Section 13 of the RERA Act: Your Guide to Homebuyer Protections

Understand Section 13 of the RERA Act, its role in protecting homebuyers, and how it ensures transparency in property transactions.
Home Loan
2 min
22 November 2024
Buying a home is a dream for many, but navigating the legalities of property transactions can often be challenging. This is where the Real Estate (Regulation and Development) Act, 2016 (RERA) steps in, ensuring fairness and transparency for homebuyers. Among its many provisions, Section 13 of the RERA Act is a critical safeguard. It protects buyers from unfair practices by developers and ensures that their rights are prioritised during the purchase process.

Let’s dive into the key aspects of Section 13 of RERA Act, its implications, and how it secures the interests of homebuyers.

What is Section 13 of the RERA Act?

Section 13 deals with the agreement for sale between the promoter (developer) and the buyer. The law ensures that no promoter can accept more than 10% of the property cost as an advance payment or application fee without first signing a legally binding agreement for sale with the buyer.

This agreement outlines crucial details, including the property specifications, possession timeline, payment terms, and other conditions that both parties must adhere to.

In simple terms, this section prevents developers from demanding large sums of money upfront, ensuring that buyers are financially protected in case of project delays or disputes.

Additional read: Why RERA approved projects are a smart investment option

Why is Section 13 important?

Here is why Section 13 stands out as a crucial safeguard for homebuyers:

  • Prevents exploitation: Before RERA, many buyers were forced to pay hefty advance amounts without any legal guarantee of project completion. Section 13 prevents such exploitation.
  • Legal binding agreement: The agreement for sale ensures both parties are legally bound to honour their commitments, offering security to homebuyers.
  • Transparency: It makes developers disclose all relevant details, such as carpet area, possession date, and construction progress, in the agreement.
  • Protects financial interests: By capping the advance payment, buyers can avoid major financial losses if the project faces delays or legal issues.

Key features of Section 13 of the RERA Act

Let us take a closer look at the standout features of Section 13 and how they benefit homebuyers:

1. Advance payment limit: Developers cannot collect more than 10% of the property’s total cost as an advance before signing the agreement for sale.

2. Mandatory agreement for sale: The law mandates a written agreement that includes details such as:

  • Payment schedule
  • Possession timeline
  • Property specifications (for example, carpet area)
  • Penalty clauses for delays
3. Legal recourse: If the promoter violates Section 13, the buyer has the right to file a complaint with the RERA authority.

4. Safeguards for buyers: The agreement protects buyers in case the developer fails to meet promised deadlines or specifications.

How does Section 13 benefit homebuyers?

Section 13 provides multiple advantages to homebuyers, ensuring peace of mind during what is often one of the most significant purchases of their lives.

  • Prevents unethical practices: Developers can no longer demand arbitrary amounts upfront.
  • Accountability: Promoters must adhere to the terms outlined in the agreement, ensuring timely delivery and adherence to promised standards.
  • Clarity on costs: Buyers gain a clear understanding of payment schedules, reducing confusion and financial stress.

Steps buyers should take under Section 13

As a homebuyer, understanding and following the steps below can help you leverage the protections of Section 13:

  • Verify RERA registration: Always check if the developer and project are registered under RERA. This ensures compliance with legal requirements.
  • Insist on an agreement for sale: Do not pay more than 10% of the property cost without signing a detailed agreement for sale.
  • Understand the terms: Read the agreement carefully, paying attention to payment schedules, timelines, and penalty clauses.
  • Seek legal advice: Consult a lawyer to ensure the agreement aligns with RERA guidelines and protects your interests.

How does Section 13 relate to home loans?

Section 13 also aligns well with home loan procedures. Banks and financial institutions usually disburse home loans based on the agreement for sale. This agreement provides clarity and legal assurance for both the buyer and lender, facilitating a smoother loan process.

For instance, once the agreement is signed, you can apply for a home loan to cover the remaining cost of the property. It is essential to choose a trusted lender who offers competitive interest rates and flexible terms.

Consider a buyer, Anjali, who plans to purchase her first home in a metro city. Before RERA, developers often demanded 30-40% of the property’s cost upfront, leaving buyers vulnerable to delays or fraud.

Thanks to Section 13, Anjali now only needs to pay 10% as an advance after signing the agreement for sale. She reviews the agreement, consults a legal expert, and applies for a home loan with Bajaj Housing Finance to cover the remaining amount.

This process ensures Anjali’s financial security and guarantees that the developer adheres to the agreed terms.

Bajaj Housing Finance Home Loan: Your partner in homeownership

Section 13 of the RERA Act protects buyers during the initial stages of a property purchase, but securing the right financing is equally crucial. A reliable home loan can bridge the gap between your savings and the total property cost.

With Bajaj Housing Finance Home Loan, you can benefit from:

1. High loan amount: Secure a home loan of up to Rs. 15 crore* to bring your dream home to life.

2. Low interest rates: Enjoy interest rates starting 8.25%* p.a, and EMIs as low as Rs. 741/lakh*.

3. Quick approval: Get approved within 48 Hours* of applying – sometimes even sooner.

4. Flexible repayment tenure: Choose a repayment term of up to 32 years for comfortable EMIs.

5. Simple application: Take advantage of doorstep document collection for a smooth process.

6. Balance transfer facility: Move your existing home loan and get a top-up loan with better terms.

Secure your dream home with a Bajaj Housing Finance Home Loan today.

Frequently asked questions

What does Section 13 of the RERA Act cover?
Section 13 regulates advance payments in real estate transactions. Developers cannot accept more than 10% of a property’s cost as an advance without signing a legally binding agreement for sale. This ensures transparency and protects buyers from financial risks in case of delays or disputes.

How can homebuyers benefit from Section 13?
Homebuyers benefit from capped advance payments, mandatory legal agreements, and greater transparency in property transactions. This section ensures their financial security, holds developers accountable, and provides clear recourse for disputes, giving buyers confidence throughout the homebuying process.

What actions can be taken against developers under Section 13?
If developers violate Section 13, buyers can file a complaint with the RERA authority. RERA can impose penalties, order refunds, or even cancel project registrations. This enforcement ensures developers adhere to the law and protects buyers' interests.

Is there a specific timeline for filing complaints under Section 13?
A consumer complaint should be filed within two years from the date on which the cause of action arises. However, the court may entertain the complaint after two years if the complainant can satisfy the court that there was sufficient cause for the delay.

What are the implications of non-compliance with Section 13 for developers?
Non-compliance with Section 13 can lead to penalties, fines, or project registration cancellations by RERA. Developers may also face legal action from buyers, resulting in financial and reputational damage, further deterring future non-adherence to the law.

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