All You Need to Know About MahaRERA & KRERA and Its Key Achievements
When you purchase a house, there are two major implications – one is that you have made a major investment in a long-term asset and the second is that you have committed to all the propositions made in the contract for a prolonged period.
Both these account for crucial transactions, asserting integrity from the buyer as well as the seller. However, in the past years, several dispute reports were filed with impending lawsuits pertaining to these contracts. More so, usually, the homebuyers would land up in legal tussles due to extensive contracts prepared by the developers.
Other forms of investments such as equity, debt funds, mutual funds and other assets are regulated by the Securities and Exchange Board of India (SEBI) commissioned by the Ministry of Finance, Government of India. This facilitated streamlined operations in major Stock Exchanges as colossal volumes of trades are carried on every day. However, the same regulatory board was not applicable to real estate investment.
Which is why a special board was formed by the government of India strictly for real estate transactions and regulations under The Real Estate (Regulation and Development) or RERA Act, 2016. The Real Estate Regulatory Authority known as RERA was brought into effect in May 2017.
This authorization led to three main reforms in the real estate agreements – maintaining transparency, taking accountability and providing a uniform platform of regulations throughout India.
However, the registrations of a real estate developer in a particular region will be undertaken by the RERA of the respective state. Like if the company is registered in Karnataka, they will apply for RERA eligibility in Karnataka RERA or KRERA.
Let us delve more into two such states that have applied the RERA efficiently:
MahaRERA has been active since the launch of this act in 2017. As comprising one of the largest metropolises and the financial capital of India, Maharashtra is a highly developed state with structured residential and commercial sectors. To conserve these high functioning zones, MahaRERA has undertaken the responsibility of making sure that the regulations are conformed with.
- As stated previously, for such major agreements, a stern level of transparency should be maintained between the seller and the buyer. MahaRERA allots authorizations to only those developers or builders who have a consistent record of fair practises in transactions, positive customer testimonials, and no pending lawsuits. This helps the buyer to choose a developer that has integrity in operations.
The transparency helps the buyer make future decisions of selling the property much easier.
- Since the real estate developers have the upper hand in knowing all the details about the property, the way a contract is designed may often be in their favour. One reason why MahaRERA is an important medium between the two is that they make sure that the customer gets the liberty to make the necessary negotiations in case any unfair clauses are included in the paperwork.
- A naive home buyer may get entrapped in legalities due to unbeknownst realty jargon. Also, since several NDAs and No Objection Certificates (NOCs) are included in the agreement, it is rather a recurring event of lawsuits when any of the clauses are violated.
In order to protect the customers from such harsh agreements, MahaRERA intervenes when the developer suggests deterrent clauses in case the customer raises objections in the future regarding the quality of the product and service provided. This secures the buyer’s right to information, liberty to negotiate and raise issues.
- Speaking of issues, a separate portal is maintained by the MahaRERA on their website by forming an Appellate Tribunal for receiving any complaints from the buyers. This direct access has restricted any intimidation or other tactic by the seller restricting such complaints.
- A mandatory rule is authorised by MahaRERA that no promoter/developer/builder is permitted to sell, book or advertise the real estate if they are not registered under the RERA act.
Maharashtra was the first state in India to execute this act effectively since its launch.
- A wide range of applicants have registered for RERA authorizations in Maharashtra. An impressive total of more than 18000 and counting, applicants have registered so far. This also includes the RERA registrations in union territories of Dadra and Nagar Haveli and Daman and Diu, handled by MahaRERA.
- With a highly efficient grievances portal, a total of 2387 complaints were recorded in the past year itself. Out of all of the past complaints included, 2000 appellants have completed the appeal process and 1200 successfully resolved.
A parallel committee of civic bodies such as NAREDCO, MCH Land, CREDAI, representatives of Maharashtra Grahak Panchayat and Maharashtra Chamber of Housing Industry along with MahaRERA was established to monitor the conciliation and disputes forum of MahaRERA. This alternate forum was created for redressal of grievances from home buyers so as to present a uniform platform for both buyers and sellers.
