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What Is RERA? Why Every Homebuyer in India Must Know the RERA Act

By NyayKart Legal Team - Experts in RERA, consumer disputes and property law across India.

This Article Written by Nandini Banerjee Fourth Year B.A.LL.B from Indraprastha Law College.


Understand what RERA is, its key provisions, penalties and how the RERA Act protects homebuyers in India from project delays, fraud and unfair practices.


Why RERA Was Introduced

Buying a home is a very significant investment any individual makes in their life. It involves a lot of decisions and planning like saving for it, choosing the right location, layout, price range. This makes home buying both emotionally and financially intensive. However, until recently, the Indian real estate sector lacked legal protection for the buyers. In the absence of legal safeguards they were often left vulnerable to project delays, one sided contractual terms and lack of transparency. 


To address these unfair practices causing distress to the homebuyer, the Indian government introduced the Real Estate ( Regulation and Development) Act, 2016, commonly known as RERA on 1st May 2016 and came in force in 2017. This law was designed to enhance transparency towards the buyers, build their confidence and to bring accountability to the transactions, especially for individuals buying residential properties for personal use.


Understanding RERA is not only useful for it’s a necessity for every homebuyer, to protect their investments and make a well informed decision.


What Is RERA? (Real Estate Regulation and Development Act, 2016)

The Real Estate ( Regulation and Development) Act, 2016, also referred to as RERA, is a Law enacted by the India parliament to regulate the Indian Real estate sector, protect the rights and interests of the homebuyers, bring transparency of the project timelines and hold accountability of the unfair practices. It came into effect on 1st May 2017, and applies to most of the residential and commercial projects across India. Aims to create a safe and accountable environment in the real estate market, which historically lacked a strong legal safeguard for the home buyers.


Under RERA, every state and union territory is required to establish its own Regulatory authority to oversee and regulate the real estate transactions and ensure the compliance according to the act’s provisions. All real estate agents and developers must register their real estate projects and activities with the authority before advertising or selling.


  1. Which Projects Must Be Registered Under RERA?

    1. Any project for which the developer hasn’t obtained an Completion certificate before the commencement of this act(1st May 2017) [ Section 3(2)(b)].

    2. Any project whose land exceeds 500 square meters or the number of apartments proposed exceeds the number 8. Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act. [Section 3(2)(a)].

    3. Each phase of a project is considered a standalone project and must be registered independently.


Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act.  This mandate of registration ensures that developers do not sell or advertise units without regulatory intervention.


Real Estate Sector in India Before RERA

Before RERA was implemented the real estate sector was very unregulated and it left the homebuyers vulnerable to unfair practices and financial risks.


  1. Lack of transparency: before the enactment of this act, developers and builders were not required to disclose detailed project information to buyers. Basic details were not shred very often with the customers.

  2. Frequent Project delays: developers often took years beyond the promised delivery date to hand over the flats. Since there were no strict legal repercussions under previous laws, buyers were left waiting without any compensation or clear timelines. 

  3. Misleading Advertisements and False claims: without regulation, developers could advertise luxury amenities, approvals or timelines that did not exist, it was simply done to attract buyers. False promises about features and timelines were common. 

  4. Absence of a specialized regulatory body: there was no regulatory body specialised for these issues leaving the consumers in prolonged litigation, no favourable outcomes and not justice.


KEY FEATURES AND PROVISIONS

This act introduced several practical rules to make the real estate sector for fairer and transparent. These provisions directly address the pre-existing issues and provide stringent guidelines to enhance the development of fair practice. 


  1. Mandatory project registration: under section 3 of the act it is mandated that every real estate agent and developers register their projects, according to the provisions provided. It further provides many guidelines as to how and what shall be registered. The builders must submit approved layout plans, land status and titles, government approvals and completion timelines. Ensuring buyers verifying whether the project is legally approved before investing in it.

  2. Escrow account: this rule states that the developers must deposit 70% of the money collected from the buyers into a separate bank account and This money can only be used for the purpose of construction and land cost of the specific project and  can only be withdrawn with the approval of the architect, CA and engineer. 

  3. Carpet area: section 2(k) defines the term as, “the net usable floor area of an apartment, excluding 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.” Builders must sell properties based on the carpet area preventing inflated pricing.

  4. Limit in advance payment: the concept of earnest money provided in section 13 of the act mandates that the builder cannot ask for more than 10% of the amount in advance, before signing and executing the sale agreement.

