Summary of this article
Assured return schemes lack legal validity
Misleading ads may attract penalties
Buyers must verify RERA-registered projects
The Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has issued an advisory that cautions homebuyers in the state against investing in any project that promises ‘assured returns’ or ‘fixed rental income’ before possession is handed over. The RERA body has clarified that any such scheme lacks the legal validity that can expose buyers to huge financial risks.
As per UP RERA, many developers continue to promote attractive investment schemes to rope in more buyers; these ‘schemes’ include assured returns, subvention plans, pre-EMI payments, buyback features, and fixed rental income from the construction phase. In many cases, these sweet incentives actually end up luring buyers. However, the RERA body has emphasised that these promotional tactics are not legally enforceable, and if they are not met, they cannot be brought up as a grievance.
The regulatory body has highlighted that no such promises made hold any legal weight unless they are explicitly mentioned in the agreements. The agreement should also comply with the Real Estate (Regulation and Development) Act, 2016. If the compliance is absent, buyers cannot rely on these verbal commitments solely for legal recourse if the promises are not met. This makes it crucial for homebuyers to differentiate between the marketing gimmicks pulled by developers and the contractual binding terms that are bound to be delivered.
UP RERA has clearly pointed out that these misleading advertisements and false commitments violate the regulatory provisions set by the authority. As per a report by Hindustan Times, Rule 38 and Rule 61 of the UP RERA ensure that developers who issue such advertisements, which are not approved in the agreements, face strict penalties and disciplinary actions.
In order to safeguard the investments of buyers, the RERA body has advised buyers to exercise diligence before they finalise any financial commitment based on these promises. Prospective buyers should invest only in the projects that are registered with the RERA body and cross-check all the relevant details on the official portal. One should check the project registration status, land records, approved project layouts and the completion timelines as declared by the builder.
All in all, UP RERA’s advisory underscores the importance of informed real estate investments. By following the regulatory guidelines and verifying the project details, aspirational homebuyers can protect themselves from such misleading schemes that can pose a future financial liability and loss.
