RERA

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted by the Indian government to regulate the real estate sector, protect homebuyers, and promote transparency and accountability in real estate transactions. It came into effect on May 1, 2017.

Key Objectives of RERA

1. Regulation and Transparency – To establish a regulatory authority for the real estate sector.
2. Protection of Homebuyers – Ensures that real estate developers adhere to promised timelines and project specifications.
3. Accountability of Builders and Developers – Prevents project delays and fraudulent practices.
4. Uniformity in Transactions – Standardizes sales agreements, carpet area calculations, and payment structures.

Key Provisions of RERA

1. Mandatory Registration of Real Estate Projects (Section 3-4)

• Developers must register their projects with the RERA authority before advertising or selling units.
• Failure to register can lead to penalties, including fines up to 10% of the project cost or imprisonment for up to three years.

2. Protection of Buyer’s Investment (Section 4(2)(l)(D))

• 70% of the funds received from homebuyers must be deposited in a separate escrow account and used only for construction and land costs.

3. Project Delays and Compensation (Section 18)

• If a developer fails to deliver a project on time, buyers can: 
  • Withdraw from the project and get a full refund with interest.
  • Continue with the project and receive compensation for delays.

4. Standardization of Carpet Area (Section 2(k))

• The act defines “Carpet Area” as the net usable area of an apartment (excluding walls, balconies, and common areas), preventing misleading advertisements.

5. Advance Payment Restriction (Section 13)

• A promoter cannot demand more than 10% of the total cost of the apartment/villa as an advance or booking amount before signing a sale agreement.

6. Establishment of Real Estate Regulatory Authorities (Section 20)

• State RERA Authorities oversee real estate transactions and resolve disputes.

7. Real Estate Appellate Tribunal (Section 43)

• If a buyer is dissatisfied with RERA’s decision, they can appeal to the Real Estate Appellate Tribunal (REAT).

Penalties Under RERA

• Non-registration of a project → Fine up to 10% of the estimated project cost.
• False information in project registration → Fine up to 5% of project cost.
• Delay in project completion → Interest payment to buyers.
• Non-compliance with RERA orders → Fine or imprisonment (up to 3 years).

Impact of RERA

✅ Increased buyer confidence in real estate transactions.
✅ Reduction in project delays due to strict regulations.
✅ More transparency in property dealings and pricing.
✅ Fair contract terms preventing developer manipulation.