Real Estate (Regulators and Developers) Act, 2016

Published on 22 Jul 2016 by Team

RERA aims to create a balance between the interests of the consumers and developers. At present, the absence of a regulatory framework, lack of transparency and delays in obtaining numerous approvals are some of the issues hurting the sector. These need to be addressed to calm investor's nerves and boost sentiment. Therefore, among the key focus areas of the Act are encouraging best practices in the sector, bringing transparency and accountability, and ensuring timely execution of projects.

Need for a RERA Authority 

The demand for a dedicated expert body to cater to the specific disputes in the sector has been a long-pending one. For other sectors we have various regulators such as consumer forum,the insurance ombudsman, banking ombudsman, the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, etc. but the real estate sector is yet to get such a dedicated body. Real estate disputes, therefore, ultimately lead to litigation. Top RERA lawyers in India can help you to file a case against the builder for delay in property possession.

This not only delays things but many a time even the judges find themselves unable to adjudicate such matters for want of requisite domain knowledge. Real Estate developers who happen to be the key sector stakeholder, must be taken on board and their concerns must be addressed for the successful implementation of the Act. Apart from bringing in transparency and making it all fair in the property market, the legislation is expected to improve the overall health of the sector.  

Setting Up of Regulatory Body

  •  Establishment of State Real Estate Regulatory Authority for every state for redressal of grievances against any builder made mandatory

  •  It is to be paired with real estate appellate tribunals (REATS) to consider appeals against orders of RERAS

  • Regulatory authorities will have to dispose of complaints within 60 days

  •  Under the new proposals, additional benches of appellate tribunals can be set up in a state if required for speedy adjudication of grievances.

Consumer Courts not excluded

  • The Act allows aggrieved buyers to approach Consumer Courts at the District level, State level or National level as applicable


The Real Estate Regulator shall have the authority to govern real estate transactions in both areas

  • Residential
  • Commercial

Administrative Approvals 

  • A developer will not be able to market any project unless all approvals are in place. Property buyers will be able to check details about a project online

Fund Utilisation Norms

Developer obliged to park 70% of the project funds in a dedicated bank account to ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money for one project.

The promoter is entitled to withdraw the amount, from a separate account, to cover the cost of the project required in proportion to the percentage of completition of the project. However, such withdrawal can only be made after it is certified by an engineer, an architect and chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project. The best property lawyers or best RERA advocates in India can help you in sending a legal notice to builder for delay in flat possession.

The promoter is also required to get his accounts audited within six months after the end of every financial year by a practising chartered accountant. Further, he is required to produce a statement of accounts duly certified and signed by such chartered accountant, and it shall be verified during the audit that

  1. the amounts collected for a particular project have been utilised for the project; and
  2. the withdrawal has been in compliance with the proportion to the percentage of completion of the project.

Registration with Authority

This Act mandates that very project measuring more than 500 square metres or more than eight apartments will have to be registered with the RERA. This Act also lays down consequences in case of failing to register. A developer falling under the ambit of this law but still failing to register his property will be liable to pay up to 10 percent of the project cost as a penalty. Registration and various other details available on the portal will make decision-making easier for buyers. The list of erring or defaulting developers and agents can be uploaded on to the portal to caution buyers.The Act is retrospective nature has got a thumbs-down from CREDAI and other developer bodies.

An interesting feature about the Act is that it is retrospective in nature, meaning that it will also apply to on going under construction projects. When the Real Estate Act, 2016, is made applicable to ongoing projects, the developer will be required to obtain the consent of at least two-thirds of home buyers before transferring the majority rights or liability to a third party, or even before changing the design or layout of a project. Residents’ Welfare Associations (RWAs) will have to be formed within three months from the date a majority of the flats are sold. The RWAs can then collectively demand a timely possession of the property and also look after the maintenance of the common facilities. The best RERA attorneys in India can help you in filing a case with RERA Authority.

Carpet Area Defined

Under the Act, developers can sell units only on carpet area, which means the net usable floor area of an apartment. This excludes 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.

Carpet area has been clearly defined in the law and the current practice of selling on the basis of the ambiguous super built-up area for a real estate project will come to a stop as this law makes it illegal.

Providing Information

The Act makes it mandatory for the developer to disclose the following information:

  1. Details of the promoter (such as its registered address, type of enterprise such proprietorship, societies, partnership, companies, competent authority);
  2. A brief detail of the projects launched by the promoter, in the past five years, whether already completed or being developed, as the case may be, including the current status of the projects, any delay in its completion, details of cases pending, details of the type of land and payments pending;
  3. An authenticated copy of the approval and commencement certificate received from the competent authority and where the project is proposed to be developed in phases, an authenticated copy of the approval and commencement certificate of each of such phases;
  4. The sanctioned plan, layout plan and specifications of the project, plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof and the locational details of the project;

Completion and Occupation Certificate

The issuance of completion and occupation certificates from authorities are brought under regulatory supervision along with other permissions

Alteration in Project

No alteration in the project at the free will of the promoters unless the consent of at least two-thirds of the buyer of the project has been obtained.

Penalties for Violation

Stringent penal provisions have been prescribed under the Act against the promoter in case of any contravention or non-compliance of the provisions of the Act or the orders, decisions or directions of the Regulatory Authority or the Appellate Tribunal which are the following:

  1. The De-Registration of the Project
  2. 5-10 percent of the project cost
  3. Imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of the appellate tribunals or monetary penalties, or both.

Framing Rules

  • States will have to make rules within six months of notification of the proposed Act
  • Allottees shall take possession of houses within two months of issuance of occupancy certificate.

Penalty for Delay

The law ensures that any delay in project completion will make the developer liable to pay the same interest as the EMI being paid by the consumer to the bank back to the consumer.


Accepting advance payments or application fees of more than 10 percent of the cost without entering into a written agreement with the buyer is prevented.

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