- Maharashtra RERA website is designed to present a user-friendly interface so that the applicants can register for RERA in no time. Also, for the buyers, several categories are included that give details of all the scheme-related information of the project registered. Other features that can be accessed on this website are frequent updates on the current phases of under-construction projects, new projects introduced and building plans and a list of approved compliant amenities included in the project.
Crucial details such as possession dates, approved deadlines, proposed plans, as well as revised data of the above-mentioned dates are all included in the description category of the RERA approved projects on the MahaRERA website. With such detailed information, you can budget your finances and decide the home loans based on these deadlines.
Since RERA is only for authentic builders, brokers and contractors, you get insight into their credibility.
- MahaRERA has integrated several provisions for both buyers and the developers.
The developers are prohibited from advertising their projects until they are registered. They are fined up to Rs.10 lakhs if they are unable to meet the deadline plus a 3-months extension.
The developers are presented with policies that allow them correction in the project even after they have registered.
The Karnataka RERA portal has been developed under section 4(3) of the RERA Act, 2016. The civic body of the Department of Housing under the Government of Karnataka has undertaken the implementation of this act.
Specific Rules assigned by KRERA
- Developers can base the valuation of their project only on the carpet area, not the exterior built.
- KRERA website maintains an updated record of all the projects so that customers can get insight into the progress. Every developer who has registered for RERA must update their project details in case significant events occur.
- Even though only the compliant approved plans are to be implemented by the developer. But in case of any necessary alterations, all the plans should be recorded with RERA.
- To regulate the expenses and capital:
In case the deadline is overdue, the developer must pay an additional interest rate of 2% exceeding SBI’s lending rate-Marginal Cost. This applies to the buyer as well who could not meet the payment dues.
A scale of a maximum of 10% of the cost of the project can be requested as an advanced payment during sanctioning of the registered sales agreement.
70% of the payment received from the buyer must be accounted for by the builder in a separate account assigned for construction purposes only.
- Stringent punitive rules
Any violation of the aforementioned rules or the agreements of the KRERA Act will be charged with 1-year of imprisonment for agents, brokers, other third-party and buyers; while 3-years of jail for developers.
- KRERA allots a guarantee on the RERA registered projects with this policy of drafting a solution within 30 days in case any damage is observed to the property in the first five years.
- Any complaints, issues or objections can be registered in writing strictly after one year of possession of the property.
With these customised rules, KRERA has managed to implement RERA registrations effectively throughout the state of Karnataka. This led to a secured buying process for those looking to invest in a property with several benefits such as:
- Through the KRERA website, a buyer can access all the information on the listed projects. This entails the buyer knowing the tentative schedules and the progress of under-construction projects.
- The developers cannot charge for the super built-up area such as for lifts, staircase, fire hazard equipment and services, reception area and so on. This discounts the actual cost price for the buyers since the projects are first marketed over these extrinsic factors.
- KRERA has deployed efficient strategies to resolve a conflict between the buyer and the developer within a span of 120 days, which in the legal world is considered light-speed.
- The applicable 2% interest rate over the SBI’s marginal cost has been a productive step in maintaining stringent deadlines with the developers who want to avoid these additional expenses. Also, since 70% of the fees is reserved for construction only, this reduces the risk of loss of capital for developers; thus diminishing the chances of delay in development.
- In case of unfortunate events occurring in the initial five years such as collapsing of buildings, malpractices in the construction process, damage to the property due to the utilisation of cheaper products; the developer is held accountable by KRERA. This has considerably increased the quality of residential projects.
Kolte-Patil projects are all registered with MahaRERA and KRERA, and the registration numbers of RERA of each project is mentioned on the website if you want to verify the authenticity and get more insight into a specific project.