RERA

The Real Estate (Regulation and Development) Act, 2016 (RERA) is a comprehensive regulatory statute that establishes a framework for transparent, fair, and efficient conduct in the real estate sector, protecting homebuyers (allottees) from defaulting builders (promoters). Enacted after years of consumer agitation against rampant project delays, fund diversion, and misleading advertisements by developers, RERA represents the most significant regulatory intervention in the Indian real estate sector since Independence.

RERA's four major pillars are: (1) Mandatory project registration — all real estate projects (except those below a de minimis threshold) must be registered with the State RERA Authority before any advertising, marketing, booking, or selling. The promoter must disclose all project details — layout plans, approvals, contractors, financial statements — and commit to a completion date. (2) Fund-keeping obligations — at least 70% of all amounts collected from allottees must be deposited in a dedicated project account and used only for construction and land costs for that specific project — preventing the chronic practice of using collections from Project A to fund Project B. (3) Defect liability — the promoter is liable for structural defects or quality failures in construction reported within 5 years of possession. (4) Regulatory enforcement — the RERA Authority adjudicates complaints by allottees against promoters and has powers to impose penalties, revoke registration, and recommend prosecution.

RERA established Real Estate Regulatory Authorities in each State — independent regulatory bodies with adjudicatory powers. Complaints by allottees against promoters are filed with the RERA Authority and must be decided within 60 days. Appeals from RERA Authority orders lie to the Real Estate Appellate Tribunal (REAT), which must decide within 60 days. Further appeal lies to the High Court. Recovery of RERA orders (both compensation and refunds) can be effected through the District Collector/District Magistrate — who may use the land revenue recovery mechanism, bypassing the slow civil court execution process.

RERA applies to both ongoing projects (those where the completion certificate had not been received as of the date RERA came into force in a particular State) and new projects. Promoters of ongoing projects were required to register within three months of RERA coming into force in their State. This retroactive application has been the source of significant litigation — developers challenged the applicability of RERA to projects that were already in progress, but courts have consistently upheld the applicability.

For advocates advising homebuyers under RERA, the primary remedies are: (1) delay compensation — Section 18 interest on all amounts paid during the period of delay; (2) refund with interest — the allottee's right to exit the project and recover all amounts with interest; and (3) penalty complaints — complaints to the RERA Authority for violations of the registered project terms, which can result in penalties on the promoter. For promoters, RERA compliance requires attention to: registered timelines (non-compliance is immediately remediable by allottees), mandatory disclosures (incorrect disclosures attract penalty), and fund segregation (withdrawal in violation of the 70% requirement is an offence).