RERA vs Consumer Court: Claiming Compensation from Property Developers
The real estate sector has always been vital to economies worldwide, and India is no exception. This sector has grown tremendously over the last few decades, and the demands have remained strong — even spiking post-pandemic. Real estate industry today is the second largest contributor to India’s economy after agriculture.
Introduction
Putting money into real estate carries weight. It requires big financial commitments. Buying property comes with its share of hurdles such as late handovers poor build quality, or builders not keeping their word. In the past, some real estate deals gave developers the upper hand, which led to shady practices and left buyers without much protection.
India set up two key platforms, the Real Estate Regulatory Authority (RERA) and Consumer Courts, to tackle issues and boost the openness of property deals for buyers. These two systems give legal options but have big differences in how they work and the kind of help they provide. This article compares RERA and Consumer Courts to assist homebuyers in determining the most appropriate platform to address their grievances and seek compensation from developers.
What is RERA?
RERA- The Real Estate Regulatory Authority was established under the Real Estate (Regulation & Development) Act- 2016. RERA aims to bring greater transparency and regulation to the real estate sector. RERA’s structure aims to settle conflicts between people buying homes and those building them making property deals more open and fairer.
Key features of RERA:
1. Mandatory Registration: All real estate projects must be registered under RERA. Developers are barred from advertising or selling their properties without RERA registration.
2. Transparency: Developers should be transparent and provide comprehensive and complete information about projects like layout plans, projected completion timelines, and necessary approvals.
3. Buyer Protection: In case of delay or difference in the project, buyers can claim compensation.
4. Quick Dispute Resolution: RERA aims to resolve complaints within sixty days.
5. Escrow Account Requirement: Developers put 70% of the project money into an Escrow account to guarantee it is used only for construction.
6. Monetary Compensation: Buyers are allowed to claim interest for delayed possession from the delivery date to the actual transfer date.
RERA- benefits & shortcomings:
Benefits include reduction in project delays and increased accountability. Drawback is that the RERA Act does not apply retroactively, meaning projects initiated before 2016 are not covered.
Consumer Courts and their significance:
Consumer Courts are work within the ambit of 2019 Consumer Protection Act, which protects the consumers’ rights from malpractices of developers or vendors. These courts have a forum for homebuyers to file complaints over delays, construction shortfalls, unfair trade practices, and false advertisements.
The Consumer Protection Act establishes three levels of Consumer Courts based on the monetary value of complaints:
1. District Consumer Disputes Redressal Commission: Cases valued between Rs. 20 lakh and Rs. 1 crore.
2. State Consumer Disputes Redressal Commission: Cases valued between Rs. 1 crore to Rs. 10 crores.
3. National Consumer Disputes Redressal Commission: Cases above Rs. 10 crores.
Key functions of Consumer Courts:
1. Wide Scope: Complaints about consumer-purchased goods and services are referred to Consumer courts. They are not limited to real estate.
2. Compensation: Consumers can claim compensation for delays, deficiencies or defects in purchased products or services.
3. Three-Tier System: Courts are at the District, State, and National levels based on the complaint’s financial value.
4. Consumer Rights: They aim to protect consumers from exploitation.
RERA vs Consumer Courts: Key Differences
Nature
RERA Consumer Courts
- Scope
This regulatory authority deals exclusively with real estate issues. They handle complaints across all consumer sectors, including real estate
- Jurisdiction
It only registers real estate projects falling under RERA
Covers all sectors, regardless of RERA registration
- Grievances Addressed
The main focus is on delays, false advertising, and project violations Deals with broader issues relating to goods and services and any kind of deficiencies and unfair practices.
Compensation Framework
Compensation under RERA focuses on:
1. Delayed Possession: Developers are required to compensate buyers for every month that possession is delayed, starting from the initially promised date.
2. Refunds: Buyers have the right to request a full refund of any payments made if they choose not to wait for delivery — this is particularly true in cases of excessive delays.
3. False Representation: Compensation may be sought if developers misrepresent vital project details; however, it is essential to establish the nature of the misrepresentation, because not all inaccuracies warrant a claim.
4. Defects Liability: Developers are accountable for structural and quality defects found within five years post-possession.
Consumer Courts scope of compensation includes:
1. Compensation for delays: Buyers can claim compensation on account of delays and even claim compensation for consequential loss or inconvenience.
2. Quality Issues: Consumers can claim against poor quality of construction or inferior facilities.
3. Compensation for Mental Distress: The consumer is entitled to compensation for mental anguish or harassment caused by the builder.
4. Misleading Advertising Claims: Compensation benefit for misleading advertisements and false information.
Grievance redressal in RERA or Consumer Courts:
Filing a grievance in the relevant court depends upon the nature of the complaint, compensation type as well as compensation amount sought.
Landmark Judgments for information:
1. Emaar MGF Land Ltd. v. Aftab Singh: The honourable court upheld a buyer’s right to seek redressal under the Consumer Protection Act, emphasizing a buyer’s protection against builder claims.
2. Newtech Promoters & Developers Pvt. Ltd. v. State of UP (2021): It reaffirmed that buyers could choose either a refund or the possession of a delayed property.
3. Experion Developers Pvt Ltd. v. Sushma Ashok Shiroor (2022): buyers are entitled to refunds with interest due to delayed possession.
Conclusion
RERA and Consumer Courts, both are very important as they protect the rights of consumers and real estate buyers and extend their help towards claiming compensation from property developers. RERA provides swift redressal for all real estate issues, while Consumer Courts cover a wide range of claims, especially for distress caused and service shortcomings. For effective relief, it is necessary that the complaint of the buyer be understood along with the right platform required to meet the needs of the buyer.
FAQs
1. Is RERA limiting the scope of Consumer Courts?
Yes, RERA has reduced the scope of Consumer Courts in real estate matters, but buyers can still seek a remedy through Consumer Courts if they prefer.
2. Does RERA have a retrospective effect?
No, RERA applies only to projects initiated after 2016.
3. Can buyers file complaints in both forums simultaneously?
No, buyers must choose one forum to seek relief for specific issues.
4. Who has the access to file a complaint with RERA?
Any buyer, promoter, or agent feeling aggrieved by delays or non-compliance can file a complaint with RERA.
5. What projects fall under RERA?
Both residential and commercial real estate projects fall under RERA.
6. Is there a time limit for filing complaints in Consumer Courts?
Yes, complaints must be filed within two years from the date the cause of action arises.