  5. Strict project timelines: if there is a delay in possession, this act mandates that the buyers are entitled to full refund with interest or interest compensation, discouraging endless delays and putting consequences to unfair practices.

  6. Defect liability: as per section 14(3) of the said act If an allottee reports a structural or workmanship defect within five years of possession, the promoter must fix it free of charge within 30 days. If they fail to do so, the allottee is entitled to compensation under the Act.

  7. Grievance redressal: Any aggrieved consumer can file a formal complaint to the authority under Section 31 of the said act, in case there is any dispute or unfair transactions.


How Can a Homebuyer Check RERA Registration of a Project?

  1. Visit the official State RERA website

  2. Click on “Registered Projects”

  3. Search by project name / promoter name

  4. Verify approvals, timelines & complaints

  5. Download project details for record


Rights and Benefits of Homebuyers Under RERA

Homebuyers a have the right to access detailed and verified information about a project they are investing in, including the land ownership, government approvals, layout plans, construction progress and expected possession date. Which were often not provided before this act came into force, promoting transparency. 


They can claim monthly interest for delay in possession or can cancel the booking with full refund plus interest. With the 70% escrow rule buyers can be secure about their funds as the money can only be used for the project. Section 14 mandates that the builders shall adhere to the sanctioned plans and project specifications as promised and also guarantees in case of structural defects builders shall indemnify and fix it.


Penalties for Violation of RERA Provisions

RERA has strong enforcement powers, developers and agents who violate the rules shall face penalties.

According to section 59, If a developer fails to register the project they can face fines up to 10% of the project cost and continued violations can result to imprisonment up to 3 years.


If a builder delays possession, gives false information or violates agreements, buyers are entitled to ask for compensation, refunds with interest or authorities can direct corrective actions. 

If a real estate agent deals in an unregistered project, they shall also face fines and registration cancellation.


These strict consequences makes sure that the developers, builders or agents take compliance seriously and take accountability. RERA gives a real legal backing to the homebuyers.


Limitations and Challenges of RERA Implementation

While RERA has significantly improve the transparency in transaction of real estate, its not without limitation. 


1. Variation in Implementation Across States: Although RERA is a central law, each state has its own RERA authority and rules, leading to differences in implementation and interpretation. In some states, rules were initially relaxed in favour of developers, reducing uniformity in buyer protection.

2. Delays in Dispute Resolution: RERA was designed for fast-track dispute resolution, but in practice, some authorities face case backlogs and administrative delays. This means not all complaints are resolved as quickly as intended.

3. Limited Coverage for Smaller Projects: Projects below the registration threshold (less than 500 sq. meters or fewer than 8 units) may not always fall under RERA. Buyers in such projects might not receive the same level of protection.

4. Buyer Awareness is Still Low: Many homebuyers are still unaware of their rights under RERA. Without awareness, even the best regulations cannot fully protect consumers.

Despite these challenges, most experts agree that RERA is a major step forward for real estate regulation in India.


Frequently Asked Questions (FAQs) on RERA


Q1. Is RERA applicable to resale properties? 

No, RERA primarily applies to new and ongoing projects. However, contractual disputes may still be governed by other laws.


Q2. Can a homebuyer file a RERA complaint online?

 Yes, most State RERA authorities provide online complaint filing portals.


Q3. Is RERA applicable to plotted developments? 

Yes, if the project meets the registration threshold and involves common amenities.


Q4. What interest is payable for delay under RERA? 

Interest is usually linked to SBI’s highest marginal cost lending rate plus a prescribed margin (varies by state).


CONCLUSION

The Real Estate (Regulation and Development) Act 2016 has drastically altered how real estate is transacted in India. The establishment of project registrations, implementation of financial regulations, and increased levels of transparency and accountability have made the Indian real estate market safer and more secure for the average buyer. However, A buyer who understands RERA can determine the validity of a project by verifying the project registration, as well as can ask the developer about the project's registration and if problems occur, they can pursue legal action against the developer. By learning about RERA, homebuyers can reduce their risk of investment and protect their economic investment and, as a result, make informed decisions with confidence in their purchases of real estate.


How NyayKart can help

If you are facing delayed possession, refund issues, or unfair settlement offers, NyayKart provides end-to-end assistance: drafting legal notices, filing RERA complaints, representing you before consumer courts, negotiating settlements, and executing refund recovery. Book a free consultation to evaluate your case and get a tailored action plan.


 


 
 
 

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