Real Estate (Regulation and Development ) Act, 2016

• Real Estate (Regulation and Development) Act (RERA) is an act

passed by the Parliament in 2016 that came into effect fully from
1st May, 2017.

• It seeks to protect home-buyers as well as help boost investments

in the real estate sector by bringing efficiency and transparency in
the sale/purchase of real estate.

• The Act establishes Real Estate Regulatory Authority (RERA) in

each state for regulation of the real estate sector and also acts as
an adjudicating body for speedy dispute resolution.
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Need for the RERA
Need for the RERA
• Real estate sector had been largely unregulated, no standardization of business practices and
transactions.
• Prevalence of issues like delays, price, quality of construction. Delays in projects had been a
major issue plaguing real estate sector- huge cost overrun due to delays.
• Numerous instances where developers cheated property buyers.
• No grievance redressal mechanism.
• Huge generation of black money in real estate sector.
Objectives of RERA
• Enhance transparency and accountability in real estate and housing transactions.
• Boost domestic and foreign investment in the real estate sector.
• Provide uniform regulatory environment to ensure speedy adjudication of disputes.
• Promote orderly growth through efficient project execution and standardization.
• Offer single window system of clearance for real estate projects.
• Empower and protect the right of home buyers.

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Important Definitions – Section 2

• Section 2 (d) "allottee" in relation to a real estate project, means the person to whom a plot, apartment or
building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise
transferred by the promoter, and includes the person who subsequently acquires the said allotment
through sale, transfer or otherwise but does not include a person to whom such plot, apartment or
building, as the case may be, is given on rent;
• Section 2 (e) "apartment" whether called block, chamber, dwelling unit, flat, office, showroom, shop,
godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of
any immovable property, including one or more rooms or enclosed spaces, located on one or more floors
or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or
commercial use such as residence, office, shop, showroom or godown or for carrying on any business,
occupation, profession or trade, or for any other type of use ancillary to the purpose specified;
• Section 2 (j) "building" includes any structure or erection or part of a structure or erection which is
intended to be used for residential, commercial or for the purpose of any business, occupation, profession
or trade, or for any other related purposes;

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Important Definitions – Section 2

• Section (k) "carpet area" means the net usable floor area of an apartment, excluding the area covered by
the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open
terrace area, but includes the area covered by the internal partition walls of the apartment.

• Section 2 (za) "interest" means the rates of interest payable by the promoter or the allottee, as the case
may be. Explanation.—For the purpose of this clause—
• (i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to
the rate of interest which the promoter shall be liable to pay the allottee, in case of default;
• (ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the
amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and
the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment
to the promoter till the date it is paid;

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Important Definitions – Section 2

• Section 2 (zg) "Person" includes,— (i) an individual; (ii) a Hindu undivided family; (iii) a company; (iv) a firm
under the Indian Partnership Act, 1932 or the Limited Liability Partnership Act, 2008, as the case may be;
(v) a competent authority; (vi) an association of persons or a body of individuals whether incorporated or
not; (vii) a co-operative society registered under any law relating to co-operative societies; (viii) any such
other entity as the appropriate Government may, by notification, specify in this behalf;
• Section (zn) "real estate project" means the development of a building or a building consisting of
apartments, or converting an existing building or a part thereof into apartments, or the development of
land into plots or apartment, as the case may be, for the purpose of selling all or some of the said
apartments or plots or building, as the case may be, and includes the common areas, the development
works, all improvements and structures thereon, and all easement, rights and appurtenances belonging
thereto;
• Section 2 (zq) "sanctioned plan" means the site plan, building plan, service plan, parking and circulation
plan, landscape plan, layout plan, zoning plan and such other plan and includes structural designs, if
applicable, permissions such as environment permission and such other permissions, which are approved
by the competent authority prior to start of a real estate project;

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Registration of Projects – Section 3

• Section 3. (1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase
in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it,
in any planning area, without registering the real estate project with the Real Estate Regulatory Authority
established under this Act:

• Prior Registration- Prior registration with Regulatory Authority- RERA is required for sell or offer of sale of
any plot, apartment or building. For the ongoing projects, the promoter shall make application with the
RERA within 3 months from the date of commencement of the Act.
• Where the project is to be developed in phases, registration to be done for every phase separately.

