How Developers Can Minimise RERA Risks From Contractor Errors

A single mistake by a contractor can set back a real estate project by months, leading to millions in losses for developers and shaking buyer confidence. The Real Estate and Regulation Act (RERA), which became effective in 2016, has completely transformed the real estate sector in India in terms of transparency and accountability. Before RERA was introduced, the sector was rife with inconsistent practices and a lack of accountability; issues which are now getting addressed through comprehensive regulatory oversight.

Every state and union territory has its own RERA unit that has the authority to closely monitor real estate projects. While it is mandatory for developers, contractors and agents to register with RERA, their operations get legal sanction only on acceptance and compliance of rules.

RERA: A Shield for Developers and Buyers

The real estate developers are often racing against time to deliver the project within the stipulated deadline. Missing a deadline poses the risk of ruining their reputation, facing consumer anger, and delaying other projects. RERA might introduce certain increased compliance burdens, costs and even delays in the process of approval. However, there is a public trust in RERA registered projects, as they typically are able to offer legal protection, reduced risk of fraud, financial loss or delays, grievance redressal system from the authority, etc. Thanks to the credibility of RERA and the support from authorities, obtaining its approval is a win-win for both developers and buyers. It helps ensure that real estate transactions are transparent, fair, and secure.

Vetting Contractor Partners

Another important stakeholder in the real estate ecosystem is the contractor, who has a direct impact on the developer and consumer. Thus, a project developer must collaborate with a contractor who aligns with their vision and ideals and can deliver the project in the stipulated time. For this one must select contractors not only on the basis of their experience or references but also look into their financial stability and the performance of their past projects. Detailed contracts must be etched that clearly lay out the scope of work, quality of work expected, timelines, payment terms and also liabilities and responsibilities of both the project developer and contractor.

Leveraging RERA’s Safeguards

RERA mandates a 5-year structural warranty period. Establishing back-to-back warranty clauses ensures that contractors are held responsible for construction workmanship issues during this period. Thus, RERA clearly supports project developers and consumers by protecting them against low-quality projects. Additionally, RERA promotes financial management and transparency through mandatory escrow accounts, separate from other project funds.

Strengthening Project Accountability

To further bridge the accountability gap, developers should keep detailed records of all aspects of the project timeline, material specifications and financial transactions. Updates on RERA portal and timely reports of any changes will add some extra transparency. In addition, developers should do quality checks and site management to ensure the construction process meets safety and durability and aesthetic criteria.

Ensuring Lasting Trust

To protect the rights of all stakeholders and to improve accountability, developers should retain a legal advisor at the very beginning of the project. These professionals will also ensure that all contracts, project documents and insurance policies are in order. The procedure should be continuous with prompt mediation to solve any problem in a timely manner. Following these vital steps will fill the gap in accountability and reduce risk from contractor mistakes so that the project developer stays involved throughout the project life cycle.

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