India: The Real Estate (Regulation And Development) Act, 2016 - Comments

Last Updated: 12 October 2016
Article by Tamoghana Goswami

For decades the promoter/developer, and not the consumer/allottee, has been king in real estate transactions. Buyers of property have been a harried lot. Their long cherished dreams of a house of their own were frustrated due to the uncertainty in construction and delivery of possession.

Attempts were made by the consumer/allottee to move the National Consumer Court or the Competition Commission of India in a wide variety of matters. The sheer number of cases clogged the two forums, bringing to fore a need for a separate dedicated and specialised regulator for the real estate industry

On March 25th, 2016, after a tumultuous passage in both the Houses of Parliament and after undergoing some substantial changes, The Real Estate Regulation and Development Act, 2016 was given assent by the President of India.

Described as a wide-encompassing Act, its object is to oversee the real estate sector through a Regulator and an Adjudicating body. Many analysts have reported that the home-buying process will get easier, the slump in the real estate industry will diminish and there will be greater quality and satisfaction available to the consumers. According to these analysts the Act is a pioneering initiative to protect the interests of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. Also, the Act is expected to help consumers move towards an accountable, transparent and fair deal in a sector notorious for delays, shortchanging, overpricing etc. But, how soon will it happen? Let us look at the salient features of the Act

Salient Features


The foremost aspect of the Act is the setting up of a separate and distinct regulatory authority other than the consumer forum for dealing with "rogue developers". The forum will be named "Real Estate Regulatory Authority" and will be set up within a year from the date of commencement of the Act. The mail box period of a year will see the Secretary of the department dealing with housing, as the Regulatory Authority. The setting up of the regulatory infrastructure will be the first crucial step in the successful implementation of the Act as the regulator, if the parties so desire, would be like a moderator from the initiation to the conclusion of the real estate projects.

Along with the establishment of a Regulatory Authority, the Act envisages the establishment of a Real Estate Appellate Tribunal, also within one year from the date of commencement of the Act. The limit for filing an appeal is 60 days from the date of receipt of copy of order or copy of the direction issued by the Regulatory Authority. Further, the Appellate Tribunal is mandated to deal with appeals expeditiously within a period of 60 days from date of receipt of the appeal by the Tribunal. The next body of appeal will be the High Court in the relevant jurisdiction.

To expedite the disposal of complaints the Regulatory Authority, in consultation with the appropriate state or central authority, also has the power to appoint judicial officers as Adjudicating Officers for adjudging the compensation to be paid by the promoters after a fair hearing has been conducted. The Adjudicating Officer will be chosen from among the ranks of District Judge.


Chapter-II of the Act elaborately deals with registration of Real Estate Projects and Registration of Real Estate Agents.

The Promoter of the real estate project has to compulsorily register the project with the Real Estate Regulatory Authority before exploiting the commercial viability of the project by advertising, sale or invitation/offer of sale. However, where a project which has already commenced when the Act came into force but has not received a commencement certificate, the promoter has been given a period of three months from the commencement of the Act, within which the project needs to be registered with the Regulatory Authority.

The following categories of projects are exempt from registration:

  1. Where the area of land proposed to be promoted does not exceed 500 square meters or the number of apartments to be constructed in the project does not exceed eight apartments. However, the appropriate Government (Central or State) may reconsider and reduce the threshold limit below 500 square meters or eight apartments;
  2. Projects where the completion certificates have been issued prior to the commencement of the Act;
  3. Projects for the purpose of renovation or repair or re-development which do not involve marketing, advertising, selling; and new allotment of any apartment plot or building.


The process of registration is made rigorous with the promoter made answerable at all steps. The promoter has to mandatorily make an application to the Regulatory Authority making disclosure of details of the promoter (registered address, type of enterprise); particulars of projects launched in the past 5 years, including the current status of completion, delay in completion, if any, and payments pending; authenticated copies of approvals and commencement certificates received for the projects /phases of the project; approved plans of the project, locational details, facilities provided, format of allotment letter, agreement for sale and conveyance deed which will be signed by the allottees etc.; an affidavit from the promoter stating that he has a legal title to the land free from all encumbrances or in case of encumbrances on the land, details of the same; an undertaking stating the time required for completion of the project or phase; an undertaking stating that 70% of the amounts realised for the real estate project from the allottees, from time to time, 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 purpose.


After the application is received by the promoter, the Regulatory Authority is mandated to accept or reject the application within 30 days. If the registration authority fails to do so within the period of time allotted, the project will be deemed to have been registered. On grant of registration, a registration number, Login id and password is provided for accessing the website of the Regulatory Authority. The website will contain a webpage allotted to the promoter who would have to fill in the details required for the project.

The procedure for revocation of the registration granted may be put into motion on receipt of a complaint or suo moto by the Regulatory Authority or on the recommendation of a competent authority, when the promoter defaults to perform his duties as described in detail in Chapter III of the Act, including default in any term of grant of approval or involvement in an act of financial embezzlement.

When the registration of a certain project is revoked, the Regulatory Authority will debar the promoter from accessing the website of the Authority and add the promoter's name to the list of defaulters. The Regulatory Authority will also have the power to pass any other direction to protect the interest of the allottees. From thereon, to finish the residual development work, the association of allottees will be given the first right of refusal to carry out the remaining work or any other manner as may be determined by the Regulatory Authority. Also, the Regulatory Authority will have the power to freeze the bank account holding the project finance and may give directions later to unfreeze the account for use of the project finance to complete the project.


