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Homebuyers beware! Violating RERA provisions may land you in jail

Non-compliance with the decisions of the Appellate Tribunal will be punishable with imprisonment for a term that may extend up to one year or with a fine for each day any default of payments continues.

April 24, 2017 / 01:58 PM IST

With less than a fortnight left for states to implement the Real Estate (Regulation and Development) Act, 2016 (RERA), homebuyers beware! While the focus has been on how the Act will force builders to comply with norms, there are stringent provisions for home allottees, too.

From May 1, non-compliance with the decisions of the appellate tribunal will be punishable with imprisonment for a term that may extend up to one year or with a fine for each day any default of payments continues. Under the Act, each state is expected to set up a Regulatory Authority and an Appellate Tribunal. While the Regulatory Authority will be empowered to address the grievances of both buyers and builders, if either of them is dissatisfied, the matter can go up to the Appellate Tribunal.

RERA lays down that buyers must make payments on time including their share in the registration charges, municipal taxes, maintenance charges etc and even the interest prescribed.

It mandates that every allottee will have to participate in the formation of an association of allottees and take physical possession of the unit within two months of the builder getting the occupancy certificate. Homebuyers will also have to necessarily register the conveyance deed of the apartment, plot or building.

There are some stringent penalties for homebuyers if they fail to comply with the orders or decisions of the Appellate Tribunal. If allottees fail to omply with the orders of the Appellate Tribunal, he shall be “punishable with imprisonment for a term which may extend up to one year or with a fine for every day during which the default continues, which may cumulatively extend up to 10 percent of the plot, apartment or building cost, as the case may be, or with both,” RERA says.


"These provisions set a level-playing field for all. Like truant developers, truant buyers will also suffer imprisonment if they fail to act in accordance with the orders of the Authority," says Sudip Mullick, Partner, Khaitan & Co.

Abhay Upadhyay, National Convenor, Fight For RERA, says that most clauses are fair. There have been instances where developers have initiated the process of forming an association; not many people come forward to become members and pay membership fees.

“The provision that deals with taking possession of the unit within two months of the builder getting the occupancy certificate, is balanced as several investors unlike end users do not take possession of the apartment or get it registered because their intention is to finally sell the house and make a profit," says Upadhyay, adding most builders charge interest from buyers for not paying the pending installments and holding charges if buyers do not take possession of the units.

"This provision makes it obligatory for the apartment owner to take possession within two months after the builder communicates to him that the occupancy certificate has been received. It makes the buyer responsible for taking possession for ‘fit outs’," says SK Pal, a Supreme Court lawyer.

Legal experts say that these provisions have been framed to keep speculators at bay. Most state apartment acts mandate that the sale deed of the housing unit will be executed only after a buyer becomes a member of the association. “But this does not happen as majority of people buy apartments with the intention to book profits and sell them at a later date. Some are interested to put them up on rent and pay bare minimum as owners," says Pal.

Builders are of the opinion that RERA covers only two stakeholders – builders and the buyers but not the sanctioning authorities and financial institutions. "Instead of over regulating the builder community, RERA should have also made the sanctioning authority that issues the occupation certificate accountable," says Getamber Anand, promoter, ATS Infrastructure Limited.

The government last recently notified the 32 remaining sections of the Act through a gazette notificaiton. It had earlier notified 59.

All sections in the Act have now been notified and states can now appoint both the regulatory and the appellate authorities by May 1. Only 13 states and Union Territories have so far notified the rules so far. 16 states have approved the draft rules.
first published: Apr 24, 2017 01:57 pm

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