pri Important FAQ’s on Real Estate Regulatory Authority (RERA) Act, 2016 Important FAQ’s on Real Estate Regulatory Authority (RERA) Act, 2016

Today I’m going to discuss about Important FAQ’s on Real Estate Regulatory Authority (RERA) Act, 2016. After posting my article titled ‘Basics of the Real Estate Regulatory Authority (RERA) Act, 2016‘, I have received many suggestions and mails to provide more FAQ’s in details on RERA. Following important FAQ’s on RERA Act,2016 prepared by me may be helpful to the builders, Home Buyers and Tax Consultants.

Important FAQ’s on Real Estate Regulatory Authority (RERA) Act,2016.

Q.1.What is the tenure or validity of registration under Real Estate Regulatory Authority (RERA) ?

Ans: Registration shall be valid for the period required to complete the project or phase as declared by the builder/developer.

Q.2. What happens if the builder/ developer fails to deliver during the validity period?

Ans: The validity of registration is based on builder’s own estimates. Thus, accountability lies with them to adhere to the timelines otherwise they risk suffering losses or liable to pay penalties.

Q.3. Can the registration is revoked under RERA?

Ans: Registration under the Real Estate Regulatory Authority (RERA) can be revoked by RERA, if it receives a complaint against the developer and is satisfied that the developer has not complied with the rules under the Act, or has violated the terms and conditions of approval or is involved in unfair practices to sell, market or advertise his projects.

Q.4.If RERA revoking of registration, what effects will it have on the builder/ developer?

Ans: Real Estate Regulatory Authority (RERA) can advise the appropriate Government to employ a competent authority to finish the project. The Association of buyers will have the first right to accept or refuse any further development activities in the project. If RERA revoking of registration will result in the following:-

i). The builder/developer will be listed as a defaulter and will be denied access to site of the project in which he has defaulted,

ii). Real Estate Regulatory Authority (RERA) will then inform Real Estate Regulatory Authority(RERA)’s of other states and Union Territory’s,

iii). It will direct the bank to freeze the bank account of the particular project and consequently unfreeze it for future development work, If accepted /required.

Real Estate Regulatory Authority (RERA) may, instead of revoking registration, permit registration to remain in force subject to such future terms and conditions as it thinks fit to impose , in the interest of allottees and any such terms and conditions so imposed shall be binding upon builder or developer.

Q.5. Are there any restrictions on advertisements or promotions?

Ans: The act mandates that anything shown in the marketing material needs to be in line with the final product or else real estate developer will be liable to penalties under the Act.

Any marketing collaterals are also to be uploaded on the “Real Estate Regulatory Authority (RERA)” site by the builder or developer, post registration. The advertisement or prospectus issued or published by the developer shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto. In the case of any future dispute the same can be easily referred to or produced as evidence.

Q.6. Can a real estate developer exits the project mid-way by selling to another developer or party?

Ans: While a developer is allowed to sell the project to another investor he can do so only by taking written approval of 2/3rd of project’s consumers and also the prior approval of the Real Estate Regulatory Authority (RERA). Again, if a consumer or his family or by other means holds more than one unit in a project he is considered as one consumer only. Also, the Real Estate Regulatory Authority (RERA) needs to be informed of such sale and the developer who is buying then assumes all the rights and liabilities as the previous promoter of the project (including project delivery time lines and other such matters).

Q.7. What are the responsibilities of a consumer as per Real Estate Regulatory Authority (RERA) Act, 2016?

Ans: It is mandatory for a consumer to make timely payments to the real estate developer as per the agreement for sale. He will also have to pay his share of registration charges , municipal taxes, maintenance charges, ground rent, electricity charges, water supply charges and any other services.

As per Real Estate Regulatory Authority (RERA) Act, 2016, Once occupancy certificate is issued by the real estate developer, the consumer is required to take possession within 2 months’ time. If the consumer is not able to make timely payments for his purchase, he is required to pay interest at a prescribed rate. If is compulsory for a consumer to exhibit active participation in the formation of an association, a cooperative society or any federation of consumers. A consumer shall participate towards registration of the conveyance deed of the unit.

Q.8. What is an ESCROW ACCOUNT and why is Real Estate Regulatory Authority (RERA) mandating 70% funds collected be deposited in an escrow account by a real estate developer?

Ans: An ESCROW ACCOUNT is under the purview of a third party essentially a bank or a recognized lender. This provision thereby results in future oversight of the bank account and signing authority is with the ESROW ACCOUNT manage say a trustee or a bank or a lender. One of the challenge issues for consumers has been project delays. Amongst other reasons for delay, the use of collections from one project into business expansion or construction of other project or siphoning of funds by real estate developers have also been primary causes. Thereby to protect consumer of a project the Act mandates that of all collections. Thereby to protect consumer of a project the Act mandates that of all collections 70% funds be deposited in an ESCROW ACCOUNT maintained with a scheduled commercial bank. These funds can be accessed by a real estate developer solely for purpose incurring expenditures towards the said project.