The reason for project delays has often been attributed to diversion of moneys received from allottees to completion of other projects or for investment purposes. To counter this practice the Act requires the promoter to deposit 70 % of the amount received from the allottees, in a separate account at a scheduled bank. It is also mandated that the amount shall be utilized for cost of construction/land for that specific project only. Also, when any amount is withdrawn by the promoter, the same should be in proportion to the percentage of completion of the project and with the assent/certification by an engineer, an architect and a chartered accountant. Further there is a mandatory provision for auditing the accounts every 6 months with reference to the project.

This move may have a variable effect on the developers, as it will make transactions and liquidity a little complicated and long drawn, though it will safeguard the interests of the consumers.


As mentioned hereinbefore, the Act will bring relief to the inundated corridors of Consumer court and the Competition Commission. The Act specifies actions in case of delay in possession due to suspension of the promoter, revocation of his registration or for any other reason. In any such situation the promoter shall be liable to return the amount received by him from the allottee with interest and compensation, which has been specified under the Act. In addition, the allottee may also exercise his rights to other remedies as made available under the Act.


The act mandates that in case the allottee, within five years of date of possession, notifies the builder of any defect in the quality of construction, quality or provision of services, the promoter is bound to rectify such defect without any further charges, within 30 days. In case the promoter fails to do the same, the allottee is entitled to claim relief under the Act.


  • The promoter will not be allowed to accept an amount greater than 10% of the total value as an advance payment/application fee, in the event a written agreement of sale has not been registered.
  • Hitherto the agreements relating to interest for delays in payments by either parties tilted in favour of the promoter/developer. Buyers delaying payments and builders delaying hand-over of properties did not share same penalties thus far. Now, they will be made equal.
  • The Act has prescribed that in case of default in payment due by either parties, that is, the promoter or the allottee, the same rate of interest will be applicable to both the parties.
  • Consumer courts will now be able to hear real estate disputes.
  • The promoter may cancel the agreement for sale according to the terms listed in the agreement, though the allottee may approach the Regulatory Authority if such cancellation is not within the ambit of the terms mentioned in the agreement.
  • The promoter is bound to execute the conveyance deed within the time period provided in the sanctioned plan under the local laws. In the event there are no local laws governing the time period, the conveyance deed is required to be executed within a period of three months from the date of issue of the occupancy certificate, in case of absence of local laws.
  • The allottee is entitled to take physical possession of the apartment, plot or building within a period of two months of the issue of occupancy certificate.
  • The provisions of this Act shall have an overriding effect in case there is any inconsistency between the provisions contained in this Act and in any other law (including a state law) for the time being in force. One of the state laws which was repealed with the enactment of the Act was the Maharashtra Housing (Regulation and Development) Act 2012.


  • Non-registration of Project – Penalty up to 10% of the estimated cost of the project.
  • Non-compliance of the penalty levied- Imprisonment of the promoter up to 3 years or a penalty of up to 10% in addition to the penalty levied earlier or both.
  • False information in application for registration of project- Penalty up to 5% of the estimated cost of the project or construction.
  • Failure on the part of allottee to comply/not contravene the order/directions of the Regulatory Authority- Penalty for the period till such default continues, up to 5% of the cost of the plot, apartment, building.
  • Non-compliance by the allottee of the penalty levied - Imprisonment of up to one year or fine AMOUNT per day till such default continues, up to 10 % of the cost of the plot, apartment, building.


The Real Estate Act is a promising piece of legislation which will increase transparency, due to the mandatory public disclosure of all project details, further increasing competition in the sector which is in the interest of the consumer. The Act will also bring in regulatory oversight encouraging investments in the sector. Also, among the major positives, Government's urbanization agenda (smart city projects) will be majorly complemented by proper regulation of the sector.

Nonetheless if the Act is scrutinized closely, major overhauls in the sector which has been un-regulated till now, can have unpredictable adverse effects. The proposed 70 % deposit of the amount received from allottees in a bank account may force builders to rely upon further borrowings and cost of which may be borne by of the consumers themselves.

It is observed that not even a single clause has been dedicated to enhance the environmental protection aspect, as real estate industry in the recent times has been held as a major accomplice in destruction of natural habitats of various endangered species by reclaiming marshlands, illegally dredging sand for construction, modifying natural water paths, haphazard development leading to manmade flooding etc. The above mentioned calamities could have been specifically dealt with, if there were stricter penalties proposed for Developers, who were violating this Act, specifically with reference to environmental alteration.

The Act also does not make any attempt to minimize the pernicious role of black money, rampant in real estate transactions, with builders winking at offers of cash, secure in the knowledge that such cash would come in handy in greasing palms and buying stones etc. from quarry owners who have a strong dislike for the banking channel.

Its centerpiece is the website, to be put up by every registered builder on the Authority's portal. This presupposes all buyers are net savvy and computer literate. It is justifiable to make the Developer accountable and pay compensation for defects, delays etc. but then often defects and delays are a result of a variety of factors. To wit, the developer might have promised running water and sewerage lines to the buyers but he in turn is dependent on the local municipality for these facilities so much so that in all fairness he alone should not be made liable for deficiency in these services.

The Real Estate Regulation and Development Act, 2016 is a central legislation. Along with it there are states legislations also. The most prominent ones being in Maharashtra and Kerala. The Central Act and its provisions are to be brought into force by a notification to be issued by the central government. How soon will the notification be issued is the moot question. Builders lobby would like to get it delayed. The Central Government (Ministry of Urban development) is the nodal Ministry. Adequate resources have to be put in place and both regulatory body and the Appellate Tribunals are to be manned by professionals. Till then, it is hoped that the regulatory body in place in Maharashtra and Kerala would continue to do a good job and their best practices would be followed by the regulatory authority, as and when, it starts functioning.

Consulting Editor: Mr. K. N. Chaturvedi, Former Law Secretary, Government of India

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.