Scores of homebuyers face legal and financial hurdles after purchasing a house due to authorities cancelling or suspending developers’ and real estate agents’ registrations for not having proper project documents and approvals. The Maharashtra Real Estate Regulatory Authority (MahaRERA) recently cancelled the licenses of 20,000 agents who had not obtained their agent certificates or registered with the regulator. Similarly, in March this year, Haryana RERA cancelled the registrations of five housing projects after builders failed to comply with the Real Estate (Regulation and Development Act) 2016. In July 2023, MahaRERA sent cancellation notices to over 500 developers for not updating project information.

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What Is Real Estate (Regulation and Development) Act?

This Act was passed in 2016 to safeguard homebuyers’ interests, enhance transparency, reduce project delays, prevent scams, and faster complaint redressals. The Act aims to create an information symmetry between promoters and homebuyers, with set obligations on both sides to bring professionalism and standardization to the real estate industry in India. The law also allows for the setting up of a regulatory supervision mechanism for governance to increase investors’ trust.

Why Is RERA Registration Required?

The Act mandates that all real estate projects with an area over 500 square meters or more than eight apartments must be registered with RERA. Real estate agents must obtain RERA registration to facilitate transactions. At the same time, promoters must indicate registered agents’ names for the project, which must be displayed alongside other project specifications on the RERA website upon registration.

Rule Violation May Result In Project Cancelation

RERA registration of developers and agents can be cancelled to ensure accountability and transparency. Reasons for cancellation can be fraudulent or unethical activities, false or misleading information, project delivery delays, fund misuse, and failure to comply with regulatory requirements, among others.

The recent cancellation of real estate agents in Maharashtra was due to their failure to comply with RERA guidelines. Agents are required to renew their certificate of competency with RERA. However, these cancellations are not permanent and can be restored once they abide by the rules.

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How Registration Cancelation Affects Clients

Homebuyers could face legal and financial consequences if they engage with an unregistered agent or purchase a property without a valid RERA registration. Dealing with an unregistered agent can expose homebuyers to significant risks, from unclear transactions and hidden charges to unfulfilled promises, since they lure them with great deals and rewards. If they fall into their trap, it could be difficult for them to seek legal recourse or assistance from RERA authorities. Financial losses may occur if the agent fails to fulfil its obligations, and recovering money from them would be challenging without legal protection. Hence, homebuyers should engage only with registered entities. They must also meticulously check project details before buying.