Context: The Supreme Court criticised the functioning of the Real Estate Regulatory Authority (RERA) and termed it as “disappointing”.

Background:

• This isn’t the first time the court has criticised RERA’s performance. In September 2024, the Supreme Court described RERA as a “rehabilitation centre for former bureaucrats,” accusing it of undermining the Act’s purpose. 

Key Points

• The Real Estate Regulatory Authority (RERA) was established under the Real Estate (Regulation and Development) Act, 2016 to regulate and promote transparency in the real estate sector.
• RERA is applicable to residential and commercial real estate projects, including plotted developments.
• Objectives of RERA
  • Regulate the real estate sector and improve accountability.
  • Ensure timely completion of projects and prevent delays.
  • Promote transparency in property transactions.
  • Protect buyers’ rights by setting grievance redressal mechanisms.
  • Encourage investment by creating a reliable framework.

Key Provisions of the RERA Act, 2016

• Establishment of RERA
  • States and Union Territories must establish a Real Estate Regulatory Authority for grievance redressal.
  • Functions include project registration, dispute resolution, and policy implementation.
• Mandatory Project Registration : Developers must register real estate projects (above 500 sq. m. or 8 apartments) before advertising or selling. Projects without RERA registration are illegal.
• Escrow Account Requirement : Builders must deposit 70% of funds collected from buyers into a separate escrow account to ensure funds are used for the same project.
• Timely Completion & Compensation : Developers must complete projects on time, failing which they face penalties or compensation liabilities.
• Consumer Protection & Rights
  • Buyers have the right to full project details, possession timeline, and compensation for delays.
  • False advertising by developers can lead to refunds or penalties.
• Establishment of Real Estate Appellate Tribunal : If dissatisfied with RERA decisions, consumers can approach the Real Estate Appellate Tribunal.

Source: Economic Times