DR.

RAM MANOHAR LOHIYA

NATIONAL LAW UNIVERSITY, LUCKNOW

REAL ESTATE LAW - PROJECT

RERA ACT AND ITS IMPORTANCE

Submitted to Submitted by

Dr. Manoj Kumar Nimmy Maria Babu

Enrollment No:200101094

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 ACKNOWLEDGEMENT

Writing a project on any topic is never a single man’s job. I am overwhelmed in all
humbleness and gratefulness to acknowledge my depth to all those who have helped me to
put these ideas, well above the level of simplicity and into something concrete.

I am very thankful to Dr. Manoj Kumar for her valuable help. He was always there to show
me the right track when I needed his help. With the help of her valuable suggestions,
guidance and encouragement, I was able to complete this project. I would also like to thank
my friends, who often helped and gave me support at critical junctures during the making to
this project.

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 TABLE OF CONTENTS

Heading Page No.

Introduction 4

Overview of RERA Act 5

Objectives for Implementation 5

Need for the Act 6

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Inadequacies in the Act

Conclusion 10

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 RERA ACT AND ITS IMPORTANCE

Introduction

The Real Estate (Regulation and Development) Act of 2016, commonly known as the RERA
Act, marks a watershed moment in India’s real estate sector. This comprehensive legislation
was enacted to bring transparency, accountability, and fairness to an industry that used to
leave homebuyers vulnerable to unscrupulous practices. By imposing strict regulations on
property transactions, RERA Act seeks to create a level playing field for developers and
consumers.

Overview of RERA Act

Real Estate (Regulation and Development) Act, 20161 was enacted by the Parliament of
India in 2016. It provides registration of real estate projects by promoters before launching
any real estate project to ensure transparency in project marketing and execution and real
estate agents involved in selling and purchasing of properties. It is a state level act so
registration is required to be taken in respective state by promoters and real estate agent.

Objectives Of Implementation

1. Regulating and promoting Real estate sector Protecting interest of consumers in real
estate sector Ensuring sale of plot, apartment of building or sale of real estate project
with efficiency and transparency2.
2. To establish an adjudicating mechanism for speedy dispute redressal
3. To establish the Appellate Tribunal to hear appeals from the decisions, directions or
orders of the Real Estate Regulatory Authority

1
Real Estate (Regulation and Development) Act, 2016
2
Garg, R. (2022) Real estate (regulation and development) act, 2016, iPleaders. Available at:
https://blog.ipleaders.in/real-estate-regulation-and-development-act-2016-2/ (Accessed: 07 April 2025).

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Need for RERA Act
Before the RERA enactment and commencement, the builders and the real estate developers

were not time-bound to deliver the property to the owner, rather the delay was evident which

had a devastating financial impact on all the homebuyers, particularly the homebuyers who

had invested their entire life savings in order to buy their dream home 3. If one was living in a

rented accommodation and was waiting for the delivery of fully-constructed property, then

the delay would have a compounding effect as she/he had not only to bear the brunt of

continuing loan interest payment but also as well as the rent of their home, therefore the

opportunity cost is extremely high for such homebuyers. This scenario would be damaging

for the economy also like the movement of the economy is severely impacted and the

enthusiasm of homebuyers is severely dented. But there was no one to question the builders

for this.

With the RERA enactment, the buyers or the allottees are able to or can file complaints with

the Authority or adjudicating officer against the builders or the developers under the RERA

act read with respective state RERA regulations instead of approaching the consumer forums

or the civil court for the remedies. It is to be kept in mind that though the provisions of RERA

are in addition to other remedies provided under other laws 4 nonetheless, the provisions of

RERA shall have an overriding effect in case the assistance of provisions of RERA is taken

by the aggrieved party5.

The stark change that the RERA’s introduction had brought is significant as the banks and

other financial institutions, after coming to know about the builder’s and developer’s
3
Dhawan, S. (2017) 6 rules in Rera that will stop builders from delaying delivery of your dream home, The
Economic Times. Available at: https://economictimes.indiatimes.com/wealth/real-estate/will-rera-ensure-timely-
possession-of-properties/articleshow/58492124.cms?from=mdr (Accessed: 07 April 2025).

4
Real estate (regulation and development) act 2016: Regulatory attempt and challenges ahead? (2025) B&B
Associates LLP. Available at: https://bnblegal.com/article/real-estate-regulation-and-development-act-2016-
regulatory-attempt-and-challenges-ahead/ (Accessed: 07 April 2025).
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Real Estate (Regulation and Development) Act 2016, sec 3

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violation can take recourse to a different course of actions like stop lending money to those

builders and real estate developers who are not registered or whose registration has been

canceled by the respective states in pursuance of contravention under the Act and rules or for

any fraudulent conduct. In order to obtain the registration, the builders and the developers are

required to produce the necessary documents and approvals to their requisite regulator.

BENEFITS PROVIDED TO BUYERS

Its been 9 years since RERA Act has been started and in these years it has provided much
benefits to buyers.

1.Standardizing Carpet Area Calculation

Standardization of carpet area calculation is the first and foremost benefit of RERA
Act. This is because there was no standardized formula for calculating carpet area. As
a result of which every builder used their own method of calculating and inflate the
prices of properties thereby exploiting the buyers.