• Exemption from registration- The projects having land area less than 500 square meters or having number
of apartments less than 8 (eight) are exempt from registration. Also the project for renovation or repair or
re-development which does not involve marketing, advertising, selling or new allotment of any apartment,
plot or building are exempt.

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Application and Grant of Registration – Section 4 and 5

• The application for registration to be made under section 4 of the Act with the prescribed
documents and information.
• Application for registration must be disposed of within a period of 30 days by RERA. On
successful registration, the applicant shall be provided with a registration number, a login
id, and password to fill up essential details on the website of the RERA. – Section 5
• The registration as granted may be revoked by the Authority on receipt of complaint
or suo motu on the basis that the promoter makes default, violation of any the terms and
conditions, promoter is involved in any kind of unfair practice or irregularities. - Section 5
• Note - Registration is not required for projects where the land area proposed to be
developed does not exceed 500 sq meters or the number of apartments proposed to be
developed does not exceed eight.

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Period of Registration and Extension – Section 5 and
6

• The registration granted shall be valid for a period declared by the Promoter for
completion of the real estate project or phase thereof as submitted in the affidavit along
with the application for registration.
• Section 6-Extension- The registration granted by the Authority may be extended by it
upon receipt of application from the Promoter along with the prescribed fee in the
following circumstances:
• Force Majeure: war, flood, drought, fire, cyclone, earthquake or any other calamity
caused by nature affecting and disturbing the regular developmental timeline of the real
estate project.
• Other than Force Majeure: The Authority may extend the registration to a maximum
period of one year if it feels that the circumstances and reasons for extension of the
project are reasonable. If the reason is without default on the part of the promoter only
then can the authority grant such extension.
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Functions and Duties of Promoter – Section 11

• The promoters shall create his web page on the website of the Authority and enter all
relevant details of the proposed projects, registration details and other information as
may be specified.
• The Promoters must include in the prospectus or the advertisement registration number
and the website address of the authority where the detail of the registered project has
been entered and shall make available the allottees the information including sanction
plan, lay out, the stage wise time schedule of completion of the project.
• The promoter shall obtain the completion certificate, occupancy certificate. In case any
person wish to withdraw from the proposed project on the basis of incorrect information,
he shall be refunded the entire investment along with interest at such rate as may be
prescribed.

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Functions and Duties of Promoter – Section 11

• The promoter shall not accept a deposit or advance exceeding 10% of the of the cost of
the property without first entering into agreement for sale.
• The promoter is to adhere to the sanctioned plans and project specifications as approved
by the competent authorities.
• The promoter shall not transfer or assign his majority rights and liabilities in a real estate
project to a third party without obtaining prior written consent from two third allottees,
excluding the promoters, and without the prior written approval of the Authority.
• If the promoter fails to complete or is unable to give possession of an apartment, he shall
be liable to pay on demand to the allottees, the investment made along with the interest
at the rate as may be specified.

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Transfer of Title – Section 17

• The promoter shall execute a registered conveyance deed in favour of the allottee along
with the undivided proportionate title in the common areas to the association of the
allottees or the competent authority, as the case may be, and hand over the physical
possession of the plot, apartment of building, as the case may be, to the allottees and
the common areas to the association of the allottees or the competent authority, as the
case may be, in a real estate project,
• The other title documents pertaining thereto within specified period as per sanctioned
plans as provided under the local laws: Provided that, in the absence of any local law,
conveyance deed in favour of the allottee or the association of the allottees or the
competent authority, as the case may be, under this section shall be carried out by the
promoter within three months from date of issue of occupancy certificate.

