Penalties on agents and builders in RERA
- Author: Riya Kapoor
Before RERA, there was no regulation for the developersâ€™ as well as for the brokersâ€™.
While RERA for every state is different and they have different rules for the developers, but the brokers to a great extent have common rules and penalties.
The broker shall be liable to a penalty of ten thousand rupees (10,000) every day in case of default.
10% of the project cost for non-registration
Like financial services are governed by SEBI and it plays a very vital role in case anyone is mis-selling, Real Estate is also a financial product which is very heavy but lacked a governing body. Before RERA, there was no regulation for the developers’ as well as for the brokers’. This led to mis-selling to the end-user or investor and realtors and developers used to do anything and everything just to close the deal. RERA has ensured that the intermediary, as well as the developer, has the equal responsibility and accountability. It is not just about the financial damage, but criminal damages as well as imprisonment in case of any fraud. With RERA, a home buyer has a lot more power and authority than ever before and that is why the buyer should be fully aware of the advantages he/she is getting. For the builders and the brokers, it is an opportunity to show their work and thus give a better and transparent service. They can re-build their image in the market and offer quality services to the customers. This article shares with you some penalties that a Broker and a builder will have to face, in case of passing any false information/in case of any default:
PENALTY FOR BROKERS IN RERA:
While RERA for every state is different and they have different rules for the developers, but the brokers to a great extent have common rules and penalties. For example, RERA Maharastra has taken a step ahead by taking into account the civil and legal issues of the brokers. Overall, rules like a broker has to provide all the details, Aadhar Card, details of his enterprise to get registered, have to maintain their books, etc. are standard. There are day wise penalties for non-registration and contravention.
- The broker shall be liable to a penalty of ten thousand rupees (10,000) every day in case of default. It may cumulatively extend up to five percent (5%) of the cost of plot, apartment, land or buildings, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority.
- In case of any further indulgence in unfair trade practices, a broker can get an imprisonment of 1 year.
- Up to 5 % of the property cost for non-compliance with the orders of REM.
- Up to 10% of the cost, imprisonment of up to 1 year or both for non-compliance with the orders of the Appellate Tribunal.
PENALTIES FOR BUILDERS IN RERA:
Earlier builders used to indulge in unfair methods to gain approval from the government to get the land, but now they don’t have to seek for those unfair methods. A lot of customers’ complaint that the builder has changed the originally approved plans or there is a gap between promise and reality, especially when it comes to quality of construction or late deliveries and so on. This will no longer be the case as there are so many provisions under RERA which assure that builders no longer play with the end-users or the investors. They are:
- 10% of the project cost for non-registration.
- 3 years of imprisonment or 10% of the project cost for not obeying the orders under RERA.
- 5% of the project cost for providing false information and 5% of project cost for other contraventions.
- Everyday penalty up to 5% of project cost for order contravention.
- 5% of project cost or 3 years of imprisonment for not obeying orders of the Appellate Tribunal.
Thus, the spray and pray concept will no longer be preached by the brokers as well as the builders. Anyone, be it a broker or a developer, who cannot comply with the Real Estate Act, will be held accountable for their own actions. Those who do not follow the Act will face severe penalties depending on the rules and responsibilities. RERA will bring in only full-time brokers and they will work only with long-term developers to ensure that whatever they are selling is a good product. The builders will also have an opportunity to work with professional players, who is registered and qualified to sell their product.
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