The real estate developer can with drawn funds from this account in proportion to stage of work. The request for withdraw funds from this account in proportion to stage of work. The request for withdrawn of funds from is to be certified by an engineer, architect and chartered accountant in practice that real estate developer’s claims are justified. These costs include the costs of land, construction, finance and other project costs.

Q.9.  The Real Estate Regulatory Authority (RERA) Act has mandated real estate developers to specify “CARPET AREA” rather than : SUPER BUILT UP AREA” . How it will be help to consumer?

Ans: Carper area is a measure of net usable area of the unit and does not include common areas, balconies, verandahs etc., whereas, the super built up area could be an addition of both. Therefore, to ensure that the consumer knows what he is paying for, it has been made mandatory for the real estate developer to specify carpet area. Essentially Carpet Area is the area within the external walls of a unit where a consumer can reside or have his office. Even when the balconies, verandahs or terraces are exclusively available within a unit these cannot be added to the Carpet Area prescribed in the Act.

The definition of “CARPET AREA” as per Real Estate Regulatory Authority (RARA) Act,2016 , Carpet area means the net usable floor area of an apartment , excluding the area covered by the external walls, areas under services shaft, exclusive balcony or verandah area and exclusive open terrace area but including the area covered by the internal partition walls of the apartment. Mandating carpet area to be revealed will bring in the standardization across builders that was lacking earlier. It will become easier for the customers to compare projects and rates.

Q.10. Is Real Estate Regulatory Authority (RARA) Act,2016  is applicable in Gram Panchayat?

Ans: With respect to the enforcement of this law proactively,  It is possible to have existing local building control authorities like Town Planning Departments in Municipal authorities , development authorities, Gram and Zillah Panchayats or Block Development officers are compile a list of such ongoing projects in their area.

Q.11. Is Real Estate Regulatory Authority (RARA) Act,2016 applicable to open plots?

Ans: The Real Estate Regulatory Authority (RARA) Act,2016 makes it mandatory for all commercial and residential real estate projects where the land over 500 square meters  or 8 apartments , to register with the Real Estate Regulatory Authority (RERA) for launching a project in order to provide greater transparency in project marketing and execution.

Q.12. Is Real Estate Regulatory Authority (RARA) Act,2016 is applicable for completed projects?

Ans: As per The Real Estate Regulatory Authority (RARA) Act,2016, Completed projects are exempts from the purview of the RERA Act.

Q.13. Is it safe to buy either plot or apartment or villa approved by The Real Estate Regulatory Authority (RARA) Act,2016?

Ans: At present days if a consumer wants to buy a plot or apartment or villa better to buys from the Real Estate Regulatory Authority (RARA) Act,2016 approved project. If consumer buys plot, apartment or villa from the unregistered developer or builder with RERA, the banks can refuse to release any more installments of the loan amount if the project is not registered with the RERA authority in the respective State.

FLASH: The Hon’ble Supreme Court recently upheld that the flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfill their promise with regard to amenities and liable to pay interest @6% on FLAT’s cost for delay period.

(Kindly refer and provide your valuable suggestion to my mail i.d.  or my what’s app no. 98480 99490.)

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    Too many plot developers advertise for housing plots without RERA licence? Most of them are over 500 Sq. Mt and over 50 plots. Is that permitted?

    1. B.S.Seethapathi Rao says:

      Dear Sir, Thank you to refer my article. With regards to your query “kindly refer your state RERA Act and Rules. Each State is having their own Act and Rules from time to time, But mostly Act is same but some of the rules different for administrative convenience. In my personal opinion with out RERA registration any builder and developer give advertisement for sell plots or apartments as per threshold limit is an offence. In this regard kindly refer Q.11 in my article. That’s why I have given my notes with clarity and release another article on ” Legal rights of home buyers ” under RERA. Tax Guru and Chennai Property magazine has published that article in the month of Feb’2021 edition. pl refer.

  2. Vinay Thyagaraj says:


    Good faq and helps readers. Simple and neatly explained

    However like to inform you that it is not ESCROW Account (generally escrow account is comes with some conditions to operate and involved multiple parties). It is called Project designated bank account

    Secondly, Rera exempt only Projects received occupancy certificate as on 1.5.2017.
    Otherwise, all projects are covered under the Act including completed projects (post 1.5.2017)

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