1 RERA :  Bane Or  For Real Estate Sector



Housing is one of the fundamental requirements of humans, as is well-known. Access to adequate accommodation can be a prerequisite for the enjoyment of several human rights, including the rights to work, health, social security, suffrage, privacy, and education. Humans have an inherent requirement for safe, secure, and adequate accommodation.

Recognizing the severity of the housing crisis, international and regional human rights laws have recognized the right to accommodation as an individual’s fundamental right. By international human rights law, several states have fashioned their legal systems to include the right to accommodation as a fundamental citizen right.

The Indian judiciary has interpreted the right to accommodation within the context of the right to life guaranteed by Article 21 of the Constitution, demonstrating commendable concern for this right. It has been observed that the demand for accommodation has increased substantially over time. The Real Estate Regulation Act (RERA) was enacted on 1 May 2016 and went into effect on 1 May 2017 to highlight its significance and increase transparency.

As housing is a vital contributor to economic, social, and civic development, the primary goal of this act is to bring accountability and transparency to real estate transactions to simplify them. Many purchasers are aware that RERA was implemented to defend consumer rights. The RERA Act focuses primarily on the consumer’s major concerns regarding incorrect information about projects by promoters, mismanagement of funds, and delays in real estate project completion.

The Real Estate Regulation and Development Act of 2016 (RERA) is a revolutionary act of the Indian parliament in the annals of the Indian real estate industry. The real estate law was enacted by the Rajya Sabha on March 10, 2016, and by the Lok Sabha on March 15. In addition, the President signed the measure into law on March 25, 2016. Including the fact that our honorable President published the act on March 26, 2016, and that it was published in the Official Gazette.

For the regulation and promotion of the real estate sector, a bill to establish the real estate regulatory authority to ensure the sale of plots, apartments, and buildings, as well as the sale of real estate projects, or to protect the consumer’s interest in the real estate sector, and to establish a mechanism for expeditious, efficient, and transparent resolution of disputes.

According to RERA, each state and union territory will have its own set of regulations and regulators to govern the operation of regulators. The rules for all Union territories, including the nation’s capital, were formulated by the center. Many of the states have notified RERA rules and a regulatory body will begin to operate, whereas many states are still behind schedule.

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The notified states till 31st July 2017 are Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, Andhra Pradesh, Bihar, Chattisgarh, Haryana, Karnataka, Kerala, Uttarakhand, Odisha, Punjab, Tamilnadu, and Uttar Pradesh. In numerous locations, land acquisition has become a concern. Without the approval of plans, delinquent builders frequently sell poor-quality construction projects to investors, as well as projects that become bogged down in litigation, etc. RERA aims to resolve issues such as construction delays, cost, quality, and other modifications. The purpose of the act is to increase sector transparency and encourage ethical conduct.

What Does RERA (Real Estate Regulatory Act) Entail?

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a statute enacted by the Indian Parliament. The RERA aims to protect the interests of homebuyers and increase investment in the real estate industry. On March 10, 2016, the Rajya Sabha passed the RERA law, followed by the Lok Sabha on March 15, 2016. It came into effect on May 1, 2016, when 59 of its 92 sections were notified, and on May 1, 2017, the remaining provisions took effect. The federal and state governments must notify their own rules under the Act, based on the model rules drafted under the federal Act.

The Act’s primary goals are as follows:

Assuring Transparency in the real estate sector with regard to the sale of flats, apartments, sites, structures, and any other type of real estate project.
Establishing a mechanism for expeditious resolution of disputes through adjudication.

Protecting the interests of purchasers and allottees in the real estate market.
Using authority as a conduit to establish a bridge of trust between customers and promoters.

As a result of the increase in disputes between purchasers and promoters, the Government of India has enacted the Real Estate Regulatory Act, which stipulates that promoters must adhere to certain requirements to legally construct or sell a project.

