RERA and consumer forums can provide better relief to home buyers

Real estate
When going through the legal documents of a developer for his client, Malav Virani, partner at MDP & Partners, asked for a copy of the sale agreement that was uploaded on the Maharashtra Real Estate Regulatory Authority’s website. The developer promised Virani’s client possession in December 2019. But, the documents submitted to the regulator stated 2021. “This is the most common challenge buyers are facing right now. In the sale agreement, the developer promises possession much earlier and when registering with the regulator gives a separate date,” says Virani.

Developers have also been doing this for under-construction projects that are already delayed for years. Surabhi Arora, senior associate director – research at Colliers International India, points out that many projects in Noida that were started in 2009-10 are stating possession dates in 2020-21 when registering with real estate regulator. Most of them had promised delivery in 2012-13 in the sale agreement. The worst part: The regulator cannot rescue buyers in such cases.

While the Real Estate (Regulation and Development) Act, or RERA, looks promising on paper, buyers stuck in the existing under-construction projects are finding it difficult to take developers to task. Realtors are using the rules to their advantage. For many such buyers, consumer courts can be a better avenue to seek relief than approaching the real estate regulator.

Consumer court can be faster for final relief: Once the project is registered with the real estate regulator, buyers have two options to seek relief against a developer. They can either approach the real estate regulator or a consumer forum. For reliefs already provided under the RERA, buyers cannot approach civil courts. Both remedies have their advantages and disadvantages. 

For projects that are not registered with the RERA, buyers can go to a civil court or consumer court and in some instances, they can even approach the real estate regulator to direct the developer to register the project under RERA.

If there’s a group of buyers who want quicker relief, consumer forum will make sense than approaching a real estate regulator, according to lawyers. In RERA, to reach the apex court for finality, a buyer needs to first approach the regulator, then appellate authority and then high court. Lawyers say this can be time-consuming and take much more time than approaching a consumer court.

If the total value of all their flats combined is over Rs 10 million, buyers can approach National Consumer Disputes Redressal Commission (NCDRC) directly. The Supreme Court is the only judicial authority that any party can approach to appeal against NCDRC order. “In cases dealing with project delays, the NCDRC has been active and pro-consumer.  They have passed some great orders,” says Virani.

Lawyers also point out that a few states have also watered down RERA by giving some leeway to under-construction projects. Vivek Chandy, partner at J Sagar Associates, points out at Telangana. The state has exempted real estate projects from registration if they had obtained sanction plans before January 1, 2017. With this, most of the ongoing projects are excluded from RERA registration.

Some states have excluded projects for which lease deeds of either 50 or 60 percent of the apartments have been executed.

Single buyers may approach RERA: For those fighting on their own, approaching consumer forums can get tiring if the cost of the house is below Rs 10 million.  They need to first approach the state commission and then NCDRC for flat costs between Rs 2 million and Rs 10 million. For disputes involving an amount below Rs 2 million, the individual needs to approach a district forum. “In many states as of now, there is no backlog of cases with regulators. A buyer can expect his case to be heard faster,” says Chandy.

Again, if you are alone and reside outside Delhi, where NCDRC is situated, approach real estate regulator. It will save travelling time and engaging senior lawyers. You can also file complaints online with a few regulators.

Other than project delays, RERA also provides relief to buyers if a developer changes a project plan without informing the buyers, if requisite permissions are lacking, or if there were misrepresentations/false promises. RERA also makes real estate agents accountable for their role in the sale of real estate projects.

RERA still has a long way to go: Most states have just started implementing RERA. The process of appointing regulator or appellate authority is still underway.

Many lawyers also say that recent orders of real estate regulators have not been encouraging. The Bombay High Court recently set aside an order passed by the Maharashtra Real Estate Regulatory Authority (MahaRERA), saying a six-year delay in possession of flat was ‘justifiable’ on the grounds of ‘administrative uncertainties and obstacles’ as presented by the builder. In another order, MahaRERA dismissed complaints of 15 homebuyers ruling that in the absence of a registered agreement for sale, the provisions of Section 18 of RERA do not apply. The section deals with refund and compensation.

Most experts say that there are bound to be teething problems with RERA. “We think it will take at least four years for RERA to be absolutely effective in all states. Buyers need to be patient,” says Arora.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel