MOFA is Scrapped and New Law RERA is introduced

Regulation of real estate sector was necessitated due to large scale cheating of the consumers of real estate purchasers/consumers.  MOFA Act, lacked the teeth to reign in the builders lobby which were becoming too powerful with the support of those in power and mainly due to the corruption introduced by the British Rule which is prevailing and getting more and more teeth day in an day out.  In order to regulate the real estate sector, the government has come up with the idea of Real Estate Regulatory Authority (RERA) Bill which is expected to help buyers. RERA is supposed to protect the interest of the homebuyer and ensure timely delivery of projects. Real Estate Regulatory Authority (RERA) Bill was introduced in 2013 and finally the bill got approved in March 2016 last year.  Only hope that the Government doesn’t come under pressure from Builders Lobby and without the knowledge of the public filter down the clauses so as to give some leniency the way Rights to Information Act is being done, in order that this doesn’t happen corruption has to be nipped in the bud and stringent punishment for those in government is in the order of the day.

Although RERA is a central law, its implementation will depend on state governments, as real estate is a state subject but dilution of the this should not happen, if it happens we will have a 2^nd MOFA Act with is toothless. Maharashtra government had approved the Real Estate (Regulation and Development) Act (RERA).

Under RERA, each state will have to setup regulatory bodies as appellate tribunals to solve the disputes between buyer and builder within 120 days.

Developer will have to put 70% of the money collected from a buyer in a separate account to meet the construction cost of the project.

RERA will make it mandatory for all commercial and residential real estate projects where the land is over 500 sq. mt. or eight apartments will have to register with the regulator before launching a project.

RERA also seeks to impose strict regulations on the promoter and ensure that construction is completed on time.

Carpet area has been clearly defined in the bill to include usable spaces like kitchen and toilets imparting clarity which was not the case earlier.

A developer’s liability to repair structural defects has been increased to 5 years from the earlier 2 years.

The buyer will pay only for the carpet area (area within walls). The builder can’t charge for the super built-up area, as is the practice at present.

Developers will be able to sell projects only after the necessary clearances. Under RERA, builders and agents will have to register themselves with the regulator and get all projects with more than eight apartments registered before launch.

To enable informed decisions by buyers, Real Estate Regulatory Authorities will ensure publication on their websites information relating to profile and track record of promoters, details of litigations, advertisement and prospectus issued about the project, details of apartments, plots and garages, registered agents and consultants, development plan, financial details of the promoters, status of approvals and projects etc.

Prior to RERA, one instance of how the builders used to cheat the buyers was that builder used to collect money from the buyers of Project A and put that money to use in Project B, so the Project A buyers project is stalled for want of money.  Though RERA will not give 100% relief to the buyers but it has got more teeth than the earlier MOFA Act and if the buyers are aware, they can ensure that they are not cheated by the builders.

In case of any queries, please do not hesitate to write to me, I will try to answer your queries to the best of my ability.