Consumer Protection In Real Estate: Examining The Role Of RERA In Safeguarding Buyer Rights

The Consumer Protection Act, 1986 was enacted to protect the interests of consumers, and provide remedy to redress their grievances. In common parlance, one who buys goods and services against consideration is called a Consumer. Consumers have various rights. If these rights are violated, they can approach a specialised forum known as “Consumer Courts”.

The working of Consumer Courts has served the purpose to a considerable extent. However, several shortcomings have been noticed while administering the provisions of the said Act. In order to streamline the working of consumers and improve the working of the consumer courts/commission, there have been amendments made in the Consumer Protection Act in recent times. Now, we have the Consumer Protection Act, 2019 (CPA) which came into force from 20.07.2020.

By the amendment made in the Consumer Protection Act, the pecuniary jurisdiction has been enhanced. The ceiling of District Commission was raised to ₹1 crore from ₹20 Lacs. The State Commission has jurisdiction to adjudicate complaints where the value of goods or services exceeds ₹1 Crore and upto ₹10 crore and beyond ₹10 Crore, consumers can directly file complaints before the National Commission. The Amended Act gives consumers the option of filing a complaint where they reside or work for gain.

Real Estate Sector is considered as one of the most important sectors in the Indian Economy as it acts as facilitator in satisfying the requirement of home to the countrymen. It is well known that there is an acute housing shortage in the country.

There has been substantial delay in completion of the housing projects due to misgovernance and lack of control.  In order to put a check on all the issues, the government has brought Real Estate (Regulation and Development) Act, 2016 (RERA Act). Under the RERA Act, the registration of builders is mandated. No developer/promoter can sell, buy, advertise, or invite customers without registering the project with Real Estate Regulatory Authority. The provision of RERA Act ensures that buyers get the details of the project including the project completion timeline and approvals given to the project by various authorities.

RERA Act restricts builder(s)/developer(s) to make any alterations in the project without taking consent of the 2/3rd of allottee(s). Evidently, the interest of buyers is safeguarded against dishonest actions of builder(s)/developer(s).

There have been general complaints amongst the consumers that builder(s)/developer(s) used to divert funds earmarked for one project to a different project or for some other purpose which contributed to a delay in the completion of the project.

However, with the introduction of RERA Act, the misuse has been curtailed to some extent. In case builder(s)/developer(s) fails to comply with the provision of RERA Act, it provides for heavy penalty.

The failure of the builder/developer to provide the flat within the contractually stipulated period would amount to deficiency of service entitling the consumer/allottee to seek a refund of the amount along with appropriate compensation. Deficiency includes any fault, shortcomings or inadequacy in the quality, nature, and manner of performance etc.

The consumer/allottee has the option to file a complaint under CPA or RERA Act to seek refund of the amount invested or seek compensation for the delay in construction or for deficiency in providing promised services. The remedy under RERA Act to seek refund with interest and compensation is without prejudice to the other remedies available to allottee.

It is noticed that builder(s)/developer(s) incorporate one-sided and unreasonable clauses in the buyers’ agreement, which are loaded in favour of builder(s)/developer(s) and against the allottee. Such clauses would amount to an unfair trade practice. The State Commission and National Commission can declare such clauses null and void under the amended CPA.

The allottee of a flat has remedies, both under CPA and RERA Act for redressal of the grievances, which the allotee can elect. Further, an allottee has the right to withdraw complaints pending in Consumer Courts and file the same before RERA. There is no requirement to pay a court fee.   The remedies under both CPA and RERA Act are consumer/allotee friendly, faster and devoid of technicalities.