In India’s real estate industry, RERA has brought about significant adjustments. The purchasers have found great solace in the government’s unwavering commitment to upholding fair play in the real estate industry, which pertains to a private sector such as the real estate market. In addition to the purchasers, the promoters, and the real estate agents who adhere to government regulations but incur losses as a result of some promoters’ unethical practices, real estate agents will also experience happiness and satisfaction.

Currently, only four states have established their permanent regulators.
Madhya Pradesh, Maharashtra, Punjab, and Gujarat. The remaining states are supported by interim regulators. Only 23 states/territories have notified the Act’s rules, while six states have drafted the rules but have not yet been notified.


Homebuyers have long complained that real estate transactions were skewed and burdensome in the developers’ estimation. The objective of RERA and the government’s model code is to create a more just and equitable transaction between the vendor and the consumer of properties, particularly in the primary market. The Real Estate (Regulation and Development) Act, 2016 (RERA) will simplify the purchase of real estate by introducing greater accountability and transparency, so long as the provisions and spirit of the central act are not weakened by the states.

RERA will provide the Indian real estate industry with its first regulator. The Real Estate Act mandates that each state and union territory establish a regulator and draught rules governing its operations.

What Projects Are Covered by RERA?

Typically, the RERA will apply to the following types of projects:
The development of commercial and residential properties, as well as land plots.
Greater-than-500-square-foot projects require a permit. meters or 8 units.
Before the act’s enactment, projects without a Completion Certificate.

The project is only for renovation/repair/redevelopment, which does not entail re-allotment; therefore, marketing, advertising, selling, or new allotment of any apartments, plots, or buildings in the real estate project will not be subject to RERA.

The motive for Implementing RERA

Since 2012, the Indian real estate industry has been threatened by the following factors:
Low rental income,
Stocks accumulate;
Arbitration and uncertain taxation.
The Indian Express, 2017. Consequently, property demand has diminished further. This decreased the demand for investment in the construction industry’s recovery.

Uncertain delays or obstacles are cause for concern for a purchaser who is investing his life resources in a property. Brokers and real estate agents took advantage of prospective purchasers by misrepresenting the quality of the construction and completion. They mislead purchasers regarding the resources of the property. They would verbally pledge to property documents that were frequently absent or insufficient. In addition, the agents concealed the litigation status of properties from prospective purchasers.

RERA Has Jurisdiction

The Real Estate Regulation and Development Act (RERA) went into effect in multiple states on July 1, 2017. The ambits of the RERA Act are not limited to new projects to be initiated after the implementation of the RERA Act but also include projects that were in progress on the date of the Act’s implementation but had not yet received a completion certificate from the relevant authority.

A legal question recently arose before the Maharashtra RERA Authority as to whether or not the RERA authority’s jurisdiction is extinguished if an agreement is terminated before the implementation of RERA.

Regarding the case of Chauthiprasad S. Gupta versus M/S Nahalchand Laloochand Pvt. Ltd, the purchaser made a substantial payment to the builder, and the builder subsequently executed and registered a sale agreement for a unit in NL Aryavarta at Dahisar (East), Mumbai. According to the purchasers, the constructor unilaterally terminated the agreement of sale through a letter of termination without providing the buyer with an opportunity to be heard. The builder, therefore, petitioned the Authority to direct the builder to withdraw the letter of termination and to award interest and compensation.

The developer contested the buyer’s claim because the agreement was terminated before the implementation of RERA, and as such, the RERA authority lacked the authority to hear the present complaint. In addition, the contractor argued that the agreement was terminated by its terms and that the Authority, therefore, has no role to play.

Concerning the jurisdictional question raised by the constructor, the Authority determined that the subject project meets the definition of an ongoing project and is registered under Section 3 of the RERA Act. The jurisdiction of the RERA Authority over such projects continues until the project is completed and the promoter’s obligations regarding the project have been thoroughly discharged. The authority consequently determined that the RERA Authority has jurisdiction over such cases.

