How the SC verdict on the real estate law benefits homebuyers

The court also ruled that the amount invested by the beneficiaries, as well as the interest quantified by the regulatory authority or the contracting officer, can be recovered as arrears of land income from the builders.

Aimed at protecting homebuyers, the ruling brings major relief to homebuyers, speeds up the resolution process, and makes it difficult for state governments to water down the intent of the law.

Bulletin | Click for the best explanations of the day to your inbox

The judgment came on a batch of civil appeals filed against the rejection of legal claims (by property developers / developers) by the Allahabad High Court.

Which projects are covered when the law is applied retroactively?

Under Chapter II of the Law, registration of real estate projects was compulsory. It provided that for projects in progress on the date of entry into force of the law, in particular projects for which the certificate of completion had not been issued, the promoters would be required to apply for the registration of the project. with the authority.

“According to the outline of the 2016 law, its application is retroactive and it can be seen without risk that the projects already completed or to which the completion certificate has been granted are not under its bosom and therefore, acquired rights or accumulated, if any, are not affected in any way. At the same time, it will apply after the registration of current and future projects under Article 3 to prospectively follow the mandate of the 2016 law ”, said Supreme Court of Justices Uday Umesh Lalit , Ajay Rastogi and Aniruddha Bose.

Projects that received their certificate of completion before the enactment of the RERA, however, are not covered by the law.

What must builders do to file an appeal?

The Supreme Court has affirmed that it is mandatory for real estate developers to deposit at least 30% of the penalty ordered by the regulator, or the total amount as the case may be, before challenging any RERA order under section 43 (5). This should ensure that only genuine appeals are filed and that the interests of home buyers are protected.

“It should be noted from the outset that article 43 (5) of the law provides for the lodging of an appeal before the court of appeal against the order of an authority or of the adjudicator by any injured party and when the promoter intends to appeal an order against the imposition of a penalty, the promoter must deposit at least 30 percent of the amount of the penalty or any greater amount that may be ordered by the appeal court. When the appeal is lodged against any other order resulting in the restitution of the sum to the successful tenderer, the promoter is required to deposit with the appeal tribunal the total amount to be paid to the successful tenderer, including the interest and compensation which are imposed on him, if necessary, or with both, as the case may be, before the appeal is lodged, ”observed the court.

Counsel for the appellants had argued that the pre-filing condition is “onerous for builders alone” and “discriminatory”. The Chamber noted that “in our opinion… the obligation imposed on the promoter of the prior filing under Article 43 (5) of the Law can in no way be considered as onerous as requested or in violation of Articles 14 or 19. (1) (g) of the Constitution of India. “

What did the court rule on homebuyers getting their investment back?

This falls under section 40 (1) of the Act. The builders had argued that under section 40 (1) homebuyers are only entitled to recover interest or penalties as land arrears. The court ruled, however, that “if section 40 (1) is interpreted strictly and it is understood that only penalties and interest on the principal amount are recoverable as arrears of land income, this would be fine. contrary to the fundamental purpose of the law. :

Given the economy of the law, the court observed, what must be returned to the beneficiary are their own savings. The amount with interest calculated / quantified by the authority becomes collectible and this arrears become enforceable in law, he said.

Why did RERA enter?

Regulation of the real estate sector has been under discussion since 2013 and the RERA law finally came into force in 2016. Data shows that over 77% of the total assets of an average Indian household are held in real estate, and that is the greatest investment an individual has made in their lifetime.

Before the law, the real estate and housing industry was largely unregulated, with the consequence that consumers could not hold builders and developers to account. The Consumer Protection Act, 1986 was inadequate to meet the needs of home buyers. The RERA was introduced with the aim of ensuring greater accountability to consumers, reducing fraud and delays, and establishing a mechanism for the speedy resolution of disputes.

To date, 34 States / Union Territories have notified RERA rules, while its implementation in Nagaland is underway. West Bengal enacted its own legislation – the West Bengal Housing Industry Regulation Act 2017 (HIRA) – instead of notifying the RERA rules. Thirty states / UTs have established real estate regulatory authorities and 26 have established real estate appeals courts, according to the latest data available from the Department of Housing and Urban Affairs.

As of July 23, 67,669 real estate projects and 52,284 real estate agents had been registered under RERA, and 70,601 complaints had been handled by the real estate regulatory authorities.