Real Estate (Regulation and Development) Act, 2016 (RERA) has been enacted to regulate the real estate sector in India. Till 2016, the real estate sector in India was not regulated and because of this innumerable complaints of cheating, fraud and embezzlement of money were filed in consumer courts and before police against builders and developers. Non-Resident Indians (NRI) especially incurred a lot of losses because the builders and developers in India were aware of their problems of coming to India to get legal issues resolved with builders and developers. The present act aims to bring fair practices in the real estate sector so that interests of innocent buyers are protected against the greed of the few.
Under the said act, a regulator will be established for each of the states and union territories. The act makes it mandatory that the real estate projects whether they are of commercial or residential nature, be registered with the regulator. Further, the act makes it mandatory for the projects under construction to get themselves registered within three months of the formation of the regulatory body. Builders and developers covered by the act will be given their own registered numbers and identifications and their financial and other details will be available on the website of RERA. The builders and developers cannot book or offer anything for sale in their projects till the time they have been registered with the regulatory body. It is also mandatory for builders and developers to keep 70% of the amount collected from the buyers in each of the project in a separate bank account. The said quota must be used only for the construction of the project. However the act itself empowers state governments to reduce the amount of the quota to less than 70%. The builders and developers shall also be liable for any structural defects in their projects for five years from the date of the completion of the projects.