In conclusion, if a project is registered under RERA but has not yet received an Occupancy/Completion certificate, constructors can no longer evade liability by claiming that the complaint is unmaintainable.

Impact Of RERA On the Real Estate Industry

Initial backlog.
increased project expenses.
Tight liquidity.
The increase in capital expenditures.
Lengthening of the launch period.
Existing and new project registration requires a substantial amount of initial effort. Details such as the status of each project executed in the previous five years, promoter information, detailed execution plans, etc., must be compiled.

With the advent of RERA, specialized forums such as the State Real Estate Regulatory Authority and the Real Estate Appellate Tribunal will be established for the resolution of disputes regarding the purchase of a home, and the aggrieved party will no longer have recourse to other consumer forums and civil courts in such matters.

While the RERA lays the foundation for expedited dispute resolution, its effectiveness will be determined by the speed with which new dispute resolution bodies are established and by the degree to which disputes are resolved expeditiously and definitively.
The effect of RERA on the customer

RERA was enacted to defend the rights and interests of property purchasers. The developers must disclose the construction status on the Authority’s official website to increase the transparency of the project completion status. After receiving the registration number from the authority, this must be done every three months or every quarter. In the event of any wrongdoing by the promoter or developer, the purchaser or allottee may register a complaint online with the Authority.

The purchasers’/allottees’ complaints must be addressed within 120 days. Builders/promoters are prohibited from altering the building’s structure without the prior approval of all purchasers. All of these measures, in addition to those outlined in the sections of the Real Estate (Regulation and Development) Act of 2016, are anticipated to increase investor confidence.

Influence of RERA on Developers/builders

Under RERA, the contractors are obligated to register project-relevant statistics. Included are:
The promoter’s information,
The land’s status and ownership should not be contested.
Statutory approval from the appropriate authorities,
Accords that comply with all of the RERA Act’s stipulations,
The brokers’ information,
the architects and contractors
Engineer and CA certificates are presented.

If promoters/builders neglect to register this information, they will incur severe penalties. The constructors are obligated by a five-year agreement with the purchaser for quality assurance of the building, with the five years commencing on the date of occupancy.

This means that if construction quality or other structural issues arise within five years of the sale of a property, the builder or promoter is obligated to make repairs or provide compensation. In addition, they must assure the formation of the Resident’s Welfare Association within three months of the conclusion of the project. The fact that, per Section 18 of the RERA Act, 2016 purchasers can request a refund in the event of a delay or dissatisfaction with the property places developers in a difficult position.

In addition to disclosing the above-mentioned essential information to purchasers, they must also disclose the property’s precise dimensions (carpet area). They can no longer list the super-built-up area (common area, veranda, etc.) as the extent of the property. As a result, they are unable to charge buyers the amount for a highly built-up area. After obtaining RERA’s sanction, developers may only begin selling.

Due to the stipulation that 70% of the project cost received by the builder must be deposited into an escrow account and must be used for the same project, RERA also reduced the liquidity of builders. Before the release of funds from the escrow account, CA and Engineer certifications must be provided.

  1. RERA’s Effect on new construction
    Any endeavor with more than eight apartments or an area greater than 500 square feet is deemed to be a large development. Mts. is required to register under RERA. Each construction phase must be separately registered with the State Authority by the developers. Since builders are required to register their new initiatives, they cannot initiate them in advance. Once upon a time, pre-launches were the primary source of capital formation. There is a limit on how many deposits constructors can take from purchasers.

Under RERA, a contractor may not accept a deposit of more than 10%. Advertising a project without first registering it with RERA is also prohibited; section 59 of the RERA act, 2016 allows RERA to issue a notice to the developer and take action against the project.

In addition, the Act addresses two main concerns of buyers:
Delays in construction work and
Constructive excellence.
If a builder disregards the RERA regulations in either circumstance, the builder will be responsible for compensating the customer for the loss. The terms of compensation are stipulated in the parties’ initial contract. In addition, it specifies the amount of interest the contractor must pay in the event of construction delays.

