HomeJAGRUK INVESTORThe Real Estate (Regulation and Development) Act, 2016

The Real Estate (Regulation and Development) Act, 2016

The real estate sector in any economy is of supreme significance. Not only does it serve the economy by enhancing its infrastructure, but also reflects its well-being.
Earlier every state had its own law which governed the real estate market. Yet still, Real Estate Regulation and Development Act, 2016 centralised the regulation of the real estate industry. This Act brought in some much-needed transparency in the real estate sector. For this purpose, the Act empowered the Central Government to establish the Real Estate Regulatory Authority (RERA).

It required the compulsory registration of real estate projects. Mandatory filing of certain data and display of information on the RERA website is also necessary. This has equipped the homebuyers to make informed choices. It has also provided for remedies in the case of delay and other default.

What does RERA do?

  • The Act fully came into force on 1 May, 2017.
  • The Act establishes a RERA in each State for regulation of the real estate sector.
  • RERA also acts as an adjudicating body for speedy dispute resolution.

Objectives of RERA Registration

RERA provides that real estate projects must be registered. These projects include residential and commercial real estate projects. Registration is done by the promoter, i.e., the builder. The objectives of registration are:

  • More transparency and accountability towards consumers in order to protect their interests
  • Resolve grievances by establishing the dispute resolution mechanism
  • Reduce fraud by increased compliance

In case of non-registration of the real estate project, Section 59 stipulates a penalty of up to 10% of the estimated project cost and in case of continued default, an additional fine of up to 10% of the estimated project cost or imprisonment up to 3 years or both.

Special directions in RERA

RERA provides that a person can be a promoter who:

  • constructs the building for the purpose of selling to other persons
  • develops the land into a project
  • any development authority or any other public body in respect of allottees
  • an apex State-level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings
  • any other person who acts himself as a builder, coloniser, contractor, developer, estate developer.

Responsibilities of a promoter

Section 11 of the Act provides that a promoter is responsible for:

  • all obligations, responsibilities and functions under the provisions of the Act as per the agreement for sale,
  • making available to allottees sanctioned plans, layout plans, along with specifications, approved by the competent authority,
  • stage-wise time schedule of completion of the project including water, sanitation and electricity,
  • obtaining the completion certificate or the occupancy certificate and to make it available to the allottees individually or to the association of allottee,
  • obtaining the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the association of allottees,
  • providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees,
  • enabling the formation of an association or society or co-operative society for allottees.

Provision for taking advance for purchase of property

RERA provides that a promoter shall not accept a sum more than 10% of the cost of the apartment, plot, or building as an advance payment or an application fee from a person. To ask for an advance, the promoter has to first enter into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.

The agreement for sale shall specify:

  • particulars of development of the project including the construction of building and apartments,
  • specifications and internal development work and external development work,
  • the dates and the manner by which payments towards the cost of the apartment, plot, or building, are to be made by the allottees,
  • the date on which the possession of the apartment, plot or building is to be handed over, and
  • the rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default.

Right of buyers

Under RERA, the buyers are entitled to the following:

  • obtain the information relating to sanctioned plans, layout plans along with the specifications,
  • know the stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed,
  • claim the possession of the apartment, plot or building,
  • claim the refund of the amount paid along with interest from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building,
  • have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building by the promoter.


Before the enactment of the Act, the real estate sector in India was majorly unregulated. Except for the erstwhile Consumer Protection Act, 1986, no recourse under the law was available to the real estate buyers. RERA envisages effective consumer protection, uniformity and standardization of business practices and transaction in the real estate sector. It aims at providing transparency and protecting the interests of consumers in the real estate sector. Further, it intends to ensure greater accountability towards consumers and significantly reduce frauds, delays and high transaction costs.

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