provision. “Not knowing your rights can also prove costly. There have been many cases where the courts have come down heavily on the consumers for their lack of awareness,” says Shirish Deshpande, a lawyer and also chairman of Mumbai Grahak Panchayat.

Citing the newspaper advertisement that Upadhyay saw in Ghaziabad, he says that consumers should be aware that if a developer is making any modifications to the existing plans, two-thirds of the existing buyers should provide written consent for the change. Else, the developer is not permitted to make any changes.

In fact, all real estate projects now need to display the sanctioned plans at their site, even if they don’t fall under Rera’s ambit, according to the recent ruling of the Supreme Court. It means, if you are a home buyer, you don’t need to wait until the developer uploads the plan on your state Rera’s website. You can visit the project site, take a picture of the displayed plan, and keep it as a record. “While the laws exist to cover buyers, they also need to be proactive in knowing them and ensuring that developers follow them. If a builder does not display the plans, the buyer should complain to the local authority and their state regulator,” says Deshpande.

Many buyers are also not aware that once 50 per cent of the houses in a project are sold, the developer needs to mandatorily form a housing society and conveyance needs to be done within a stipulated time on procuring occupational certificate. The developers, on the contrary, continue to charge the new buyers yearly maintenance, which is now a source of revenue for them.

Rera specifies that the developers need to deposit 70  of the funds collected from buyers of a project in a separate bank account. But not many regulators are keeping a track of this provision, according to Rera activists. It’s the buyer’s responsibility to ask the developer documents like chartered accountant certificated to ensure that the money raised from a particular project is used in the same. “In many earlier cases where buyers have not received the flat, it’s found that the funds were diverted,” says Upadhyay.

Also, ensure that the agreement that you sign with the developer is based on the draft issued by the state government to avoid lopsided terms and conditions. The date of delivery mentioned in the agreement should be the same that the developer has mentioned with the state real estate regulator. Also, developers cannot charge money for open parking space, according to the Rera laws.

Basic rules buyers should know

- Execute the agreement for sale if a buyer pays over 10 per cent of the house cost

- Developers should display the project plan at their site

- Society should be formed if 50 per cent flats are sold

- Conveyance is mandatory once a developer gets an occupation certificate

- The agreement should be based on the draft notified by the state government

- Consent of two-third buyers necessary for any change to the project plans

- Open parking cannot be sold