Know- How about Delayed Possession and Compensation Under RERA

The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to enhance transparency, accountability, and efficiency in the real estate sector. One of its key objectives is to protect homebuyers by ensuring that developers adhere to project timelines. Despite these regulations, delayed possession continues to be a common concern. This know-how article explains the provisions under RERA that address delayed possession and the compensation mechanisms available to buyers.

Understanding Delayed Possession

Delayed possession occurs when a developer fails to deliver a property to the buyer within the agreed timeframe. Delays may result from various factors, including:

• Financial constraints affecting the developer.
• Delays in obtaining approvals from authorities.
• Construction slowdowns due to labor shortages or material procurement issues.
• Legal disputes or regulatory challenges.

Such delays can disrupt a buyer’s financial planning and living arrangements, leading to additional costs and inconvenience.

RERA’s Measures to Prevent Delayed Possession

RERA mandates that developers adhere to the timelines specified in their sales agreements. If possession is delayed, homebuyers are entitled to compensation, ensuring that developers remain accountable.

Key RERA Provisions Related to Delayed Possession

1. Completion and Possession Date: Developers must register projects with the regulatory authority, providing a specific timeline for completion. This deadline is documented in the sales agreement, and any delay beyond this period entitles buyers to compensation.
2. Completion and Occupancy Certificates: Developers must secure completion and occupancy certificates from local authorities before handing over possession. Failure to do so can lead to penalties under RERA.
3. Developer Accountability: RERA enforces legal consequences for developers who fail to meet possession deadlines, ensuring that buyers are not left without recourse.

Compensation for Delayed Possession

RERA offers multiple relief options to buyers affected by project delays:

1. Refund and Interest on Paid Amount

• Full Refund: Buyers can request a refund of the amount paid if possession is delayed beyond the committed date.
• Interest on Paid Amount: If the buyer opts to wait for possession instead of seeking a refund, the developer must pay interest on the paid amount. This interest is typically set at 2% above the Reserve Bank of India’s (RBI) lending rate.

2. Right to Cancel the Agreement

• If a delay extends beyond a reasonable period (often six months or more), the buyer has the right to terminate the agreement.
• The developer must refund the full amount paid within 45 days. Failure to do so can result in additional penalties.
• If the refund is not issued within the prescribed timeframe, the buyer can claim interest on the amount due.

3. Developer’s Obligation to Inform About Delays

• Developers are required to inform homebuyers in writing if a project is delayed.
• This requirement allows buyers to assess their options and seek appropriate remedies.
• In certain cases, developers may invoke a force majeure clause for delays caused by natural disasters or other unforeseen circumstances. However, they must notify buyers and obtain approval for timeline extensions.

4. Penalties for Non-Compliance

• If a developer fails to adhere to RERA regulations, the regulatory authority can impose fines and other penalties.
• In extreme cases, non-compliance may result in imprisonment.
• These provisions act as deterrents to prevent developers from delaying projects without justification.

5. Dispute Resolution Mechanism

• Buyers can file complaints with the RERA authority if they experience undue possession delays.
• The authority is empowered to adjudicate disputes and ensure timely resolution.
• If RERA’s intervention does not yield satisfactory results, buyers can seek legal recourse through consumer courts.

Steps to Take in Case of Delayed Possession

If a homebuyer faces a delay, the following steps can be taken:

1. Review the Sale Agreement: Verify the agreed-upon possession date and related terms.
2. Communicate with the Developer: Seek an official explanation for the delay. Developers are required to issue formal notices for delays.
3. File a Complaint with RERA: If the developer does not resolve the issue, a formal complaint can be submitted to the local RERA authority.
4. Pursue Legal Action: If RERA’s resolution process is unsatisfactory, buyers can approach a consumer court under the Consumer Protection Act.

Understanding rights under RERA helps homebuyers take informed actions in case of delayed possession. Many buyers remain unaware of the compensation provisions available, leading to prolonged financial stress. Awareness and timely action can significantly impact the resolution of possession delays.

Conclusion

Delayed possession remains a challenge in the real estate sector, but RERA has introduced measures to protect buyers and ensure accountability from developers. By enforcing compensation provisions, refund mechanisms, and dispute resolution processes, RERA has improved transparency and fairness in the market. Homebuyers should be aware of their rights and take appropriate steps when facing possession delays. Developers, in turn, must adhere to project timelines to avoid legal consequences and maintain buyer confidence.