A. Introduction to Real Estate (Development & Regulation) Act, 2016:

The real estate sector has grown in the recent years but has largely been unregulated from the perspective of consumer protection. This has affected the overall potential growth of the sector due to absence of professionalism and standardization. To regulate the real estate sector, the government has come up with the idea of Real Estate (Regulation and Development) Act, 2016 (RERA).

The act is comprised of 92 Sections out of which Section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78 and sections 81 to 92 were notified by the Central Government to come into effect from 1st May, 2016 whereas remaining sections of the act were notified w.e.f 1st day of May, 2017 vide E Gazette Notification No. S.O. 1216(E), dated 19th April, 2017.

RERA is meant to protect the interest of the homebuyer and ensure timely delivery of projects. Although RERA is a central law, its implementation will depend on state governments, as real estate is a state subject.

B. Objects And Reasons For Which The RERA Act Has Been Framed:

The Real Estate Act is intended to achieve the following objectives:

a) ensure accountability towards allottees (buyers) and protect their interest;

b) infuse transparency, ensure fair-play and reduce frauds & delays;

c) introduce professionalism;

d) establish symmetry of information between the promoter and allottee;

e) imposing certain responsibilities on both promoter and allottees;

f) establish regulatory oversight mechanism to enforce contracts;

g) establish fast- track dispute resolution mechanism;

h) promote good governance in the sector which in turn would create investor confidence.

C. Applicability of RERA:

– RERA is applicable to all the real estate projects and the Promoter (builders and developers) needs to get such projects registered with Real Estate Regulatory Authority except in the following cases:

– Where the land proposed to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases

– Where the Promoter has received completion certificate for a real estate project before the introduction of RERA

– Where the project is for the purpose of renovation or repair or re-development which does not involve marketing, selling or new allotment of any apartment, plot or building.

D. Implementation of RERA In National Capital Territory Of Delhi:

The Central Government has framed National Capital Territory of Delhi Real Estate (Regulation and Development) (General) Rules, 2016 for implementation of RERA in NCT of Delhi vide notification dated 24th November, 2016.

E. Key Features of RERA:

1. Registration of Real Estate Agents:

RERA mandates prior registration of Real Estate Agents with Real Estate Regulatory Authority who are willing to facilitate the sale or purchase of any plot, apartment or building in a real estate project registered under RERA.

By this provision, real estate agents are also covered in the ambit of RERA, thus ensuring accountability on their part.

2. Transparency to the buyers:

The promoter shall, upon receiving his Login Id and password (post registration) create his web page on the website of the Authority and enter all details of the proposed project for public viewing such as details of registration granted by Authority, quarterly up-to-date status of the project etc.

With this obligation of the promoters, the buyers can stay updated about the status of the project just by visiting and checking the website of the authority.

3. Return of amount and compensation to the buyers:

If the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale or due to discontinuance of his business as a developer for any reason, then the buyer has two options:

i) the buyer can withdraw from the project and shall get refund of the full amount paid in advance to the promoter alongwith interest which shall be the State Bank of India highest Marginal Cost of Funds based Lending Rate plus 2% and compensation within 45 days of such amount becoming due.

ii) Otherwise, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at the State Bank of India highest Marginal Cost of Funds based Lending Rate plus 2%.

Thus, the promoter is required to provide timely possession of the apartment, plot or building to the buyer failure of which will cause to incur additional costs on the part of the promoter.

4. Carpet Area Defined:

“Carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

The price of the property depends on the Carpet area. With a clear definition of Carpet Area now, builders and developers cannot use their own method of calculation of the same, thus the buyers are escaped from the manipulation of the developers who used to increase carpet area at their own will to shoot up the prices of the property.

5. No Diversion of funds:

The promoter has to make sure that 70% of the amounts realised for the real estate project from the allottees, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that project which shall be withdrawn to cover the cost of the project, in proportion to the percentage of completion of the project as certified by an engineer, an architect and a chartered accountant in practice. Also the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.

Now the builders and developers cannot divert funds allotted to a particular project towards another one and are left with no excuse of having insufficient funds.

6. Defect Liability:

Any structural or other defect in workmanship, quality or provision of services or any other obligations of the Promoter as per the agreement for sale relating to such development if brought to the notice of the Promoter within a period of 5 (five) years by the Allottee from the date of handing over possession, then it shall be the duty of the Promoter to rectify such defects without further charge, within 30 (thirty) days, and in the event of Promoter’s failure to rectify such defects within such time, the aggrieved Allottees shall be entitled to receive appropriate compensation.

7. Adherence to sanctioned plans and project specifications by the promoter:

The promoter shall not make any alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such building, except minor additions or alterations as may be required by the allottee, or as may be necessary due to architectural and structural reasons but with prior intimation to the allottee.

This provision prohibits the developer to make alterations or additions in the layout plans and specifications of the building.

8. Obligations of promoter regarding insurance of real estate project:

The promoter shall obtain all such insurances as may be notified by the appropriate Government and shall pay the premium and charges in respect of the same. The insurance shall stand transferred to the allottee or the association of allottees at the time of entering into agreement for sale.

9. No deposit or advance to be taken by promoter without first entering into agreement for sale:

The developer must enter into a prior written agreement for sale with the buyer to accept a sum more than 10% of the cost of the apartment, plot, or building, as an advance payment or an application fee and register the said agreement for sale.

10. Obligation to obtain Completion Certificate:

The builder should be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws for the time being in force and to make it available to the allottees individually or to the association of allottees, as the case may be.

11. Liability of the allottee:

Every allottee, who has entered into an agreement for sale to take an apartment, plot or building shall be responsible to make necessary payments in the manner as specified in the said agreement for sale including his share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any. Failure on part of the allotte to make such payment(s) shall make him liable to pay interest. However, the obligations of the allottee to make such payments may be reduced when mutually agreed to between the promoter and such allottee.

12. Grievance Redressal:

Any aggrieved person may file a complaint with the Real Estate Regulatory Authority or the adjudicating Officer, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter, allottee or real estate agent.

Any person aggrieved by any direction or order or decision of the Authority or the adjudicating officer may prefer an appeal to the Appellate Tribunal within 60 days or such reasonable time as may be accorded by the Tribunal, of such order or decision. Where a promoter files an appeal with the Appellate Tribunal, he shall deposit with the Appellate Tribunal atleast 30% of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard.

Any person aggrieved by any decision or order of the Appellate Tribunal, may, file an appeal to the High Court. No appeal shall lie against any decision or order made by the Appellate Tribunal with the consent of the parties

RERA provides sound grievance redressal policy to promoters, real estate agents and buyers.


Author Bio

More Under Corporate Law


  1. Arun Gaur says:

    I have two questions. This is from Jharkhand.

    1) If Suppose a builder starts construction of a Property in April 2017 and does not advertise / intend to sell at the moment. He Completes the project using his own funds in August 2018 and receives the Occupancy Certificate from the Authorities.

    Now he wants to sell, will he require RERA Registration? As all issues which RERA deals has already been completed. There is no delay, no interest point, Occupancy taken, sold on as is where is basis etc.

    Further, if he requires to take RERA registration, then will he need to deposit 70% of the amount in seperate bank account? Or he can withdraw all monies at one go?

    2) The amount deposited for ongoing project in seperate RERA account has to be withdrawn as per project completion method. Now, if the project is completed 80%, amount invested in project is “A”, then how much money is to be withdrawn? A X 80% ?? Then when will the profit of the project be taken out?

    Please let me know


Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

June 2021