Mohit Goel, Managing Director, Omaxe Limited

Navigating the Indian property market not only involves financial planning but also requires a thorough knowledge of the laws that govern real estate transactions. These laws help guarantee transparency, protect buyers and ensure accountability for the real estate industry. Here are the important rules that every buyer must be aware of to make informed decisions and protect their investment.

Real Estate (Regulation and Development ) Act ,2016 (RERA)

It is a significant piece of legislation that aims to increase transparency and confidence of buyers in property transactions. The law requires that developers register projects with a total area of more than five hundred square meters, or equivalent of eight units, with the RERA authority. This registration ensures that developers publish vital information about their projects, including timelines, layouts, and legal approvals, through the RERA portal.

Buyers gain tremendously from this because they can check a project’s compliance and monitor its progress online. In addition, RERA requires developers to deposit 70% of the money received from customers into an escrow account to ensure that these funds are exclusively used to fund the project. Buyers also have access to grievance redressal mechanisms that allow them to file complaints against developers over delays, misinformation, or issues  related to quality.

Transfer of Property Act, 1882

This law governs the conveyance of ownership rights and ensures that purchasers receive the benefit of clear and undisputed ownership. Transactions involving property must be completed through written agreements, which provide legal guidelines for transferring property. For buyers, it is crucial to ensure that the seller owns a clear title that is marketable and is free of any disputes.

This can be accomplished by conducting a search for title at the sub registrar’s offices or consulting with a legal professional. The law also stresses the importance of checking certificates of encumbrance, which guarantee that the property has not been pledged or mortgaged to the loan. Buyers must exercise due diligence to avoid any future disputes and protect their rights to ownership.

Registration Act,1908

According to the Registration Act, registering a property transaction is not a formality but rather a legal obligation for transactions with a value of more than Rs100. Registration confers legal recognition on the sale contract, making it legal in the event of disputes. Buyers must pay stamp duty and registration fees, which are different in different states, as part of the procedure.

Although these charges are not considered to be additional costs, they are essential in protecting the buyer’s rights. Not registering renders the transaction illegal and opens buyers to lawsuits or disputes. Employing a lawyer to ensure proper paperwork and a smooth registration process is highly advised.

Benami Transactions (Prohibition ) Act,1988

The law is intended to stop benami transactions where property is held under the name of someone else to hide ownership. Participating in or being an ‘involved party’ in these transactions could lead to the confiscation of the property and severe penalties. To protect themselves from such risk, buyers should verify the owner’s name through legal documents, such as title deeds, and make sure there isn’t any ambiguity within the property’s ownership structures.

A thorough due diligence process, which includes verifying the source of funds and history of ownership, is crucial. Buyers must be careful about dealing with those who are unable to provide all the details regarding the property or the owner.

Consumer Protection Act,2019

This law assists property buyers by acknowledging them as consumers and enabling them to settle issues. Buyers can file complaints with the court for consumer rights against developers for infringing on their rights, deceitful ads, or deficiencies in construction.

The law guarantees quick resolution and penalizes developers for making false claims or providing poor service. Buyers are required to keep all documents related to transactions, including receipts and promotional materials, to prove their case in the event of a dispute. With this law, buyers can protect their rights and make developers accountable for their obligations.

Conclusion

The knowledge of these fundamental laws is not just about compliance; it is about empowerment. Real estate investments are huge and often involve life savings, and buyers must be equipped with the necessary legal knowledge to make sense of the market’s complexity. Thorough due diligence and knowledge of these laws can assist buyers in making confident, safe, and profitable investment decisions.