Vide recent Notification dated April 19 2017 being S.O. 1216(E) issued by the Ministry of Housing and Urban Poverty Alleviation sections 3 to 19, 40, 59 to 70 and 79 to 80 of the Real Estate (Regulation and Development) Act, 2016 (the "Act' or 'RERA') came into force w.e.f. May 01 2017. Earlier, the Ministry notified effective date for sections 2, 20 to 39, 41 to 58, 71 to 78 and 81 to 92 of the Act as May 01 2016.


An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.

The Act aims at protecting the rights and interests of consumers and promotion of uniformity and standardization of business practices and transactions in the real estate sector. It attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism.


  • ensure accountability towards allottees and protect their interest;
  • infuse transparency, ensure fair-play and reduce frauds & delays;
  • introduce professionalism and pan India standardization;
  • establish symmetry of information between the promoter and allottee;
  • imposing certain responsibilities on both promoter and allottees;
  • establish regulatory oversight mechanism to enforce contracts;
  • establish fast- track dispute resolution mechanism;
  • promote good governance in the sector which in turn would create investor confidence


  • All developers will now have to disclose the original sanctioned plans and changes made in the project at the later stage and duration of the time within which they will complete the project.
  • Each state will set up its own regulatory authority that has the responsibility to register and regulate projects under this Act. It will be the responsibility of each state regulator to register real estate projects and real estate agents operating in their state under RERA. The details of all registered projects will be put up on a website for public access. No developer can advertise/market the project, apartment or building without registering the project with the RERA authority.
  • After registering with regulatory authority, the builder has to update all the project details online on authority's website and update the same on regular basis in terms of status of the project and other information. This, in turn, will help the buyer to get accurate information about the project and make informed decision while investing in the project. To provide clarity to buyers, developers will have to keep them informed of their other ongoing projects. The promoter is also required to furnish the following additional information and documents at the time of registration of the project with the Regulatory Authority:
  • brief details of his enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter;
  • a brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending;
  • an authenticated copy of the approvals and commencement certificate from the competent authority obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the competent authority for each of such phases;
  • the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority;  the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy;
  • the location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project;
  • proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees;
  • the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any;
  • the number and areas of garage for sale in the project;
  • the names and addresses of his real estate agents, if any, for the proposed project;
  • the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project;
  • a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorized by the promoter, stating:--
  • that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person;
  • that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details;
  • the time period within which he undertakes to complete the project or phase thereof, as the case may be;
  • that seventy per cent of the amounts realized 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.

Qua declaration to be submitted by the promoter, as stated above, following further conditions are also to be met, namely:

  • the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project,
  • that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project,
  • that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.
  • For new projects, the promoter is required to declare the time period within which he intends to complete the construction of the project, failing which, the registration will lapse. However, for ongoing projects, the promoter is required to mention the extent of (i) the construction work completed as per the last approved sanctioned plan of the project; and (ii) the development of common areas, amenities etc. along with expected period of completion of on-going project, which has to be commensurate with the extent of development already completed.
  • Under the Act, the period of registration may be extended by the Regulatory Authority due to specified force majeure events. In certain cases, it may be extended on account of reasonable circumstances but such an extension shall not exceed 1 (one) year in aggregate. In addition to this, the Rules made under RERA provide that the registration period may be extended, where actual work (as per the sanctioned plan) could not be carried by the promoter due to (i) specific orders from any court of law or tribunal, competent authority, statutory authority, relating to the project; or (ii) due to such mitigating circumstances, as may be decided by the Regulatory Authority.
  • The developer has to pay penalty in case of delay in giving possession or return the total amount with interest at a defined rate, as mentioned in the agreement of sale, to the homebuyer;
  • A developer cannot ask for more than 10 per cent of the booking amount as an advance without making an agreement for sale. Earlier, developers asked for 10 per cent of the total cost of property as the booking amount;
  • Promoters must have the consent of two-thirds of the buyers in a project before making any change in the number of units or other structural changes. RERA prescribes penalties, including imprisonment on developers who delay projects or do not deliver on promises. Developers are required to disclose their project details on the real estate regulator's website, and provide updates on construction progress;
  • In case of any structural defect or poor quality, it will be the responsibility of the developer to rectify such defects for a period of 5 years. Any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter. For delayed possession, developers need to pay an interest rate of 2 percentage points above State Bank of India's lending rate;
  • Developers/builders are required to submit the original approved plans for their ongoing projects and the alterations that they made later. They also have to furnish details of revenue collected from allottees, how the funds were utilized, timeline for construction, completion, and delivery that will need to be certified by an engineer/architect/practicing chartered accountant;
  • Quality of construction in projects has been given significance under RERA based on protest from buyers regarding poor quality of flats over the last few years. The regulator will ensure protection to buyers in this matter for five years from the date of possession. If any issue is highlighted by buyers in front of the regulator in this period including in quality of construction and the provision of services, the developer will have to rectify the same in a matter of 30 days;
  • Developers can't invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Furthermore, after registration, all the advertisement inviting investment will have to bear the unique RERA registration number. The registration no. will be provided project-wise;
  • After registering the project, developers will have to furnish details of their financial statements, legal title deed and supporting documents;
  • If the promoter defaults on delivery within the agreed deadline, they will be required to return the entire money invested by the buyers along with the pre agreed interest rate mentioned in the contract based on the model contract given by RERA;
  • If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery;
  • After developers register with the regulator, a page will be created for the builder on the regulatory authority's website. The developer will be given login credentials using which it will upload all the information regarding the registered projects on the regulator's website. The number, type of apartments, plots and projects and their completion status will be updated at a maximum quarterly basis;
  • The regulator will have the power to fine and imprison errant builders based on a case by case basis. The imprisonment can go up to a period of three years for a project;
  • Imprisonment of up to three years prescribed for errant developers. A developer can sell only on the basis of carpet area which will help home buyers understand what they will be paying for each square foot they will get for use.

and many such other aspects introduced under RERA.

Till now, Andhra Pradesh, Madhya Pradesh, Bihar, Uttar Pradesh, Gujarat, Kerala, Odisha, and union territories of NCT of Delhi, Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep have notified rules for implementation of RERA. Bihar and Odisha have notified rules in complete sync with the one notified by the Ministry. While other states like Uttar Pradesh, Haryana and Gujarat have provided certain exemptions to ongoing projects; and states such as Delhi and Maharashtra have given relaxation in terms of disclosures and lock-in period on investments made by developers.

With implementation of RERA, real estate industry is entering a new regime with protection for buyers and stringent laws against promoters / developers for noncompliance. To begin with the agreements signed between land owners, developers, financial institutions and buyers will have to undergo a complete makeover in order to be in accordance with RERA. Rest, time will tell.

** more details with follow in subsequent issues of India Legal Impetus.

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.