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Real Estate (Regulation & Development) Act, 2016

The Real Estate Regulatory Authority established under RERA Act is the adjudicating authority to resolve the disputes between consumer & builder. The authority is also responsible for granting/rejecting the registration of real estate projects.
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The Real Estate (Regulation & Development) Act, commonly known as the RERA Act has been introduced with an objective to foster the interests and rights of real estate customers and to standardise business transactions and procedures in the sector. The Act will bring transparency in the system, impose responsibility on consumer & builders and ensure fast-track grievance resolution mechanism. 

Let’s take a look at the provisions of the new Act:-

1. Registration of any new real estate project with Real Estate Regulatory Authority(RERA)

It is mandatory for the promoter of any real estate project to first register the new project with Real Estate Regulatory Authority before marketing/selling/advertising/offering or inviting a person to book/sell the project or any part of it unless directed by the authority to the promoter.

Allowance: If the project has already been commenced or is ongoing for which completion certificate is not yet obtained, then the builder is required to get the registration within 3 months from the date of initiation of the project in accordance with the provisions of the RERA Act.


Registration is not required in the following cases, if:-

  • The promoter has to necessarily get his project registered with the authority where proposed area of land does not exceed 500 sq.mts. or 8 apartments(inclusive of all phases). This limit can be reduced to below 500 sq. mts. or 8 apartments, if the government finds it essential to do so.
  • In case the promoter has obtained the completion certificate before the beginning of this Act.
  • In case the promoter has started a repair or renovation project which doesn’t involve marketing/selling/new allotment etc.

2. Application Proforma for registration:

The duly-filled application form for registration must disclose all the contents as prescribed in the guidelines of the Act along with prescribed fees and following documents:

  • Brief details of the enterprise
  • Brief details of the projects launched in preceding 5 years( whether already finished or being completed, as per the case)
  • Validated copy of sanctions and certificate of commencement for each project & phase in the project
  • Sanctioned layout, specifications & plan of proposed project/phase
  • Plan of development of work to be done in the proposed project and planned facilities to be provided
  • Location details of the project

    Allotment letter proforma, agreement for sale and the deed of conveyance as to be signed by the allottees

  • Affidavit/declaration letter signed by the promoter
  • Details of the architect/contractor/real estate agents/engineer etc.
  • All other documents as to be prescribed by the authorities

The application can be submitted online within 1 year from the date of establishment of the project.

3. The real estate regulatory authority established under the Real Estate Regulatory Act shall reject or grant the registration within 30 days from the date of receiving the application. After that, a registration number and log in ID/password such as Maharashtra RERA login generated by Maharera is granted in order to gain access to the website of the authority. It is necessary for the promoter to build his web page with the authority and fill the details of the proposed project. In case the real estate regulatory authority fails to issue/reject the registration number within the 7 days after the expiry of 30 days, the project shall be deemed to have been registered with the authority. The application shall be rejected by the authorities only after hearing the pleas/evidences/facts from the applicant.

4. The validity of registration as granted by the authority under the Act of RERA India may be extended on an application forwarded by the promoter.

5. Real estate Agents under the Act are mandatorily required to get themselves registered otherwise they can’t earn fees/commission for facilitating sale/purchase of property i.e. land/apartment.

6. Advertisement or prospectus of project should relate only facts of the project: The promoter has to provide the web page address of the real estate regulatory authority where its project details are given in the form of advertisement or prospectus of the proposed project. Any loss of deposit/advance or damage sustained by the depositor owing to misleading/false information provided in the advertisement/prospectus shall be borne by the promoter in the prescribed manner as mentioned in the Real Estate Regulatory Act India. In case the depositor intends to withdraw its investment amount along with the interest & compensation in agreed manner due to the false statement contained in the advertisement, then he may do in the manner prescribed in the RERA Act.

7. Advance Payment @ 10% : In accordance to the provisions of the RERA Act, a promoter shall not take more than 10% of the cost of apartment/plot/ building as an advance payment/application fees from a person/buyer unless it first enter into a written sale agreement with the said person and get the same registered accordingly. This sale agreement must contain all the relevant clauses, terms and conditions as prescribed in the Act.

8. Project execution as per sanctioned plans: The promoter is required to strictly adhere to the sanctioned plans/layouts/specifications as approved by the apt authorities for execution to be a part of RERA India as per the housing rules and regulations in India.

