Recently the Supreme Court criticized RERA’s performance, calling it “disappointing.”

• The bench noted that the authority had failed to protect homebuyers and regulate the real estate sector effectively.

Supreme Court’s Observation on RERA’s Functioning

• The criticism was based on a submission  which highlighted the “domino effect” in the sector, where one failed project often leads to multiple failures.
• Concerns Raised: The Supreme Court previously, in September 2024, had also expressed dissatisfaction, stating that RERA had become a “rehabilitation centre for former bureaucrats” rather than a functional regulatory body.
• Delays in dispute resolution and lack of accountability in enforcing regulations.

About RERA and Its Functions

• The Real Estate Regulatory Authority (RERA) was established under the Real Estate (Regulation and Development) Act, 2016.
• Implementation: All States/ UTs have notified Rules under RERA except the State of Nagaland.
• It aims to protect homebuyers’ interests and promote transparency in the real estate sector while encouraging investments.
• Objectives
• • Regulation and promotion of the real estate sector.
  • Ensuring transparency and efficiency in project sales.
  • Consumer protection from fraudulent practices.
  • Establishing a fast-track dispute resolution mechanism.

Salient Provisions of Real Estate (Regulation and Development) Act, 2016

• Registration of Real Estate Projects: All real estate projects must be registered with RERA if they meet either of these criteria:
  • Plot size above 500 sq. meters
  • More than 8 apartments
• Dispute Resolution Mechanism: Establishes dedicated adjudicating officers and an Appellate Tribunal for quick resolution.
  • Allows consumers to file complaints against developers, buyers, or agents violating the Act.
• Regulation of Promoters and Agents: Promoters need approval from two-thirds of allottees and RERA before transferring project rights.
  • Agents must be registered with RERA and comply with rules.
• Authority to Halt Violations: RERA can stop an agent, promoter, or buyer from continuing any activity if a complaint is raised.
• Penalties for Non-Compliance
  • For Promoters: Up to 5% of project cost as a penalty for violations.
  • For Tribunal Non-Compliance:
    • Imprisonment up to 3 years
    • Fine up to 10% of project cost, or both.
• Jurisdiction and Legal Restrictions
  • Civil courts have no jurisdiction over matters under RERA or its Appellate Tribunal.
  • No court can grant an injunction against RERA’s decisions.

Advantages of RERA for Property Buyers

• Transparency and Accountability: RERA ensures developers disclose complete project details, including layout, legal permissions, and timelines. This builds trust and enables buyers to make informed decisions.
• Timely Project Completion: Developers must adhere to the promised deadlines. Delays result in penalties, ensuring timely possession and reducing buyer stress.
• Protection Against False Advertising: Developers cannot provide misleading information in promotional materials. RERA mandates that all claims be accurate and registered.
• Financial Security through Escrow Accounts: Builders must deposit a portion of project funds in an escrow account, preventing fund diversion and ensuring project completion.
• Grievance Redressal and Structural Defect Liability: RERA offers a swift dispute resolution system and holds developers accountable for structural defects for a specified period post-possession.

Challenges in Implementation of RERA

• Complex and Costly Registration Process: Developers often find the RERA registration process time-consuming and expensive, which can deter them from initiating new projects.
• Compliance Difficulties for Small Developers: Smaller developers may lack the necessary resources to fully comply with RERA regulations, potentially hindering their operations.
• Inconsistent Implementation Across States: The effectiveness of RERA varies by state, with some regions not implementing the act as effectively as others, leading to disparities in regulatory enforcement.
• Insufficient Infrastructure and Human Resources: Some states face challenges due to inadequate infrastructure and staffing, resulting in delays in project registration and complaint resolution.
• Lack of Awareness Among Stakeholders: Many homebuyers and developers remain unaware of RERA’s provisions, leading to non-compliance and underutilization of the act’s benefits. 

Conclusion

Addressing these challenges is crucial to ensure that RERA effectively protects the interests of both buyers and developers in the real estate sector.

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