Repercussions of RERA on an ongoing initiative

Due to RERA, difficulties may arise for developers who are still constructing initiatives. In accordance with the Act, all ongoing projects must now register with the regulatory authority prior to proceeding with project completion. Before registration, they are also prohibited from advertising or promoting the property. These measures are likely to significantly delay the construction and sale of the current property. Before transferring over possession to the purchaser, constructors are required by RERA to issue an occupation or completion certificate. As of today, there are millions of flats in all of India’s main cities, including Mumbai and Bangalore, that have not done so.

Another concern for these developers is whether or not they will receive the certificates on time, as this depends on the Municipal Corporation for projects within the planning area, and on the Gramme panchayat for projects outside the planning area. In cases where developers request an extension, the amount of time permitted for project completion depends on the authority, and the authority will assess a sanction for the project’s delay.

Impact of RERA on Brokers and Agents

Historically, Indian real estate agents were an unorganised segment of the industry. To facilitate a transaction, intermediaries must now be registered under the new law. There are between 500,000 and one million real estate agents in India, which has an unorganised and unregulated real estate market, according to estimates. With RERA in effect, brokers cannot guarantee amenities or services not listed in the documents. Moreover, they will be required to provide all information and documents to homebuyers at the time of reservation.

As a result, RERA is likely to weed out inexperienced, unprofessional, and fly-by-night operators, as brokers who violate the regulations will be subject to a substantial fine, imprisonment, or both. Brokers will no longer be able to sell properties without registering with the RERA Authority. In the event that they provide purchasers with inaccurate property information, they may also be penalised. However, many unorganised brokers may find themselves out of employment, according to industry participants. Registration fees must be paid by agents. Many real estate agents will choose to close their stores, citing a lack of trust in architects and the absence of RERA-mandated benefits.

Advantages Of RERA
RERA has introduced uniformity to the real estate sector in terms of carpet area and common areas, which will prevent malpractices such as alterations to the layout, area, agreement, specifications, and information about the broker, architect, and contractor, etc.
The timely dispatch of the reserved office spaces or residences is required of developers. If not, the developer is subject to severe monetary penalties and imprisonment.
The same capabilities guaranteed at the time of registration must be provided at the time of transfer. If not, the builder will be subject to penalties.
Specifying the carpet area rather than the built-in area, which exceeds the former by at least 20 to 30 percent, is required.
Before selling any dwelling or office space, clearance from government departments must be obtained.
Each of the developer’s promoted initiatives should have a distinct bank account.
Within one year of the building’s transfer, the purchaser may notify the developer of any defects in the structure and receive free repairs.

Disadvantages Of RERA
The new law’s rules and regulations do not apply to ongoing initiatives or those that have been delayed due to certification issues.
Delays in approval and certification by government agencies may impede on-time product delivery.
Small developers whose initiatives are less than 1,000 square feet in size are categorised as’small’. m. These do not fall under the jurisdiction of this law, and registration with the regulator is not required.
Without approval, projects cannot be initiated, so the initiation of new projects could be delayed.
The advantages outweigh the disadvantages, and this is a step in the right direction to assist commoners receive the timely delivery of their ideal homes and purchase them at affordable prices.

Market Conditions Following One Year of RERA
Fewer project launches have occurred, and execution has been the primary focus.
To avoid litigation, developers have sought to comply with regulations.
Existing projects’ slackened deadlines for completion have provided developers with a window of opportunity.
There has not yet been a precedent-setting, market-altering decision.
In spite of this, the developers believe that RERA has altered the market dynamics within a brief time frame. Anita Arjundas, managing director of Mahindra Life space, asserts that the RERA is India’s first genuine attempt to regulate an industry that has been viewed as opaque. One year into the implementation of the Act, we can summarise it as a year of transformation and volatility, as well as one that promises new opportunities.