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Return of amount and compensation – Section 18

• Section 18 of the Act is of particular significance, as it directs defaulting builders to pay

compensation for delay in handing over possession of the flats.
• Under Section 18, if a builder fails to hand over possession of the flat as per the date
mentioned in the Agreement of Sale, the homebuyer has two options – either to
terminate the agreement and seek refund or to continue with the project and claim
compensation. If he decides to exit the project, the builder will be liable to return the
entire amount paid for the flat with interest. On the other hand, if the homebuyer opts to
continue with the project, he can claim interest for every month of delay till the time the
apartment is handed over.
• The rate of interest is prescribed under the Real Estate Regulation Rules, which vary from
state to state. For example, Rule 18 of the Maharashtra Real Estate Rules prescribes a
rate of interest equal to SBI MCLR (Marginal Cost of Lending Rate) plus two percent (2%).
Since the current MCLR rate is 8.6% (varies from time to time), the penal interest rate
would be 10.6%.
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Rights and Duties of Allottees – Section 20

Section 20 provides for the various rights and duties of the allottees.
• (1) The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans
along with the specifications, approved by the competent authority and such other information as
provided in the Act or the rules and regulations made thereunder or the agreement for sale signed
with the promoter.
• (2) The allottee shall be entitled to know stage-wise time schedule of completion of the project,
including the provisions for water, sanitation, electricity and other amenities and services as agreed
to between the promoter and the allottee in accordance with the terms and conditions of the
agreement for sale.
• (3) The allottee shall be entitled to claim the possession of apartment, plot or building, as the case
may be, and the association of allottees shall be entitled to claim the possession of the common
areas, as per the declaration given by the promoter.

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Rights and Duties of Allottees – Section 20

Section 20 provides for the various rights and duties of the allottees.
• (4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate
as may be prescribed and compensation in the manner as provided under the Act, from the
promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or
building, as the case may be, in accordance with the terms of agreement for sale or due to
discontinuance of his business as a developer on account of suspension or revocation of his
registration under the provisions of the Act or the rules or regulations made thereunder.
• (5) The allottee shall be entitled to have the necessary documents and plans, including that of
common areas, after handing over the physical possession of the apartment or plot or building as
the case may be, by the promoter.
• (6) Every allottee, who has entered into an agreement for sale to take an apartment, plot or building
as the case may be, shall be responsible to make necessary payments in the manner and within the
time as specified in the said agreement for sale and shall pay at the proper time and place, the share
of the registration charges, municipal taxes, water and electricity charges, maintenance charges,
ground rent, and other charges, if any.

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Rights and Duties of Allottees – Section 20
Section 20 provides for the various rights and duties of the allottees.
• (7) The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay
in payment towards any amount or charges to be paid under subsection (6).
• (8) The obligations of the allottee under sub-section (6) and the liability towards interest under
sub-section (7) may be reduced when mutually agreed to between the promoter and such
allottee.
• (9) Every allottee of the apartment, plot or building as the case may be, shall participate
towards the formation of an association or society or cooperative society of the allottees, or a
federation of the same.
• (10) Every allottee shall take physical possession of the apartment, plot or building as the case
may be, within a period of two months of the occupancy certificate issued for the said
apartment, plot or building, as the case may be.
• (11) Every allottee shall participate towards registration of the conveyance deed of the
apartment, plot or building, as the case may be, as provided under subsection (1) of section 17
of this Act.

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Regulatory Authority RERA – Section 20 - 40
Establishment – Section 20
• Establishment Section 20 of the Act provides for the establishment of Real Estate Regulatory Authority
(‘Authority’ for short) by the appropriate Government.
• Section 2(g) of the Act defines the term ‘appropriate government’ as in respect of matters relating to –
• the Union Territory without Legislature,
• the Central Government;
• the Union territory of Puducherry,
• the Union territory Government;
• the Union territory of Delhi,
• the Central Ministry of Urban Development;
• the State, the State Government.
• The appropriate Government is to establish the Authority within 30.04.2017. The Authority is to exercise
the powers conferred on it and to perform the functions assigned to it under the Act.

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Regulatory Authority RERA – Section 20 - 40
Status of Authority Section 20(2) provides that the Authority shall be a body
corporate by the name having perpetual succession and a common seal, with the
power, subject to the provisions of this Act, to acquire, hold and dispose of property,
both movable and immovable, and to contract, and shall, by the said name, sue or
sued.

