What is Mortgage in RERA?

What is Mortgage in RERA : Real Estate (Regulation and Development) Act, 2016 (RERA) is a regulatory act that came into effect on May 1, 2017, to safeguard the interests of homebuyers and promote transparency and accountability in the real estate sector. The act aims to bring transparency, efficiency, and accountability in the real estate sector and protect the interests of buyers and sellers.

One of the key aspects of RERA is to regulate the mortgage of properties in the real estate sector. In this article, we will discuss what is a mortgage in RERA, its significance, and the implications of the RERA act on mortgage transactions.

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What is Mortgage in RERA?

A mortgage is a legal agreement between a borrower and a lender, where the borrower pledges his/her property as collateral to obtain a loan. The lender has the right to seize and sell the property in case of default by the borrower. The mortgage is a significant component of the real estate sector, and it plays a crucial role in the financing of real estate transactions.

Under RERA, a mortgage is defined as a security interest created in a property for securing the repayment of any amount due or to become due under a loan or any other financial assistance. A mortgage can be created by any person, whether he/she is the owner of the property or not. The mortgage can be created on both immovable and movable property.

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Significance of Mortgage in RERA

The mortgage is a significant aspect of the real estate sector, and it plays a crucial role in the financing of real estate transactions. The mortgage provides the necessary liquidity to the real estate sector, enabling developers to raise funds for the construction of projects. It also provides an opportunity for homebuyers to obtain loans and finance their purchase of a property.

The RERA act has brought significant changes in the real estate sector, and it has had a significant impact on mortgage transactions. The act aims to promote transparency, efficiency, and accountability in the real estate sector and protect the interests of buyers and sellers. It has introduced several provisions that have a direct impact on mortgage transactions.

Implications of RERA on Mortgage Transactions

The RERA act has introduced several provisions that have a direct impact on mortgage transactions. The act mandates the registration of all real estate projects with the regulatory authority, and it requires developers to provide a detailed project plan and all necessary information to buyers.

Under the RERA act, the developer is required to disclose all encumbrances on the property, including mortgages, to the regulatory authority. This provision ensures that the buyers are aware of all the legal implications of purchasing the property and the existing encumbrances on it.

The act also mandates that developers can only accept up to 10% of the total cost of the property as an advance payment from the buyers, and they have to maintain a separate account for such payments. This provision ensures that developers do not divert funds from one project to another and protects the interests of buyers.

Conclusion: What is Mortgage in RERA

What is Mortgage in RERA: In conclusion, a mortgage is a crucial aspect of the real estate sector, and it plays a significant role in financing real estate transactions. The RERA act has brought significant changes in the real estate sector, and it has had a direct impact on mortgage transactions. The act aims to promote transparency, efficiency, and accountability in the real estate sector and protect the interests of buyers and sellers. The provisions of the act ensure that buyers are aware of all legal implications of purchasing the property and the existing encumbrances on it. The act has also introduced provisions to protect the interests of buyers and prevent developers from diverting funds from one project to another.

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