How much compensation under RERA?
RERA was enacted for quick redressal of complaints against the builders but compensation under RERA is a concern for many buyers.
In a bid to protect the interest of home buyers as well as weed out non-serious and unscrupulous players from the market, the Real Estate (Regulation and Development) Act, 2016 (RERA) has proposed heavy penalties on builders who will henceforth either delay their projects or won’t comply with RERA norms.
For instance, RERA recommends imprisonment for a term which may extend up to three years, or fine which may extend up to 10% of the estimated cost of the real estate project, or both, in case of non-compliance with the Act. Moreover, in case of any structural defects arising within five years of handing over the possession of project to buyers, developers will be liable to rectify such defects without further charge.
Under Section 18 of the Act there are two cases under which the builder is liable to return the money of the buyer.
One case is if builder is unable to give possession as per agreement or discontinuous his business then the builder is liable to pay interest including compensation. What section 18 contemplates that there is no separate compensation awarded to the buyer the interest component includes compensation. In case buyer opts for possession then if there is delay in possession then the buyer will get interest of delay.
Compensation under RERA is also there in section 18(2) and 18(3) in which but 18(2) talks about defect in title of land the buyer will be entitled to compensation and under 18(3) also any other violation execept mentioned above.
How much of interest rate?
Many states fixed the rate of interest payable by the promoter to the allottee or by the allottee to the promoter, as the State Bank of India highest Marginal Cost of Lending Rate plus two percent.
The interest percentage and the compensation amount (to be mentioned in the agreement of sale at the time of booking) in the case of any default could differ state-wise. Maroo says, “The state governments are vested with the powers to fix the rate.
At present, as SBI’s MCLR is 8%, developers will have to pay 10% interest on the paid amount to the buyers. At the same time, buyers will also pay the same interest at 10% on delayed payment of their dues and not the penal rates of 12% to 18% as mentioned in the sales agreement.
Adv. Nitish Banka