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CS Deepak Pratap Singh

Duties Of Builders &  Developers Under Real Estate (Regulation And Development) Act, 2016

Real Estate is playing very important role in development of Indian economy. It is one of the most profitable businesses in some part of country. The Real Estate Sector has given employment to large people in our country. It has contributed a lot in the development of housing projects and trying to fulfil demand for housing to all. Since this sector has grown beyond expectations in recent time, but remain unregulated and unorganised till date. The consumers are left on the mercy of builders and developers and they are exploiting their best. Theses builders and developers are providing services to consumers at their will; there is no time limit for completion, possession and services to be promised. They have lacked professionalism in their work. The rights of customers are not protected and only remedy is to go to the Consumers Forum and wait for long time.

The government viewing difficulties of customers and to regulate real estate sector promulgated Real Estate (Regulation and Development ) Act, 2016 and same has been passed by the Parliament on 15th March, 2016 and got assent of President on 25th March, 2016. The government has implemented the Real Estate (Regulation and Development) Act, 2016 from 1st May, 2016.


Section Duties/ Obligations imposed
Section 3(1)/4 The Act provides and prohibits the Builders and Developers not to book, sell or offer for sale, or invite persons to purchase any plot, apartment or building, as the case may be in any real estate project before registering the same with Real Estate Regulatory Authority Provided that any project of area more than 500 Sq. Mts and having more than 8 apartments should be registered with RERA.
Section 4(2) The Builders and Developers required submitting various documents such as Commencemence Certificate from relevant authority, Draft Agreement, other draft letters, required permission required if any with registering with RERA to make available all documents relevant to project to the purchasers.
Section 4(2)(1)(D) An obligation has been imposed on the promoters to keep 70% of the amount realised from allottees in a separate bank accounts and same will be expanded only on the project for which it is received on the basis of stage of completion as certified by the Architect or Chartered Accountant or other authority as may be prescribed.
Section 4(2)(1)(D)(iii) The promoters should get their accounts audited with a Chartered Accountant within a period of 6 months from the end of financial year.
Section 7(1)(a) The registration with RERA will be revoked if promoters are failed to comply with any rules and regulations under this act.
Section 7(1)(b) The promoters should follow all terms and conditions of competent authority, while completing the project. The project should be according to approved plan and materials should be used as mentioned in the advertisement etc.
Section 7(1)(c) The promoter should not be indulging in unfair practices, otherwise its registration with RERA will be revoked and he is black listed according the provisions of RERDA, 2016.
Section 11(1) To create a wave page on the site of RERA after receiving Login ID and Password and share details of proposed project for public viewing including quarterly updates of bookings of apartments, flats, garages and quarterly updates of projects, approvals and other information as may be necessary and prescribed by the RERA.
Section 11(2) Advertisement if any of the promoters should contained prominently the wave page address on the website of RERA, where all details regarding project are available.
Section 11(3) To make available to the allottees at the time of booking and issue of allotment letter following details; 1) Sanctioned Plan Layout approved by competent authority; 2) stage wise schedule of completion of the project
Section11(4)(b) To handover Completion Certificate or Occupancy Certificate to the allotted or association of allottees at the time of giving of possession of the project to the allottees or association of allottees.
Section11(4)(c) To provide and handover Lease Certificate to the allottees or association of allottes at the time of giving possession of project, if project is developed on lease hold land.
Section 11(4)(d) To provide all essential services at reasonable charges till handing over possession of project to the allottees or association of allottees.
Section 11(4)(e) To take effective steps in formation of association of allottees and to do all acts and take all necessary steps to register the association of allottees.
Section 11(4)(f)/17 Execution of registered conveyance deed in favour of the allottee along with undivided proportionate title in common area to association of allottees
Section 11(4)(g) Pay for all outgoings for which collections made from allottees until transfer of physical possession to allottees or association of allottees.
Section 11(4)(h) Not to mortagege or create charge on the apartment, building or plots after allotting the same to the allottees, which has effect on the rights of allottees.
Section11(5) Not to arbitrarily cancel allotment and it should be in accordance with the rules and regulation prescribed under the Act and the Agreement with the allottees.
Section 11(6) To maintain and keep all details ready as may be prescribed by RERA.
Section 12 The promoter is liable to compensate any person making advance or deposit for any loss sustained by reason of any false statement in any advertisement or prospectus.
Section 13(1) Not to accept any advance or deposit or application fees more than 10% of the cost of apparent plot or building without first entering into agreement for sale and registering the same agreement.
Section 13(2) The Agreement of Sale should be in standard form and should contain provisions as may be prescribed.
Section 14(1) The project should be completed according the sectioned plan or layout approved by the competent authority.
Section14(2) Not to make any alterations or additions to sanctioned plans, layouts plans and specifications other than minor additions or alterations without previous written permission of at least two third of the allottees other than the promoters.
Section 14(3) Liability to rectify structural defects or defects in workmanship within a period of 30 days if brought to the notice of the promoter within a period of 5 years from the date of handing over the possession of the project to the association of allottees. On failure promoter has to compensate the allottees.
Section 15(1) Not such transfer or assignment without prior written consent of at lease of two third allottees except promoter and without prior written consent of RERA.
Section16 The promoter should take insurance as may be prescribed to save project and title (this section is proposed to be amended).
Section 18(1) If promoter fails to give possession and allottes wishes to withdraw, he has to give compensation to the allottees as may be prescribed. If allottees do not wish to withdraw, then promoter to pay interest at prescribed rate for every month of delay till handing over the possession.
Section 18(2) Liability to compensate allottees for loss caused by defective title. The claim for such compensation shall not be barred by the law of limitation.
Section 18(3) Liability to compensate allottee for failure to discharge obligations imposed by the Act or rules or regulations thereunder or by agreement for sale.

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A Qualified Company Secretary, LLB , AIII , Bsc( Maths) BHU, Certification in Insurance Risk Management ( ICSI-III) have completed Limited Insolvency Examination and having more than 20 years of experience in the field of Secretarial Practice, Project Finance, Direct Taxes ,GST, Accounts & F View Full Profile

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  1. Pranita Chandane says:

    If during the period of application for registration if I failed to get the registration no. then what is the penalty under RERA…..n what are the consequences of RERA….what is the due date of Registration….n what should I do in case I receive a letter of penalty from RERA dept today…..

  2. Renish says:

    We are going to start new real estate online advertisement portal. So we would like to know that what are the formalities to get permission,terms & conditions etc…….

  3. Adv Kirit R Modi says:

    Registration of existing projects also to be applied for within three months i.e.before 31st July. But application forms not yet prescribed. Whether we should apply on plain paper giving required details? Will State Govt grant registration on such plain paper application? Unless registered, new projects can not be advertised or booking start.

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