States must refrain from introducing exceptions to the definition of ongoing initiatives.
The formulation of the definition of “ongoing projects” conflicts with one of the primary goals of RERA, which is to provide homebuyers with greater transparency and improved communication. This aspect of Central RERA is crystal obvious. States should refrain from proposing exceptions and support the simple yet extremely explicit definition of “current projects.”

Hold government agencies accountable for the delay in approving applications
Delays in granting required government approvals for a real estate project (such as ownership certificate, land-use conversion, environmental and pollution no-objection certificates, non-encumbrance, road access, and other infrastructure-related approvals) can result in project delays. Every certification procedure should be legally time-bound in order to reduce the likelihood of delivery delays.

All state statutes should retain the RERA’s incarceration and monetary sanction provisions for violations.
State laws should no longer allow for the addition of penitentiary time and/or fines for various violations.
In the event of non-compliance by developers, real estate agents, or purchasers, the Central RERA 2016 recommends imprisonment for up to three years, a fine of up to 10 percent of the estimated cost of the real estate project, or both. But, with the exception of Kerala, all other states and union territories have added a clause allowing for the compounding of an offence in lieu of imprisonment, while the draught is mute on the subject in Goa.

RERA is a quasi-judicial body, and instilling faith in its redress mechanism will necessitate, to a large extent, trusting its judgement to redress RERA complaints. Therefore, the Central RERA provisions for punishment of violations, in the form of imprisonment and fines, should remain unaltered in all state laws, and the actual judgement should be left to the regulator.

Avoid conflict between IBC and RERA by precisely defining the class of homebuyers.
In ongoing projects, recent events have highlighted the problem of builders declaring bankruptcy. As “unsecured creditors,” the rights of homebuyers may be violated in such instances. Even though the new Bankruptcy Act applies to these ventures, a structured approach is necessary to safeguard the rights of homebuyers.

Set up IT infrastructure
For the long-term success of this landmark legislation, it is essential to have a robust IT infrastructure for RERA, as well as an effective and efficient monitoring structure and swift redressal of complaints in the event of violations.


The act is a positive development in terms of enhancing transparency in the real estate industry, enhancing the accountability of promoters and developers, and establishing effective forums for redressing complaints. Due to the highly corrupt sector’s stringent rules and regulations, this will result in a decrease in litigation.

In the context of the rapid transformation of the nation over the past few decades, there has been a growing focus on the constructive urbanization process as the nation endeavors to increase its capacity to meet its developmental requirements through urbanization. A standardized Real Estate Regulation Act is required in a country like India in order to have uniform standards across the country and to bring transparency to real estate transactions.

In terms of consumers, promoters, builders, etc., the implementation of RERA is a decisive step in the correct direction. In the future, along the lines of RERA, the modernization of land records, land acquisition, and the Goods and Services Tax (GST) could also be prioritized for the expansion of the real estate industry. Builders, promoters, agents, and allottees are required to adhere to the project specifications, project agreements, and regulatory frameworks.

It should also be emphasized that real estate entities must ensure that the properties of allottees are well-maintained and that residents are satisfied with the conditions of their properties. The Real Estate Regulation and Development Act (RERA) is a significant step in ensuring greater accountability of real estate developers and agents to consumers and the government.

The Real Estate Regulatory Authority (RERA) is committed to the successful and effective implementation of the country’s real estate law and has taken relevant and consistent measures for the sector’s progressive growth in the country. In order to promote the sustainable development of the RERA, as well as a customer-friendly environment, various policy measures integrated under the RERA would unquestionably bring about remarkable changes in economic and social transformation.

1 Comment

  • Ashwani Joshi

    Excellent. Piece of information.
    Keep up Adv Govind Bali in the larger intrest of public.

    Ashwani Joshi
    Plot Holder and Colonizers Association Punjab


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