The Indian real estate sector has a history of an unhealthy relationship with consumer rights, responsibility, and transparency in every sense applicable to the business. Rogue builders and their fraudulent practices often victimized buyers. Therefore, the government enacted the Real Estate (Regulation and Development) Act, 2016 (RERA) to protect home buyers. The Consumer Protection Act, passed in 1986 and later amended in 2019, also provides additional safeguards to buyers. This article examines how these two laws complement each other to enhance protection for real estate purchases.
Protection under the Real Estate (Regulation and Development) Act, 2016
The Real Estate (Regulation and Development) Act, 2016 (RERA) has inspired significant change in the Indian real estate sector. The primary objective of the enactment is to protect the interests of consumers and, in that process, promote responsibility and transparency in the real estate sector.
Key Provisions of the Act
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Establishment of Real Estate Regulatory Authorities
In keeping with RERA, every state and union territory should set up a Real Estate Regulatory Authority (RERA). The real estate sector is overseen by this authority, which acts as an intermediary to ensure compliance with the Act.
Apart from dealing with customer grievances, RERA also registers real estate projects and agents while maintaining their records through database management. This structure aims to create a comprehensive mechanism for the administration of land developments that would shield the rights of those who buy houses
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Mandatory Registration of Projects
Developers must register any construction project with the relevant RERA with an area of more than five hundred square meters or containing more than eight units as per Section 3 of RERA.
This provision prevents fraudulent builders from promoting or selling houses in unregistered constructions, thus protecting buyers. One requirement for registration is that developers give specific information about their projects, increasing market transparency.
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Comprehensive disclosure of Project details
Section 4 mandates developers under the Real Estate (Regulation and Development) Act to publish complete information about their projects on the official RERA website.
This information includes project design, layout specifications, carpet area, completion dates, and any other approvals obtained. The RERA enables investors to make informed choices by ensuring that they are always provided with full and accurate information.
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Consumer Grievance Redressal
A robust framework established under Section 32 of RERA allows the customers to complain against builders for any violations of the Act. Homeowners have the right to file complaints of incomplete projects, poor construction, etc., according to this clause
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Timely Completion and Possession
Section 18 of RERA states that if the builder fails to deliver possession of the house on time, the purchaser is entitled to a refund with interest. This clause reminds us that projects must be completed on time, allowing buyers to take legal action for any delays and holding builders accountable for their commitment.
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Structural Defect Liability
A five-year statute of limitations applies to builders for any structural defects or poor construction as stated in Section 14(3) of RERA. This section ensures that complaints about construction problems can be made by clients during this time, thus augmenting the quality of construction and confidence among consumers
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Penalties for Non-Compliance
Severe actions depict consequences meted out to erring builders vis-à-vis rules and regulations set forth by RERA. According to Section 59, failure to register a project may attract penalties of up to 10% of the monetary outlay of the project, while persistent offences could lead to imprisonment. Thus, this enforcement regime ensures compliance from the builders as it deters all forms of injustice.
These provisions are mentioned to make readers aware of different sections under which they can hold the builders liable for any malpractice. It is very important to be aware of a buyer’s rights. These provisions will help protect the buyer and ensure all transactions occur carefully.
What do you do in case of any malpractice by builders?
- Appoint a legal expert who can make you understand the case’s implications.
- Approach your respective State’s Real Estate Regulatory Authority and file a written complaint. Point out the malpractice by the builder clearly and seek redressal accordingly.
- RERA will conduct the proceedings, and if the builder is liable, they shall be compensated or undergo any other punishment depending on the magnitude of the malpractice.
Protection under the Consumer Protection Act
The Consumer Protection Act’s main aim is to protect consumers’ rights from unfair trade practices. It provides a channel for addressing grievances related to goods and services, including those that pertain to real estate transactions. Clients who observe dishonest, irresponsible builders and developers who do not deliver as promised have the avenues of raising complaints.
One of the most important legislations that ensures the protection of consumer rights is within the built environment, the Consumer Protection Act (CPA). As a result of the booming real estate market in India, people are now exposed to multiple issues, such as poor-quality construction and long delays in possession. Conversely, the CPA seeks to resolve such issues by providing consumers with rights and means of remedy.
Key Provisions of the Act
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Provision of Alternate Dispute Resolution Mechanisms
The Act establishes an Alternate Dispute Resolution Mechanism of Mediation, i.e., the complaint will be referred by a Consumer Commission for mediation for early settlement if the party agrees. The mediation will be held in the mediation cells, which will be established under Consumer Commissions. An appeal cannot be made for settlement through mediation.
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Right to Information
The CPA guarantees that consumers can obtain truthful information about any goods or services. Note that this compels real estate developers to guarantee the utmost accuracy in providing any information related to properties, including their specifications, pricing, and legal status. With this information, every purchaser can make accurate decisions.
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Right to Redressal
There are provisions for consumers to make any necessary complaints in case of undue restrictions in trade or substandard services. Issues such as late possessions and defects in construction fall under this category. Buyers may also file a complaint in the law court against the builders for violating their statutory obligations.
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Establishment of Consumer Forums
The act established district, state, and national consumer forums. Consumers can approach any of these forums based on the amount paid by them.
1) Matters up to Rs. 50 lakh—District Forum
2) Matters between Rs. 50 Lakh and Rs. 2 crore—State Forum
3) Matter above Rs. 2 Cr – National Forum
What do you do in case of any malpractice by builders?
- In case of malpractice, first calculate the amount you paid. Based on this amount, approach the consumer forum as applicable. If the amount is up to Rs. 50 Lakhs, you can approach the District Forum. If it is up to 2 Crore, then the State Forum, and if it is beyond 2 Crore, you can approach the National Forum in New Delhi.
- File a written complaint pointing out the malpractice done by the builder and how you have suffered as a consumer. You should seek compensation for the same as malpractices amount to deficiency in service.
- The Court will conduct the proceedings, and if the builder is liable, they shall be made to compensate or undergo any other punishment depending on the magnitude of the malpractice.
Conclusion
The 2016 Real Estate (Regulation and Development) Act and the Consumer Protection Act help safeguard the interests of property purchasers in the Indian property sector.
These regulations focus on particular areas of concern pertinent to the industry, enhance transparency and accountability, and help safeguard the interests of consumers. Also, the judicial aspect supports the consumer in enhancing the obstruction posed by the construction industry. The current situation in the Indian real estate market is conducive to enhancing protection, particularly in the area of builder liabilities. However, these issues need further addressing if changes are to be realized through the law and education.
