The defect liability period better known as home warranty of five years under Clause 14 (3) of the Real Estate Act (RERA) could prove to be a market differentiator that will assure homebuyers of the construction quality of their prospective homes.
The excitement of moving into a new home could sometimes take a toll with the discovery of some construction defects in your new home. Until the Real Estate (Regulation and Development) Act 2016 came into existence, there was no way for buyers to persuade developers to fix these damages. Not only has the RERA changed the way real estate operates in India, it has also addressed certain issues that needed extensive deliberation in the past. One such issue is the builders’ accountability to offer workmanship for structural defects for a tenure of five years. According to Clause 14 (3) of the Real Estate Act, a builder or developer will be liable to fix/repair any defects brought to his notice by a homebuyer within a period of five years from the date of possession, without further charge. Moreover, the problem is to be fixed within 30 days of being brought into the notice of the developer.
In case the developer fails to rectify such defects within the specified time, a home buyer shall be entitled to receive compensation under the Act. Earlier, most developers in their agreements used to keep the period for repairs to as low as two years. However, the new rule intends to bridge this gap. According to Aditya Kedia, Managing Director, Transcon Developers, “In a business like real estate where fly-by-night operators are known to outnumber reputed developers, a 5 year defect liability period is definitely an optimistic step as far as customers are concerned.” Such constructive provisions assure them of the product’s excellence.
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Clean everything above your head
In case the developer fails to rectify such defects within the specified time, a home buyer shall be entitled to receive compensation under the Act. Earlier, most developers in their agreements used to keep the period for repairs to as low as two years. However, the new rule intends to bridge this gap. According to Aditya Kedia, Managing Director, Transcon Developers, “In a business like real estate where fly-by-night operators are known to outnumber reputed developers, a 5 year defect liability period is definitely an optimistic step as far as customers are concerned.” Such constructive provisions assure them of the product’s excellence.
What does home warranty cover?
Structural defects: Structural defects are caused due to deficiency in a building where the structure does not perform in a way as intended by the homebuyer. It generally arises due to a flaw in design, construction quality or material. Deficiency in the quality of raw material causes leakage and dampness while fault in construction results in cracks in foundation, plumbing issues and electrical and mechanical problems. Under RERA’s home warranty clause, all these issues will be covered. Moreover, to ensure that everything goes smooth, a developer will have to keep an eye on contractors who sub-contract the work in order to avoid any difficulty at a later stage.
How will home warranty protect the interest of homebuyers?
Industry experts have welcomed the move and are feeling positive about it. In the international property market, such warranties have enhanced developers’ reputation for transparency and following best practices. Kedia is hopeful of it being equally successful in India. As far as safeguarding the interest of homebuyers is concerned, warranties are sure to offer a secure environment to buyers and investors as it makes it compulsory for developers to correct any building and construction flaws that may be detected, even post the property ownership has been handed over. Such warranties will surely enhance the developers reputation for adhering to transparent, best and credible practices.
Impact on real estate prices
hile the defect liability period in international real estate market varies across countries, it is as high as 10 years in some countries where the builder liability and legal dispute redressals are systematic and strong. With a five year warranty clause under RERA and in order to evade additional cost occurring from repairs at a later stage, developers will certainly look to enhance their construction quality.
However, it is yet to be seen whether buyers will be keen to pay a premium on properties that come with stronger warranties. If experts are to be believed, homebuyers would not mind paying a premium for properties that come attached with warranties especially, once the system to enhance homebuyers’ trust is put in place. In case of lack of warranties, buyers will be forced to undertake upkeeps and repairs of any damage occurring due to construction fault at their own cost.
Also read: Top 5 Home Preparation Tips Before Unpacking
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Source: 99acres.com
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