The Real Estate (Regulation and Development) Act 2016 (RERA) transformed India's real estate sector from an unregulated builder-driven market to one with statutory accountability, mandatory disclosures, and an efficient dispute resolution mechanism.
Key Objectives of RERA
- Ensure transparency in real estate transactions
- Protect homebuyers from builder defaults, delays, and fraud
- Establish a regulatory authority with adjudication powers
- Promote fair competition and efficient redressal of disputes
Mandatory Project Registration (Section 3)
Who Must Register?
- Any residential or commercial real estate project where land area exceeds 500 sq m OR the project has more than 8 apartments
- Ongoing projects (where OC not fully received as of RERA commencement = 1 May 2017) in respective states
- Projects in development phases: each phase separately registered
Exemptions
- Projects where land area ≤ 500 sq m AND ≤ 8 apartments
- Projects where renovation/repair does not require new allotments
- Plotted development of individual plots (some states exempt, others register)
Builder/Promoter Obligations
Disclosures at Registration
- Approved plans, sanctioned building permits
- Land title documents and encumbrance status
- Financial details of the project
- Proforma of sale agreement
- Past track record of the promoter
Ongoing Obligations
- 70% escrow: Deposit 70% of collections in a dedicated bank account; withdraw only based on construction progress certified by CA + engineer
- Quarterly updates: Upload project status (construction completed, percentage sold, payments received) on RERA portal every quarter
- No change in plans: Cannot alter specifications or common areas without written consent of at least 2/3 of allottees
- Defect liability: 5 years after possession — must rectify structural defects reported by buyers at no cost within 30 days
Homebuyer Rights Under RERA
| Right | RERA Provision |
|---|---|
| Right to information about project | Section 4 — all documents on RERA portal |
| Right to timely possession or compensation | Section 18 — interest at SBI MCLR+2% |
| Right to file complaint | Sections 31-35 — RERA adjudication |
| Right to refund on delay | Section 18(1)(a) — full refund + interest |
| Right against plan changes | Section 14 — 2/3 consent required |
RERA Complaint Process
- Homebuyer files complaint on State RERA portal (MahaRERA at maharera.mahaonline.gov.in, UP-RERA at up-rera.in, etc.)
- Pay nominal filing fee (varies by state, typically Rs.1,000–5,000)
- RERA sends notice to builder; builder files reply
- Adjudicating Officer holds hearing (can be video conference)
- Order issued within 60 days
- If not satisfied: Appeal to RERA Appellate Tribunal within 60 days of order
- From tribunal: Appeal to High Court on questions of law
Interest Compensation Calculation (Section 18)
If builder delays possession by 2 years:
- Amount paid by buyer: Rs.50 lakh
- SBI MCLR + 2% = say 10% (illustrative)
- Annual interest = Rs.5 lakh
- For 2 years: Rs.10 lakh compensation
Alternatively, buyer can claim full refund of Rs.50 lakh + Rs.10 lakh interest = Rs.60 lakh (Section 18(1)(a)).
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