Article discusses Salient Features of Real Estate (Regulation and Development) Act, 2016, Registration under Real Estate (Regulation and Development) Act, 2016, Exceptions for registration, Process of Registration under RERA, Registration of Real Estate Agent, Functions, Duties and Obligations of Promoter, Rights of Allottee under RERA 2016, Penalties under Real Estate (Regulation and Development) Act, 2016, Pros and Cons of Real Estate (Regulation and Development) Act, 2016 and States Implementing RERA.

The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. The bill was passed by the Rajya Sabha on 10th March 2016 and by the Lok Sabha on 15th March 2016. The Act came into force on 1st May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1st May 2017.

Salient Features of Real Estate (Regulation and Development) Act, 2016

  • Applicable on Commercial and residential Real Estate projects.
  • Establishment of Real Estate Regulatory Authority (RERA) and Appellant Authority at state and Union Territory Level.
  • Bar of jurisdiction courts from entertaining complaints with respect to matters of the bill.
  • Mandatory registration of Real Estate Projects and real estate agents. (No sale before registration).
  • Public disclosure of project details at RERA site. Such as layout plans, status of statutory approvals, name and address of real estate agents, contractors, architect, structural engineer etc..
  • Act provides for arranging Insurance of Land title, which benefits both the consumers and developers if land titles are later found to be defective.

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A. Registration under Real Estate (Regulation and Development) Act, 2016

  • Area of land is more than 500 sq. mt. or number of apartments more than 8. (States & UT can notify more stringent criteria)
  • Where requisite approvals and commencement certificate has not been obtained prior to commencement of this act.
  • Where the project does not involves only renovation, repair or re-development and involves re-allotment or marketing of the project.

Note: if the real estate project is to be developed in PHASES, then registration shall be taken for each phase

Exceptions for registration under Real Estate (Regulation and Development) Act, 2016:

  • Where the area of land does not exceed 500 sq. mt. or 8 apartments. Central Government may notify lesser area or apartments for different states or Union territories.
  • Where the promoter has received completion certificate prior to commencement of this act.
  • For the purpose of renovation or repair or re-development which does not involve marketing advertising, selling and new allotment of any apartment, plot or building as the case be, under the real estate project.

Process of Registration under Real Estate (Regulation and Development) Act, 2016:

  • Application along with fee to the authority before booking or selling or offer of sale in the real estate project. The application shall accompany certain specified documents
  • The Authority shall within 15 days grant registration subject to the provisions of this act and will provide a registration number, Login id and password for accessing the website of Authority and to recreate his web page and to fill details of the proposed project.
  • If the Authority fails to grant registration within 30 days, the Project shall be deemed registered.
  • Registration is valid till the completion of the project as mentioned in the application

Registration of Real Estate Agent under Real Estate (Regulation and Development) Act, 2016

  • No real estate agent shall facilitate sale or purchase of any plot, apartment or building without obtaining registration.
  • Application for registration shall be made to Authority accompanied by fee and documents, within such time as may be prescribed.
  • Authority within the period as may be prescribed, grant single registration for the entire State or Union Territory.
  • Such Registration No. shall be quoted on every sale facilitated by him.
  • He shall also not facilitate sale of any project which is not registered under this act.

B. Functions and Duties of Promoter under Real Estate (Regulation and Development) Act, 2016

  • Enter all required details on the website of the Authority
  • He shall mentioned the above website address in all its advertisement and prospectus along with the registration no.
  • Shall provide the following to allottees after entering into agreement for sale:

1. Site and layout plans approved by the competent authority in the manner specified by the authority. (Any variation in the approved plan shall be intimated to the allottee)

2. Stage wise schedule completion of the project including provisions for civic infrastructure.

  • Obtain completion certificate from the relevant authority and make it available to the allottees.
  • take steps for the formation of an association or society or co-operative society, as the case may be, of the allottees under the laws applicable.
  • take steps for the registration of conveyance deed of the apartment, plot or building, as the case may be, to the allottee after handing over physical possession.
  • The promoter may cancel the allotment only in terms of agreement for sale (the allottee may approach the Authority for relief).
  • Builders will be liable for structural defects for 5 years.
  • Formation of residents’ association is compulsory within three months of the allotment of a majority of units in a project.

