What is RERA?

The Real Estate (Regulation and Development) Act, 2016 (RERA) is an Act
passed by the Indian Parliament with an aim to protect home-buyers as well as help boost investments in the real estate industry. Under this act, a Real Estate Regulatory Authority (RERA) has been established in each state of India with a vision to regulate the Real Estate Sector in India and to acts as an adjudicating body for speedy dispute resolution.

The Act contemplates that within 6 months of the RERA Act being enforced, State Governments shall make rules for carrying out the provisions of the Act. The Act prohibits unaccounted money from being pumped into the sector and as of now 70 per cent of the money has to be deposited in bank accounts through cheques is now compulsory. Under RERA, its mandatory for the builders to disclose the carpet area.

RERA is an act for regulation and promotion of the real estate sector to ensure the sale of apartment, plot or building in an efficient and transparent manner.

The implementation of RERA is expected to bring relief to the homebuyers as builders will be accountable for the timely delivery of the projects and to protect buyers from fraud sellers. The developers would also gain from the increased confidence of the consumers in a regulated environment.

It is mandatory for the developers to get all approvals from various government agencies before launching a project and disclose all the information on the website that the respective state RERA regulatory authority will set up.

Real estate agents will be provided a registration number by the regulator which they have to mention in every property sale. This will help in eliminating the possibility of misleading the purchaser. The authority has wide ranging powers to impose penalties and imprisonment of agents in case of violation of the law.

Highlights Under RERA Act

  1. Projects with a plot size of a minimum 500 square meter or 8 apartments need to be registered with the RERA Authority.
  2. RERA will be followed in every state of India and this regulation applies to both residential and commercial properties.
  3. The sale of property will be based on carpet area and not on super built-up area.
  4. Builders are required to deposit 70% of the funds collected from buyers in a separate bank account for the construction of the project.
  5. Developers have to disclose the project details (financial statements, legal title deed, and others) on the website and update it on a quarterly basis related to the construction progress.
  6. Builders require to submit the original approved plans for their project and the alterations made to RERA.
  7. Developers and buyers both have to pay the same interest rate of 2%
    above SBI’s MCLR in case of any delay.
  8. Developers cannot demand more than 10% of the property cost as an
    advanced payment booking amount before signing a registered sale agreement.
  9. Developers are not allowed to advertise, sell, offer, market or book any
    plot or apartment without registering to the authority.
  10. The buyer can contact the developer in writing within 1 year of taking
    possession to demand the shortcomings in the project. Filling of complaints under RERA will be followed in every state of India and this
    regulation applies to both residential and commercial properties.
  11. The sale of property will be based on carpet area and not on super built-up area.
  12. Builders are required to deposit 70% of the funds collected from buyers in a separate bank account for the construction of the project.
    13.Developers have to disclose the project details (financial statements, a legal title deed, and others) on the website and update it on a quarterly basis related to the construction progress.
  13. Builders require to submit the original approved plans for their project and the alterations made to RERA.

Documents Required for Registration Under RERA

Following documents should be enclosed in hardcopy with the application:

  1. PAN Card of the builder
  2. ITR of last 3 years and the balance sheet of the builder
  3. The builder must clarify about the apartment like Carpet area, number of floors, parking space
  4. .Declaration by the builder of having legal title of the land with proof
  5. Details of the land (rights, title, mortgage)
  6. If the builder is not the owner of the land, the consent letter of the actual owner with documents will be required
  7. Details of the project (location, sanctioned plan, layout plan)
  8. Ownership documents (proforma of allotment letter, agreement of sale)
  9. Information of the persons involved (Architects, Engineers and others)

Which project should be registered under RERA?

All commercial and residential real estate projects have to register except in projects where:

 The promoter has received completion certificate of the project prior
to commencement of Act.
 The area of land proposed to be developed does not exceed 500
square meters.
 The number of apartments is not more than 8.
 Any repair or renovation of an existing building or structure that does not require marketing, advertising, and selling of any apartment or
plot.

Penalties under RERA

For Promoters

Non-registration of a project: 10% of the estimated cost of real estate project.
Violation of law: Imprisonment for up to 3 years with or without fine for 10% of the estimated cost of the project.
Providing false information: 5% of the estimated cost of the project.
Other contraventions: 5% of the estimated cost of the project.


For Agents


Non-registration of a project: Rs. 10,000/- per day of default which may extend up to 5% of the cost of property.
Failure to comply with Authority: Penalty on a daily basis which may extend up to 5% of the estimated cost of plot.
Failure to comply with Tribunal: Imprisonment for up to 1 year with or without fine of 10% of the estimated cost of the project.
For Homebuyers
Failure to comply with Authority: Penalty on a daily basis which may extend up to 5% of the estimated cost of apartment.
Failure to comply with Tribunal: Imprisonment for up to 1 year with or without fine of 10% of the estimated cost of the apartment.

For Homebuyers

Failure to comply with Authority: Penalty on a daily basis which may extend up to 5% of the estimated cost of apartment.
Failure to comply with Tribunal: Imprisonment for up to 1 year with or without fine of 10% of the estimated cost of the apartment.

AUTHOR : AKSHIT GADHIA

Disclaimer: The content of this article is intended to provide a knowledge of the subject matter. Suggestions and feedback to improve the task are welcome. The article and opinions therein are based on my understanding and interpretation of the law and provisions prevailing as on date. The contents of this article are for information purposes
only and does not constitute an advice or a legal opinion. The opinion may vary according to one’s interpretation of the law. We love to hear your feedback at gadhiaandassociates@gmail.com.