What is the purpose of the RERA Act?

The Real Estate (Regulation and Development) Act, commonly known as RERA, serves multiple purposes aimed at regulating the real estate sector and protecting the interests of homebuyers. The key objectives of the RERA Act are as follows:

1. Protection of Homebuyers: The primary purpose of RERA is to safeguard the interests of homebuyers by ensuring transparency, fairness, and accountability in real estate transactions. It establishes a framework of rights and responsibilities for both buyers and developers, promoting a balanced and equitable relationship.

2. Regulation of Real Estate Projects: RERA aims to regulate real estate projects, including residential and commercial properties. It mandates the registration of projects with the respective state's Real Estate Regulatory Authority (RERA) to ensure that developers comply with the prescribed norms and regulations. This helps prevent fraudulent practices, false promises, and unauthorized projects.

3. Promoting Transparency and Disclosures: RERA promotes transparency in the real estate sector by mandating developers to provide comprehensive information about their projects. This includes project details, approvals, land status, carpet area, timeline for completion, and other relevant information. Buyers can make informed decisions based on these disclosures.

4. Timely Project Completion: RERA emphasizes timely completion of real estate projects. Developers are required to adhere to the declared timeline for project completion, and any delays beyond the specified grace period can result in penalties and compensation to the buyers. This provision ensures that buyers are not left stranded with unfinished or indefinitely delayed projects.

5. Escrow Account and Fund Management: RERA mandates that developers deposit a specified percentage of funds collected from buyers into a separate escrow account. This provision prevents diversion of funds to other projects and ensures that the funds are utilized only for the specific project for which they were collected. It promotes financial discipline and protects the interests of homebuyers.

6. Dispute Resolution Mechanism: RERA establishes a mechanism for the resolution of disputes between buyers and developers. It mandates the creation of a Real Estate Regulatory Authority and a Real Estate Appellate Tribunal in each state. These bodies provide a platform for quick and effective resolution of grievances, ensuring that buyers have a recourse for addressing their complaints and disputes.

7. Promoting Professionalism and Ethical Practices: RERA encourages developers to maintain professionalism and ethical practices in the real estate sector. It establishes a code of conduct for developers, brokers, and other stakeholders involved in real estate transactions. This helps improve the overall reputation and credibility of the industry.

Overall, the purpose of the RERA Act is to bring transparency, accountability, and efficiency to the real estate sector, protect the interests of homebuyers, and promote a fair and regulated environment for real estate transactions. It aims to instill confidence in buyers and investors, thereby fostering the growth and development of the real estate industry in India.