C. Obligations of Promoter under Real Estate (Regulation and Development) Act, 2016

  • If any person is affected by any incorrect or false advertisement by the promoter, then he shall be returned his entire investment along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act.
  • A promoter shall not accept an advance sum more than 10% of the total cost of unit without first entering into a written agreement for sale with such person and registration of the said agreement.
  • Take previous consent of the applicant for making any addition or alteration in the plan except for some minor changes.
  • To rectify structural defect or deficiency in any service brought to its notice within two years of possession.
  • The interest rate payable by the promoter as well as by allottee shall be same in the eventuality of any default by either of them. Interest to be paid from the date when the amount is received.

Note: “Agreement for sale” shall be as per the format specified.

D. Rights of Allottee under Real Estate (Regulation and Development) Act, 2016

  • To obtain information relating to site and layout plans as approved by the Competent Authority.
  • To know stage-wise time schedule of completion of the project
  • To claim possession of the unit.
  • To claim refund of amount with interest, if promoter fails to give possession as per agreement.
  • To make payment within time and in the manner as specified in the agreement.
  • To pay interest, for any delay in payment.
  • Shall take participation in formation of association or society after taking possession of the unit.
  • Shall participate towards registration of conveyance deed after possession.

E. Penalties under Real Estate (Regulation and Development) Act, 2016

Non registration Penalty may extend up to 10% of the estimated cost of the project
Non-compliance with orders of authority – Imprisonment up to 3 years (for Builders) and up to 1 year (for Real Estate Agents); and/ or

– Fine up to 10% of the estimated cost of the project

False information Fine up to 5% of the estimated cost of the project
Other contraventions Fine up to 5% of the estimated cost of the project

F. Pros and Cons of Real Estate (Regulation and Development) Act, 2016

Pros Cons
Timely Delivery of Flats All clearances are mandatory before beginning a project
Furnishing of accurate project details Declaration of actual carpet area
Changes in Projects Needs 2/3rd approval – Changes in Projects Needs 2/3rd approval.

– After sales service

After sales service Prior registration, hence No “pre launches” will be possible.

G. Other Points related to Real Estate (Regulation and Development) Act, 2016

  • Payment of interest or default charges shall same for The Builder as well as the Allottee. Default payment to allottee is much less than charged from them in case of their default.
  • Freezing of bank accounts in case of revocation of registration.
  • The Promoter should indemnify the loss due to defective title.
  • Change of promoter to be made only with the consent of 2/3rd

H. States Implementing Real Estate (Regulation and Development) Act, 2016

State/UT Date of notification Website
Gujarat 29 October 2016
Uttar Pradesh 11 October 2016
Chandigarh 31 October 2016
Dadra and Nagar Haveli 31 October 2016
Andaman and Nicobar Islands 31 October 2016
Lakshadweep 31 October 2016
Daman and Diu 31 October 2016
Madhya Pradesh 22 October 2016
Delhi 24 November 2016
Maharashtra 19 April 2017
Andhra Pradesh 28 March 2017
Odisha 25 February 2017
Bihar 1 May 2017
Rajasthan 1 May 2017
Jharkhand 18 May 2017
Uttarakhand 28 April 2017
Tamil Nadu 22 June 2017
Karnataka 10 July 2017
Punjab 8 June 2017
Chattisgarh 26 April 2017
Haryana 28 July 2017
Assam 6 May 2017
Telangana 4 August 2017
Himachal Pradesh 28 September 2017
Goa 24 November 2017
Tripura 27 October 2017
Puducherry 18 July 2017

I. Conclusion:

Delays in projects were one of the biggest problems faced by the buyers. This was due to range of reasons from diversion of funds to problems in land acquisition, bad construction etc. Consequently, the courts were flooded with litigations, police registered are filled with FIR’s against the promoters, thus choking the entire system. Therefore the coming of the RERA act will be a boon to all home buyers who have been clamoring for transparency and accountability in the real estate sector.

First, the registration of projects and brokers with RERA will help the buyers not only in making informed decision but also prevent frauds caused due to selling of projects without approval plans with developers, siphoning off money by the brokers etc. Also it will help organize and regulate the broker segment in India. Now the broker will themselves endeavor to choose a RERA compliant developer before selling the project.

The compulsory timely compensation in case of delay of projects is expected to reduce litigations in the court. Moreover, the mandatory mention of carpet area will not provide any room to developers to employ deceiving tactics between what they promise to give and what they actually give. Therefore the act has laid down much responsible and larger role for the developers, thereby, ensuring greater transparency in project-marketing and execution.


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Qualification: CA in Job / Business
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Location: New Delhi, New Delhi, IN
Member Since: 08 Jan 2019 | Total Posts: 1

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