2.Transparency In Real Estate Projects

Before implementation of RERA act, real estate developers don’t disclose proper
information like Project layout, deadline of project completion, utilization of amount
received from the buyers. As a result of which there was no transparency in the
functioning of real estate developers. Also, they tend to take undue advantage of the
buyers money. All this has been eliminated with this act since now every real estate
developers are required to register their projects under RERA Act and provide proper
information to the buyers regarding the project.

3.Restriction Of Making Changes By The Real Estate Developer Without Consent

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Under RERA Act, the promoters are required to take consent from atleast 2/3rd of
allottees who have agreed to take apartments or plots in the real estate project before
making any change in the sanctioned layout plans as approved by the authority. So
this provision has restricted promoters from making unnecessary changes in the
project layout.

4. Accountability Of Promoters For Any Structural Defects For A Certain Period

Another benefit of RERA Act is that buyers have right to get structural or any other
defect rectified by the promoter within 5 years from possession of the plot or
apartment as the case may be without any additional charges. This rectification is
required to be done by the promoters within 30 days of notice being given by the
buyer. In case the said defect was not rectified within 30 days then the buyer is
entitled to receive compensation for the same.

5. Protection To Buyers In Case Of Delay In Project Delivery The buyers are entitled
for full protection under RERA Act in case the promoters fails to deliver the project
by due date due to any reason. They are being given two options- Either they can
withdraw from the project and are entitled to get full refund by the promoter or they
can continue with the project till they receive the possession and are entitled to get
interest for every month of delay till they receive the possession.

6.Prevention From Misleading Advertisement

Earlier the promoters don’t disclose accurate and reliable information in the
advertisement or prospectus issued for selling plots or apartments. But with RERA
implementation, promoters are bound to provide accurate disclosure of information
about Registration number and Website address of the authority where details of the
project are mentioned. This helps buyers in taking informed decision after receiving
proper disclosure of information.

7.Effective Utilization Of Buyers Money

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 Under RERA Act, the promoters are obligated to deposit 70% of the amount realized
from allottees in a separate bank account and the same shall be used for the respective
project only. Further the promoters shall withdraw these amounts in proportion to
project completion percentage after getting it certified by an engineer, an architect and
a chartered accountant in practice. This prevents misuse and diversion of funds which
was earlier done by promoters.

8. Establishing Mechanism For Grievance Redressal

The buyers can raise a grievance to Real Estate Regulatory Authority in case of any
default on the part of promoters or real estate agent. Further in case the person
aggrieved from direction of the regulatory authority, it may make an appeal to the
Appellate Tribunal for grievance redressal.

9.Restriction On Accepting Advance From Buyers

RERA Act restricts the ceiling on acceptance of advance or application fee by

10.Obligations In Case Of Transfer Of Project

Pursuant to RERA Act, the promoters can’t transfer the real estate project’s rights to
third party without obtaining consent from 2/3rd allottees and approval from the
Authority.

Inadequacies in the Act

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Though the Act under Section 32 emphasizes on single-window clearances for the project as

well as time-bound efforts, however, it fell woefully short of prescribing the steps to achieve

such an admitted objective. Presently, the developers in different states have to seek multiple

permissions from multiple authorities with multiple questions. This prolongs the entire

process of obtaining the approval for the project. In addition to that, side dealings and

corruption also gets perpetuated, hence the single window clearance in a time-bound manner

needs to be implemented in spirit as it would attract investments, help in rotation of money

and clear roadblocks that affect the real estate sector6.

Section 3 of the Act prescribes separate registration of the project to be developed in phases

and each phase under the act shall be considered a standalone real estate project. The

provision would aggravate the delay and encourage red-tapism and seep corruption as every

time the application for registration is required to be made which include the requirement of

various approvals. This need to be addressed to better sub-serve the interest of real estate

sector and buyers

Similarly, there are no proper safeguards for the promoter under Section 18 of the Act when

the promoter is unable to give possession in accordance with terms of the agreement as it

does not take into account the factors like lean season, economy, interpretation of the

completion of the project as these factors might have an impact on status of project and buyer

might also be encouraged to not take possession in the lean season due to depreciation in

property value and instead claim refund and compensation despite the completion of the

project. Therefore, the Act presumes only the fault of developers and not of buyers who for

different reasons might claim a refund.

Similarly, conveyance avoiding behavior of the buyer is not taken care of in Section 17 of the

Act in order to make the promoter responsible for carrying out maintenance and repair works

for as long as possible. There is a presumption in the provision that only the promoter

prolongs the completion of conveyance. Therefore, a time period of three months for

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Real Estate (Regulation and Development) Act 2016, sec 18

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conveyance needs to be looked at to balance the tilt and for the development of the real estate

sector.

Conclusion

In summary, RERA and its rules represent a watershed moment for India’s real estate sector.
This progressive regulatory framework has ushered in an era of transparency, accountability,
and fairness that benefits all stakeholders. RERA’s insistence on project registration, regular
updates, standardised agreements, and accurate area calculations has empowered homebuyers
– shielding them from hidden costs and ensuring they receive fair value.

With provisions like the defect liability period and stringent penalties for non-compliance,
RERA enforces quality standards & timely project completion. This not only boosts investor
and consumer confidence but also attracts more investments, propelling the growth of the real
estate sector.

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