With the Real Estate Regulation Act (RERA) set to be implemented from May 1, 2017, state governments and consumer activists are actively discussing the rules that could protect the home buyer’s interests. While the developers and buyers are the main focus, one issue that hasn’t received much attention, is whether legal advisors and the system will be ready to handle RERA cases.
Experts point out that prior to RERA, the disputes in the home buying space have been addressed by consumer forums and civil courts, based on the consumer protection laws and contract laws that apply to all categories of customers in general. The number of disputes in the home buying space has been on the rise, with the National Consumer Disputes Redressal Commission registering about 1,700 complaints in the year 2014-15, as against a few hundred in the previous years.
Consumer protection laws have a well-defined spatial grid and are present in every district, explains Manoj N Kumar, partner, BMR & Associates LLP. “However, with the advent of RERA, specialised forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal, will be established for the resolution of disputes pertaining to home buying and the aggrieved party will have no recourse to other consumer forums and civil courts, on such matters. While the RERA sets the groundwork for fast-tracking dispute resolution, the litmus test for its success, will depend on the timely setting up of these new dispute resolution bodies and how these disputes are resolved expeditiously with a degree of finality,” Kumar maintains.
Legal advisors’ readiness to handle RERA cases
Legal advisors’ preparedness, is the key to ensuring a smooth transition to RERA.
“We have already received requests from various clients. Consequently, our firm has been holding briefing sessions about the provisions of the RERA and their obligations under the act. We are assisting several clients, to put in place new procedures and mechanisms and structure real estate projects to ensure that they are compliant with the RERA,” says Ameet Hariani, managing partner, Hariani & Co. Developers need to ensure that both, new and ongoing projects, are in compliance with the provisions of the RERA, adds Hariani.
Experts and real estate industry bodies are also stepping up their outreach programmes, to sensitise the industry on issues around RERA, with legal experts often being called to deliver impact assessment or training sessions. RERA has created a new area of practice that did not exist earlier and legal advisers will have to learn, to effectively handle cases under the act and defend their clients who may be the developers or the purchasers, maintains Nishit Dhruva, managing partner, MDP & Partners. “In any case, the language in the agreements for sale will have to be tightened, to ensure that there is no ambiguity, upon the regulatory authority being appointed. The disposal of the cases referred to the regulatory authorities and the appellate tribunals and the process involved, will determine the ultimate success of the RERA,” Dhruva concludes.
Aspects of RERA that require awareness
According to experts, some provisions of the RERA, which everyone needs to be aware of, include:
- Maintenance of a separate project account with 70% of the amount from allottees. This amount to be released as per the completion of the project upon prior certification by an engineer, an architect and a chartered accountant.
- Documentation and agreements to be based on basic formats recommended by the RERA rules.
- Requirement of consent from all affected customers, in case of any change in the project’s plans.
- The developers can sell units only on the basis of carpet area.