The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to protect homebuyers and bring transparency and accountability in the real estate sector. One of the primary functions of RERA is to address issues like fraud and misrepresentation by developers, ensuring that buyers' interests are safeguarded. 1. What Constitutes Fraud or Misrepresentation Under RERA? Fraud or misrepresentation can occur when a developer provides false information, makes misleading claims about a real estate project, or conceals important facts. Some common examples include: Promising facilities or amenities that are not provided. Misleading buyers about the project's completion date. Selling units without proper registration with the RERA authority. Changing the project layout, design, or specifications without the buyer's consent. Failing to deliver the property on time or as per the promised standards. 2. Filing Complaints Under RERA Homebuyers or allottees can file complaints with the RERA authority if they suspect fraud, misrepresentation, or any violation of RERA provisions by the developer. Complaints can be made in writing or through an online portal provided by the respective state's RERA authority. The complaint should clearly mention the nature of the fraud, the details of the project, the developer, and any supporting evidence. RERA authorities are empowered to investigate and adjudicate on the complaint. 3. Penalties for Developers Under RERA RERA has stringent provisions for penalizing developers involved in fraud or misrepresentation: Revocation of Registration: If the authority finds that the developer has committed a violation such as fraud or misrepresentation, it can revoke the registration of the real estate project. This means the developer can no longer sell or advertise the project. Penalties for Non-Compliance: If the developer has provided false information or indulged in misrepresentation, the RERA authority can impose heavy financial penalties up to 5% or more of the project's estimated cost. Imprisonment: In cases of non-compliance with RERA orders or directions, the developer can face imprisonment up to 3 years or a further financial penalty. Compensation to Buyers: The developer may be ordered to pay compensation to the buyers for losses incurred due to the fraud or misrepresentation. This compensation may include reimbursement of payments made by the buyer, interest for delayed possession, or damages for loss of value or inconvenience. 4. Key RERA Sections Addressing Fraud and Misrepresentation Section 12 (Obligations Regarding Advertisements or Prospectus): If a developer issues any advertisement or prospectus with misleading information and a buyer relies on it, leading to losses, the buyer can claim compensation. If the buyer withdraws from the project due to such misinformation, the developer must refund the money along with interest. Section 18 (Return of Amount and Compensation): If the developer fails to complete the project or give possession as per the agreement, the buyer can claim a refund of the entire amount paid, along with interest and compensation. This section also allows buyers to continue with the project and claim compensation for delayed possession. Section 19 (Rights and Duties of Allottees): Buyers have the right to know all the project details, including sanctioned plans, layouts, stage-wise completion schedules, and approvals. Any misinformation or misrepresentation of these details can lead to penalties under RERA. Section 31 (Filing of Complaints): This section provides the procedure for buyers to file complaints with the RERA authority or the adjudicating officer if there is any violation of the Act, including fraud or misrepresentation. 5. RERA’s Adjudicating Process Once a complaint is filed, RERA follows a structured process to investigate and adjudicate the matter. The authority can call both the buyer and the developer to present their case. RERA authorities are required to resolve disputes within 60 days of filing the complaint, making the process quicker compared to traditional civil litigation. Appeals against the orders of the RERA authority can be made to the Real Estate Appellate Tribunal (REAT) and further to the High Court. 6. Real Estate Appellate Tribunal (REAT) If either party (buyer or developer) is dissatisfied with the RERA authority’s decision, they can appeal to the REAT. The tribunal has the power to review RERA authority decisions, including those related to fraud, misrepresentation, and penalty imposition. 7. Key Safeguards for Buyers Under RERA Project Registration: RERA mandates developers to register their projects with the authority before advertising or selling any units. This ensures that only legally approved projects are sold to buyers. Escrow Account: Developers are required to deposit 70% of the project funds in a separate escrow account, ensuring that the money collected from buyers is used only for the project’s construction and not diverted for other purposes. Timely Possession: RERA enforces strict deadlines for project completion. If a developer fails to hand over possession on time, they are liable to pay interest to the buyer for the delay. Conclusion RERA provides strong protections for homebuyers against fraud and misrepresentation by developers. The Act allows buyers to seek compensation, penalties, and even criminal prosecution in cases of deceptive practices. By empowering regulatory authorities with stringent powers, RERA has greatly increased transparency and accountability in the real estate sector.