Composition of Authority - Section 21 provides that the Authority shall consist of a

Chair person and not less than 2 whole time members to be appointed by the
appropriate Government.
The Chairperson and other members shall be appointed by the appropriate
Government on the recommendations of a selection Committee consisting of
The Chief Justice of the High Court or his nominee;
The Secretary of the Department dealing with Housing and the Law Secretary in such
manner,
From amongst persons having adequate knowledge of and professional experience of at
least 25 years in case of the Chair person and 15 years in the case of the Members in
urban
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Regulatory Authority RERA – Section 20 - 40

Tenure - Section 23 provides that the Chairperson and Member shall hold office for a
term not exceeding five years from the date on which they enter upon their office, or
until they attain the age of 65 years, whichever is earlier and shall not be eligible for re-
appointment.

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Complaints before the Regulatory Authority – Section
31

• A complaint can be filed 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.

• Process of filing complaint under RERA:

• Step 1 – Visit the state’s official website. On the portal, you will find the page of Complaint Registration.
• Step 2 – Click on the Complaint Registration link. A complaint form will open and you are required to fill the
complaint details.
• Step 3 – While filing the complaint, a homebuyer would be asked to submit their personal details including
name, address, contact, and project details. You have to attach supporting documents for the same.
• Step 4 – After filling up the complaint, the complainants would need to pay an amount of Rs 1,000 for
registering the complaint or Rs 5,000 in case the complaint is filed before the Adjudicating Officer.

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Powers of the Regulatory Authority

Powers of the Authority – Section 36 to 38

• The following are the powers vested on the Authority –
• to call for information,
• conduct investigations;
• to issue interim orders;
• to issue directions;
• to impose penalty or interest;
• to rectify orders
Section 40 of the RERA Act states that if a promoter, allottee or real estate agent
fails to pay any interest or penalty or compensation imposed by the adjudicating officer
or the RERA Authority, it can be recoverable from such promoter or allottee or real
estate agent in such manner as may be prescribed as an arrears of land revenue.

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Appellate Tribunal

Establishment of Tribunal - Section 43 of the Act provides that the appropriate Government
within 30.04.2017 shall establish an Appellate Tribunal to be known as (name of the State/Union
Territory) Real Estate Appellate Tribunal, by notification. The appropriate Government may, if it
deems necessary, establish one or more benches of the Tribunal, for various jurisdictions in the
State or Union Territory. The appropriate Government of two or more States or Union territories
may, if it deems fit, establish one single Appellate Tribunal

Order – a decree Section 57 provides that every order passed by the Tribunal shall be executable
by the Tribunal as a decree of a civil court and for the purpose the Tribunal shall have all the
powers of a civil court. The Tribunal may transfer order to a civil court having local jurisdiction and
such civil court shall execute the orders as if it were a decree made by the Court.

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Appellate Tribunal

Appeal to High Court Section 58 provides that any person aggrieved by any decision or order of the Tribunal,
may file an appeal to the High Court, within a period of 60 days from the date of communication of the
decision of the order of the Tribunal, to him, on any one or more the grounds specified in Section 100 of CPC.
The High Court may entertain the appeal after the expiry of 60 days if it is satisfied that the appellant was
prevented by sufficient cause from preferring the appeal in time. No appeal shall lie against any decision or
order of the Tribunal with the consent of the parties.

Right to legal representation Section 56 provides that the applicant or appellant may either appear in
person or authorize one or more Chartered Accountants in practice or Company Secretaries in practice or
Cost Accountants in practice or legal practitioners or any of its officers to present his or its case before the
Tribunal or the Regulatory Authority or the Adjudicating Officer, as the case may be

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Adjudicating Officer under RERA – Section 71 and 72

• The State RERA Authority shall, in consultation with respective State Govt. appoint one or more
Adjudicating officers.
• Any aggrieved person may file a complaint with the Adjudicating officer for violation or contravention of
the provisions of this Act, rules or regulations made there under.
• The word “Person” as above shall include the association of allottees or any other voluntary consumer
association registered under any law.
• The Adjudicating officer shall decide the compensation or interest claims under the Act within 60
days from the date of receipt of the claim application.
• For deciding any matter of enquiry, the Adjudicating officer shall have the power to summon and enforce
the attendance of any person known to the facts and circumstances of the case to give evidence or to
produce any document which may useful for or relevant to the subject matter of enquiry.
• If the Adjudicating officer is satisfied that any person has failed to comply with the provisions of this Act,
rules or regulations made there under, he may order to pay such compensation or interest as he think fit in
accordance with this Act.

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