Explore the significance of RERA's Section 13, which governs advance payments and sale agreements. Discover its impact on homebuyers and find support for all property-related needs.
Understanding Section 13 of RERA
The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to bring transparency and accountability to the real estate sector in India. Among its various provisions, Section 13 holds particular importance as it safeguards the interests of homebuyers by regulating advance payments and agreements for sale.
In this comprehensive guide, we will break down the key aspects of Section 13, its implications, and how it ensures the protection of homebuyers.
Section 13 in Detail:
- Section 13 (1): Limit on Advance Payment
RERA stipulates that a promoter, i.e., the builder or developer, cannot accept an advance payment or application fee from a homebuyer that exceeds ten per cent of the cost of the apartment, plot, or building, as the case may be, without first entering into a written agreement for sale. This provision is designed to prevent unscrupulous builders from demanding large sums from buyers without legal commitment.
- Section 13 (2): Details in the Agreement for Sale
The agreement for sale, as required in sub-section (1), must adhere to specific guidelines:
– Form: It should be in a form as prescribed by RERA.
– Particulars of Development: The agreement must specify the particulars of the project’s development, including details about the construction, specifications, and internal and external development works.
– Payment Schedule: It should outline the dates and manner in which payments towards the property’s cost are to be made by the homebuyers.
– Possession Date: The agreement must include the date on which possession of the property will be handed over.
– Interest Rates: It should specify the rates of interest payable by both the promoter and the allottee in case of default.
Implications for Homebuyers:
Section 13 of RERA has several implications for homebuyers:
- Financial Security: Homebuyers are protected from exorbitant advance payments, ensuring they are not financially burdened before the legal agreement is in place.
- Transparency: The agreement for sale provides comprehensive details about the property, payment schedule, and possession date, promoting transparency in real estate transactions.
- Legal Recourse: In case of defaults or disputes, the written agreement becomes a crucial legal document for both homebuyers and promoters.
Landmark Case on Section 13: A Complete Analysis
In a case before the Rajasthan Real Estate Regulatory Authority in Jaipur, a complainant participated in an auction organized by respondent 1 and was allotted a plot in a project being carried out by respondent 1 under a Memorandum of Understanding (MoU) with respondent 2. The complainant had deposited 15% of the total amount as per the terms.
However, respondent 1 issued a further demand note for 35% of the amount without executing an agreement for sale and included a warning in the demand note. The complainant contended that respondent 1 had not fulfilled the requirement of executing an agreement for sale as mandated by Section 13 of the Real Estate (Regulation and Development) Act, 2016 (RERA). The complainant sought the following remedies:
- A direction to respondent 1 to execute an agreement for sale in accordance with Section 13 of the Act.
- A restraint on respondent 1 from demanding or accepting any further amount until such an agreement is executed and registered.
The bench, comprising Nihal Chand Goel (Chairman), Shailendra Agarwal, and Salvinder Singh Sohata (Members), held that all provisions of RERA, including Section 13, which apply to any advertisement, promotion, booking offer of sale, or sale of any plots in a registered project, would apply to the project in question.
The auction had been conducted with the announcement that the project was registered with RERA. This information assured and promised potential buyers that the provisions of the Act and the rules and regulations made thereunder would apply to this project and govern their relationship with respondent 1 regarding any plot purchased at the auction.
The Authority Issued the Following Directions:
- Respondent 1 was instructed to execute an agreement for sale with the complainant and register it before demanding or accepting any further amount beyond the 15% already deposited.
- The complainant was obligated to pay the balance amount by 30-09-2020 or within three days from the date of the sale agreement as per the payment schedule provided in the agreement for the sale to be executed, whichever was earlier.
- Respondent 1 was directed to align its land disposal rules and terms and conditions of the auction with the provisions of the Act.
This decision by the Rajasthan Real Estate Regulatory Authority ensures that the complainant’s rights under RERA are protected, and it upholds the requirement for an agreement for sale before further amounts can be demanded from the buyer. Additionally, it emphasizes the importance of adherence to RERA rules and regulations in real estate transactions.
How Can Vakilsearch Assist?
Vakilsearch understands the complexities of real estate transactions and offers expert assistance in property-related matters. Whether you need guidance on RERA compliance, drafting agreements, or understanding your rights as a homebuyer, Vakilsearch’s property registration and advisory services are designed to provide clarity and peace of mind.
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FAQs:
Can a promoter ask for more than ten per cent as an advance payment without an agreement for sale?
No, as per RERA's Section 13, a promoter cannot demand more than ten per cent as an advance payment without first entering into a written agreement for sale.
What should I do if the promoter doesn't adhere to the agreement's terms?
If the promoter defaults or doesn't adhere to the agreement's terms, you can seek legal recourse and remedies as outlined in RERA.
Is it advisable to consult legal experts when entering into an agreement for sale under RERA?
Yes, consulting legal experts or professionals from Vakilsearch is advisable to ensure that the agreement for sale complies with RERA regulations and safeguards your interests.
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