The Real Estate (Regulation and Development) Act, 2016 (RERA), stands as a cornerstone of reform, designed to instill accountability, transparency, and efficiency within the real estate sector. A pivotal element of this legislation is the protection of homebuyers through mandatory disclosure obligations imposed on builders (promoters). This document outlines the key disclosures builders are legally obligated to provide and highlights how homebuyers can effectively leverage their rights under RERA, incorporating relevant case laws to illustrate the practical application of these provisions.
1. Project Registration Details: The
Foundation of Legality
- Mandatory Disclosure:
Builders are obligated to register their projects with the respective
State RERA before undertaking any form of advertising, selling, or booking
of units.
- Homebuyer Due Diligence:
- Verify the RERA Registration Number.
- Confirm the Approval Status of the project.
- Access detailed project information on the official
RERA website of the relevant state.
- Significance:
- Selling unregistered projects is a contravention of
the law. Registration ensures adherence to legal norms, approved plans,
and established timelines.
- Legal Precedent: In the case of NBCC (India) Ltd. v. Union of
India, the Supreme Court reiterated the importance of RERA
registration for all ongoing projects, emphasizing that it is crucial for
protecting the interests of homebuyers and ensuring compliance with the
Act.
2. Approved Plans and Layouts:
Preventing Unilateral Alterations
- Mandatory Disclosure:
Builders must disclose approved building plans, layout plans, sanctioned
Floor Area Ratio (FAR), and any subsequent modifications.
- Significance:
- This prevents unauthorized changes to the layout or
building structure without the informed consent of the buyers. Section 14
of RERA specifically addresses unauthorized alterations.
- Legal Precedent: The Delhi High Court, in Forum for People’s
Collective Efforts v. State of West Bengal, highlighted that any
deviation from the sanctioned plan without the consent of the allottees
would be a violation of RERA and the allottees would be entitled to
compensation.
3. Project Completion Timeline:
Holding Builders Accountable for Delays
- Mandatory Disclosure:
Builders must clearly state the expected date of project completion and
possession, and are legally bound to honor this commitment.
- Homebuyer Rights:
- Section 18 of RERA entitles buyers to a refund or
compensation with interest in case of delayed possession beyond the
agreed-upon timeframe.
- Legal Precedent: In Simmi Sikka v. EMAAR MGF Land Ltd.,
the Supreme Court clarified that homebuyers are entitled to seek a refund
along with interest for delays in possession, reaffirming the
enforceability of the timelines stipulated under RERA.
4. Builder's Past Project Record:
Assessing Credibility and Risk
- Mandatory Disclosure:
Builders are required to provide a transparent track record of their past
completed projects, including details of any delays, disputes, or legal
proceedings.
- Significance:
- This enables prospective buyers to assess the
builder's credibility, financial stability, and history of project
delivery before making a significant investment.
5. Details of Common Areas and
Amenities: Ensuring Fulfillment of Promises
- Mandatory Disclosure:
Builders must accurately list all common facilities such as lifts, fire
safety systems, clubhouses, parking spaces, open spaces, and other
promised amenities in the RERA filing.
- Homebuyer Protection:
- Builders are legally prohibited from reducing or eliminating
promised amenities after the booking stage without explicit approval from
the majority of buyers.
- Legal Precedent: Several RERA authorities have ruled in favor of
homebuyers when builders have attempted to unilaterally reduce or
eliminate promised amenities. For instance, in a case before the
Maharashtra RERA, a builder was directed to reinstate promised amenities
and compensate buyers for the inconvenience caused by their removal.
6. Title and Legal Clearances:
Safeguarding Investments from Legal Risk
- Mandatory Disclosure:
The builder must provide comprehensive legal documentation establishing
clear ownership or legitimate development rights over the project land.
This includes land title documents, approvals from local authorities, and
non-encumbrance certificates.
- Significance:
- A disputed or unclear title renders the entire project
vulnerable to legal challenges, potentially jeopardizing the investments
of homebuyers.
7. Financial Transparency:
Monitoring Fund Utilization
- Mandatory Disclosure:
- Detailed project cost estimates.
- Comprehensive details of funds collected from buyers
and their utilization.
- Regular (typically quarterly) updates on construction
progress and the financial status of the project.
- Significance:
- Transparency in financial matters helps prevent
diversion of funds, which is a common cause of project delays. Regular
updates allow buyers to monitor the progress and financial health of the
project.
- Legal Precedent:
In a recent judgement court ordered the builder to disclose detailed
financial records related to project funds, directing them to ensure all
funds collected were exclusively used for the construction of that
particular project, preventing misuse.
By understanding these mandatory
disclosure requirements and leveraging the provisions of RERA, homebuyers can
actively safeguard their investments, ensure transparency, and hold builders
accountable for their commitments. It is crucial for all homebuyers to conduct
thorough due diligence, verify information provided by builders, and
proactively engage with their respective State RERA authorities to protect
their rights and interests.
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