The Supreme Court directed the Centre to examine whether the rules framed by various states under Real Estate Regulatory Authority (RERA) are in conformity and subserve the interest of home buyers.

A bench of Justices D.Y. Chandrachud and Surya Kant gave three months to the Centre to examine if there are any deviations in the rules framed by the states to the rules framed by the Centre in 2016 and to place the report by first week of May 2022.

The bench appointed advocate Devashish Bharuka as amicus curiae in the plea by advocate Ashwini Upadhyay seeking implementation of builder-buyer agreement to safeguard the interest of home buyers and requested him to assist the Union ministry of housing and urban affairs to examine the rules framed by the states.

What is RERA?

• Indian real estate sector was largely unregulated till 2016, which led to many anomalies resulting in various unfair practices and affected home buyers adversely. 

• Real Estate (Regulation and Development) Act, 2016 passed in March 2016 brought in a transformation to ensure regulation and promotion of the real estate sector in an efficient manner and to protect the interest of home buyers.

• RERA marked the beginning of a new era in the Indian real estate sector and a step towards reforming the sector encouraging greater transparency, citizen centricity, accountability and financial discipline. 

• According to the Centre, 34 states/UTs have notified rules under RERA. In Nagaland, it is under process to notify the rules. West Bengal enacted its own legislation, which has now been struck down by the Supreme Court.

• Under RERA, each state and Union Territory will have its own Regulatory Authority (RA) which will frame regulations and rules as per the Act

• As many as 30 states/UTs have set up Real Estate Regulatory Authority.

• RERA makes it obligatory on the part of the builders not to book, sell or offer for sale, or invite persons to purchase any plot, apartment or building in any real estate project without registering the project with the authority.

• Some of the major provisions of the Act, besides mandatory registration of projects and real estate agents, include depositing 70 per cent of the funds collected from buyers in a separate bank account for construction of the project. This will ensure timely completion of the project as the funds could be withdrawn only for construction purposes. 

• The law prescribes penalties on developers who delay projects. All developers are required to disclose their project details on the regulator’s website, and provide quarterly updates on construction progress. In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers.

• RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter. 

• Another highlight of the Act is imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of appellate tribunals and regulatory authorities.

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