Font size:
Print
Real Estate Regulatory Authority (RERA)
RERA was built for protection but undone by inaction
Context: Justice Surya Kant called RERA a “rehab centre for ex-bureaucrats” in March, pointing to serious shortcomings in the authority’s functioning. This is not the first criticism; several insiders have raised alarms about the lack of effectiveness in RERA.
More on News
- Former Uttar Pradesh RERA member, Balvinder Kumar, stated that the authority lacks the power to hold rogue builders accountable.
- Haryana’s adjudicating officer, Rajender Kumar, called RERA a “toothless tiger.”
In 2022, Union Minister Hardeep Singh Puri criticised states for diluting RERA’s core objective—protecting homebuyers.
About RERA
-
- The Real Estate (Regulation and Development) Act, 2016, commonly referred to as RERA, is a landmark legislation in India aimed at promoting transparency, accountability, and efficiency in the real estate sector.
- Objectives:
-
- Regulation of Real Estate Transactions: Ensures buyers are protected from unfair practices in residential and commercial property dealings.
- Mandatory Registration: Requires real estate projects and agents to register with RERA, promoting compliance among developers.
- Timely Completion: At least 70% of buyer funds must be kept in an escrow account, ensuring they are used only for project construction.
- An escrow account is a financial arrangement where a third party holds funds or assets on behalf of two parties involved in a transaction until certain conditions are met.
Dispute Resolution: Provides a fast-track mechanism for resolving real estate disputes through Regulatory Authorities and Appellate Tribunals.
Transparency Provisions Fall Flat
- The RERA Act mandates that:
- 70% of project funds be kept in escrow to prevent misuse,
- Builders compensate buyers with interest for delays,
- Refunds be paid with interest if projects stall or are cancelled,
- Quarterly construction and finance updates be published online.
- But there’s barely any state-level audit of these provisions. Compliance remains largely unchecked, making transparency an illusion. Builders continue to flout norms with impunity, knowing enforcement is weak and consequences minimal.
Dispute Redressal: A Mirage
- Under RERA, complaints are supposed to be resolved within 60 days, with another 60 days for appeals. Orders can include refunds, compensation, or even imprisonment for builders. In practice, however, justice is often delayed—and sometimes never delivered.
- According to Square Yards data, out of 265 buyer-filed cases:
- Only 28% saw recovery from builders.
- Over 50 cases have “reserved orders” pending for 7–8 months.
- More than 30 cases await execution despite final rulings.
- At least 15 escalated to the High Courts due to non-compliance.
- Even MahaRERA—once considered the gold standard among state RERAs—struggles. Its mediation-first approach delays actual hearings, which can take 12–18 months to begin. Multi-year legal processes often result in orders that still go unenforced.
Execution: RERA’s Achilles Heel
- RERA lacks independent enforcement powers. It depends on state agencies like police and district collectors to implement its orders. When these bodies delay action or ignore RERA directions outright, the entire system collapses. Maharashtra alone has hundreds of unexecuted recovery warrants.
- To make matters worse, RERA offices are overwhelmed—handling 80 to 100 cases daily—many led by retired bureaucrats without legal or real estate expertise. Builders exploit legal loopholes to stall proceedings, draining the resources and morale of already exhausted homebuyers.
Even Automatic Provisions Are Failing
- What’s more alarming is that even provisions meant to apply automatically—like compensation for construction delays—are increasingly treated as issues requiring formal adjudication.
- This is not how a functional regulatory system operates. In countries like Singapore, the regulatory and adjudicatory arms work efficiently, making the contrast with India stark.
What Must Change?
- Proactive Regulatory Oversight: State RERAs must audit builder disclosures, monitor compliance with escrow norms, and intervene early—before a project spirals out of control.
- Independent and Effective Enforcement: RERA must not depend on sluggish state machinery for order execution. Legal provisions for quick, binding recovery and meaningful penalties must be enforced.
- Trained, Capable Personnel: RERA offices must be staffed with legal experts and professionals with a deep understanding of real estate, not just retired administrators.
- Legislative Reform and Political Will: Strengthening the Act and ensuring its uniform implementation across states is crucial. Without this, even the best digital platforms and reporting tools are cosmetic fixes.
