In the middle of rising economic uncertainties, India has emerged as one of the few world economic countries that have a combination of economic acumen and consistent growth in an international market. Everyone knows that India is now on a path that will lead to its participation in international growth, which will lead to the growth and expansion of the country’s economy in the long run.
The “Real estate sector” in India has witnessed a phenomenal upsurge in the last two decades. The sector has drawn huge investments, and people have spent their hard-earned money with the hope of unlocking their dream homes.
The real Estate Sector, which seems to be one of the major contributors to the inclusive growth of the nation, is also clutching a share of its regulatory attention. Significant rights and liabilities involved in the transactions of the Real Estate Industry have attracted the government’s attention towards appropriate policies and regulations for the real estate sector.
Legal Remedies under the Consumer Protection Act
Prior to the RERA Act, a buyer could typically approach the Consumer Forum for the resolution of disputes and grievances. The erstwhile Consumer Protection Act of 1986 and the current Consumer Protection Act 2019 provide for various redressal forums at district, state, and national levels. Such commissions have been set up with jurisdictions being defined in terms of territorial limits, where either the complainant or the opposite party resides or works, or where the cause of action has arisen.
Under the Consumer Protection Act, a complaint could be filed by the homebuyer regarding the delay in delivering possession of the property or the deficiency in service arising out of using inferior quality raw materials or substandard products. The homebuyer can seek an order directing the developer to refund the amount along with interest and compensation, including damages caused to the homebuyer due to the deficiency in service. The applicant can file a complaint, supporting it with the necessary documents, without even hiring an advocate since the procedure involved in filing the complaint is very simple.
Legal Remedies under RERA
RERA, also known as The Real Estate Regulations and Development Act 2016 is a legislation that ensures strict compliance with the norms that each and every developer, builder, and construction giant have to adhere to in different parts of the country. It protects and promotes the interests of home buyers and also boosts investments in the sector.
In the present era, where the majority of homebuyers are aggrieved by the delay in the timely delivery of projects and other construction aspects, RERA comes to the rescue of the investors. The Act entitles the aggrieved homebuyers to claim the refund amount from the respective builders and developers, along with interest, in case they make any default in the delivery of possession of property according to the agreed terms and conditions.
Since the prolonged delay in the delivery of projects cripples the sole purpose of investing in real estate, RERA enables developers and construction pioneers to deliver the projects on time to their respective owners, thereby bringing more transparency and accountability to the real estate sector.
At the same time, RERA envisages penal provisions stipulating that the defaulter shall be liable to a penalty extending to 5 percent of the estimated cost of the real estate project as determined by the Real Estate Regulation Authority. Moreover, imposition of penalty in case of contravention of the orders and directions of the Real Estate Appellate Tribunal extends up to 10 percent of the estimated cost or three years of imprisonment or both.
Furthermore, as per RERA guidelines, the developers have to keep 70 percent of the money collected from the buyers in a separate Escrow account to meet the construction costs of the project. This ensures control over the developers who tend to divert their money otherwise, instead of investing it for the purpose for which it was intended, and also ensures that the respective project is completed on time.
The real estate sector is a catalyst for meeting the needs and demands of housing and infrastructure in the country. RERA and the Consumer Protection Act have helped to standardize the industry and strike a balance between the interests of homebuyers and builders to fulfill the vast and growing demand of this sector. Thus, the structure of these acts, which focuses on the growth and regulation of the real estate sector, has increased the role of professionals in guaranteeing the effective implementation of the law in the country.
Legal Intern, LawDiktat
1. Wikipedia.com2. scribd.com