9. No addition/alteration shall be allowed in sanctioned plans:  As soon as the project plans are approved and accepted by the allottee for sale, the promoter is not allowed to make any addition/alteration in the approved plans, technical specifications, structural designs, and amenities of proposed project without the prior consent from the allottee.  Similarly, in case of addition/modifications in common areas within the project, he is required to take previous accord of at least 2/3rd of the allottees, who have agreed to take apartment in the said project building, other than the promoter.

10. Structural/workmanship defects: If there are any defects in structure/workmanship/quality or that of provision of services or any other contractual obligations of promoter, then the allottees are allowed to bring into the attention of the promoter within the duration of 5 years from the date of handing over of the project. The promoter has to rectify the defect in a fixed period of 30 days else he shall be obliged to pay a calculated compensation amount to the allottee(s) as prescribed in the Real Estate Regulatory Act.

11. Sell units only as per Carpet Area: As per the RERA Act, developers are required to sell units only on carpet area i.e. net usable floor area of an apartment excluding internal walls, exclusive balcony, exclusive terrace area or areas under service shafts.

12. Realisation proceeds in distinct bank account: The Real Estate Regulatory Act requires the promoter to deposit 70% of the realization proceeds as received from allottees, periodically & phase wise, in a distinct escrow bank account so as to make certain that such amount as collected shall be used only for purpose of completion of the project.

13. Refund/interest in delays:  if the promoter fails to hand over the possession within given time period due to prescribed reasons, then, he shall be liable (on the demand made by the allottee) to refund the taken amount along with interest and compensation in the prescribed manner as per the RERA Act.  Further to above, he shall be granted with relief without prejudice to any remedy as available to the allottee.

Also if the allottee wishes to carry on with the completion of project irrespective of the delay in the completion instead of withdrawing, then he is expected to get an interest, at the prescribed rate, by the promoter for the delay till the date of completing & granting possession.

In addition, there are other provisions in the Act that help in fulfillment of the objectives of the Real Estate Regulation Act.

Penalty provision of the Act

Non-Registration/non-compliance of the tribunal order:

If the promoter fails to register his real estate project by mistake or by intention, he shall have to bear a penalty as high up as up to 10 % of the assessed cost of the proposed project.

If he fails to comply with the tribunal order then he shall be sentenced to up to 3 years imprisonment or pay a penaly fine of up to 10% of the evaluated project cost.

In violation to any other provisions of the Act or if the promoter provides false/misleading information to RERA: The promoter has to pay the fine which can extend up to 5% of the evaluated project cost.

Since when is Rera applicable?

The real estate (regulation and development) Act, 2016 (RERA) has been effective across all states from 1 May 2017.

Is Rera compulsory?

The Real Estate Act makes it mandatory for all commercial and residential real estate projects where the land is over 500 square metres, or eight apartments, to register with the Real Estate Regulatory (RERA) for launching a project, in order to provide greater transparency in project-marketing and execution.

What are the rules of Rera?

RERA specifies certain norms for building and development of real estate which will enhance the transparency in transactions in the real estate sector. It has provided several rights to the home buyers and has also specified certain rules and regulations to be followed by all builders/ developers.

How long does it take to get Rera number?

If you are applying for a broker licence, sales agent licence, or a developer licence, RERA will respond within 5 days of receiving a complete application.

How do I file a case in Rera?

You can file a complaint under Section 31 of RERA either with the Real Estate Regulatory Authority or the adjudicating officer. This complaint can be filed against promoters, allottees and/or real estate agents. Many state governments have laid out the procedures for filing applications under RERA

How many times can a builder delay closing?

By law, a builder is permitted two extensions of 120 days each, without having to pay delayed closing compensation, provided that the homeowner was given proper written notice. After the 240 days have elapsed, the builder must set a Delayed Closing Date and the homeowner is entitled to delayed closing compensation.

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Reviewed by: Prachi Darji
Associate - Legal, MyAdvo Techserve Pvt. Ltd.

Prachi Darji is an expert corporate lawyer, currently associated with MyAdvo as an in-house legal advisor. She has finished B.Sc, LLB(Hons.) from Gujarat National Law University. She has an expertise in various domains of law including Intellectual Property Law, Company law, etc. At MyAdvo, she is taking care of litigation strategies and internal legal processes.