By Chirag Shah & Co.

,
Advocates & Solicitors
www.advocateshah.com

The Real Estate (Regulation and Development) Act, 2016

The Real Estate (Regulation and Development) Act, 2016 is an Act of the
Parliament of India which
(i) seeks to protect home-buyers as well as
(ii) help boost investments in the real estate industry.

The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok
Sabha on 15 March 2016.

The RERA Act was assented by the president of India on 25th March, 2016
and was notified in Gazette of India for public information on 26th March, 2016.

The Act is applicable to whole of India except Jammu & Kashmir

The main objectives of RERA are:

§ To protect interest of consumer in real estate sector.

§ To bring the Transparency in real estate sector.
§ To stop unethical practices in in real estate sector.
§ To provide Single window dispute Resolution.
§ To bring control on Real Estate Agents.
§ To widen the Scope and applicability of RERA by defining various Terms.
§ Registration of Promoter, Builder, Developer, Real Estate Agent with RERA
is compulsory.
§ Log in Id and Password being issued to Promoter, Builder, Developer to
publish information of Registered Projects on RERA website which shall be
open to Public at Large.
§ Entire Details of Project including time schedule as to completion be
published on the Website of RERA.
§ Advance money from the Allottee to be deposited by Builder in Separate
Account.
§ Restriction on withdrawal of the amount from that account upon Builder.
§ Handing over of Possession of Premises only after OC.
§ Formation Society and further Conveyance by Builder within prescribed
time.
§ Remedy to rectify the Defects in Construction.
§ To establish a process for speedy dispute redressal.
§ To ensure sale of plot, building or apartment, or real estate project, in an
efficient and transparent manner.
§ To establish a tribunal to hear appeals from decisions, directions or orders
of Real Estate Regulatory Authority and adjudicating officer.

A number of key terms have been defined.

Some of them are:

Advertisement, Agreement for Sale, Allottee, Apartment, Architect, Building,
Carpet Area, Commencement Certificate, Common Areas, Completion
Certificate, Development, Development Works, Engineer, Estimated Cost of Real
Estate Project, External Development Works, Family, Garage, Immovable

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

Property, Interest, Internal Development Works, Local Authority, Occupancy

Certificate, Person, planning area, Project, Promoter, Prospectus, Real Estate
Agent, Real Estate Project, Sanctioned Plan

Prior Registration is needed (Sec - 3) :

No developer or builder shall advertise, market, book, sell or offer for sale, or
invite persons to purchase any plot, apartment or building, in any real estate
project or part of it, in any planning area, without registering Real Estate Project
(REP) with Real Estate Regulatory Authority (RERA). Even the Registration of
Agent is compulsory.

When Registration of Project is NOT required (Sec - 3) :

There are three situations:

§ Where area of land proposed to be developed does not exceed 500 sq m
or number of apartments proposed to be developed does not exceed 8
inclusive of all phases
§ Where promoter has received completion certificate for Real Estate
Project prior to commencement of Act
§ For purpose of renovation or repair or re-development which does not
involve marketing, advertising, selling or new allotment of any apartment,
plot or building, under real estate project

How to make application for Registration of Projects :

It is stated that RERA shall operationalize a web based online system for
submitting applications for registration of projects within a period of 1 year from
date of its establishment. RERA is yet to be established. Until a web based online
system is established, all applications shall be made in paper format.

Important Information to be enclosed by Promoter

while making application : (Sec - 4)

§ Details of the company

§ Detail of projects launched by developer in the past five years whether
already completed or being developed, including current status of said
projects, any delay in its completion, details of cases pending, details of
type of land and payments pending
§ Authenticated copy of approvals and commencement certificate from
competent authority for real estate project mentioned in application
§ Sanctioned plan, layout plan and specifications of proposed project or
phase, and whole project as sanctioned by competent authority
§ Plan of development works to be executed in proposed project and
proposed facilities to be provided including fire fighting facilities,
drinking water facilities, emergency evacuation services, use of
renewable energy
§ Location details of project, with clear demarcation of land dedicated for
project along with its boundaries including latitude and longitude of end
points of project

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

§ Pro-forma of allotment letter, agreement for sale, and conveyance deed

proposed to be signed with allottees
§ Number, type and carpet area of apartments for sale in project along with
area of exclusive balcony or verandah areas and exclusive open terrace
areas apartment with apartment
§ Names and addresses of his real estate agents for proposed project
§ Names and addresses of contractors, architect, structural engineer and
other persons concerned with development of proposed project
§ Declaration, supported by an affidavit, which shall be signed by promoter
or any person authorised by promoter
§ Declaration to be provided by the promoter in his affidavit while making
an application to RERA.

% of amount to be deposited by Promoter in

separate Bank Accunt : (Sec - 4 (l) (D))

The developer shall deposit 70% of amounts realised for real estate project from
allottees, in a separate account to be maintained in a scheduled bank to cover
cost of construction and land cost and shall be used only for that purpose.

Withdrawal of amount from that account : (Sec - 4 (i) (D)

The developer shall withdraw amounts from separate account, to cover cost of
project, in proportion to percentage of completion of project

Time limit for grant of Registration by RERA (SEC – 5(1)(a))

Registration by RERA shall be granted within 30 days from date of application.

RERA shall also provide registration number, Login ID and password to applicant
for accessing website of Authority and to create his/her web page and to fill
details of proposed project.

Rejection of Application for Registration (Sec - 5 (1)(b))

RERA shall communicate in writing the reasons for rejection of application within
30 days from date of application and opportunity of Hearing to be given.

What if RERA fails to Grant Registration or

Reject Registration (Sec - 5 (2))

If RERA fails to grant registration or reject application, project shall be deemed to

have been registered. RERA shall also within 7 days (from expiry of 30 days)
provide registration number, Login ID and password to applicant for accessing
website of Authority and to create his web page and to fill details of proposed
project.

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

Validity of Registration (Sec - 5 (3) :

Registration shall be valid for a period declared by promoter for completion of

project or phase.

Is RERA applicable to On going Projects ?

Yes, as per section 3(1) of the Act, ongoing / existing projects, which have not
received completion certificate are covered under the Act. The said section is
reproduced below:
“……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……”

Can Registration once granted be Revoked (Sec – 7)

Yes, RERA can revoke registration on receipt of a complaint or on

recommendation of competent authority.

What acts lead to Revocation of Registration by RERA (Sec – 7) :

The following four acts are lead to revocation of registration by RERA:

§ Promoter makes default in doing anything under Act / Rules / Regulations
§ Promoter violates any terms or conditions of approval given by competent
authority
§ Promoter is involved in any kind of unfair practice or irregularities
§ Promoter indulges in any fraudulent practices

WHAT is the Role of RERA after Revocation of Registration (Sec - 7 (4) :

§ RERA shall debar promoter from accessing its website in relation to that
project and specify his name in list of defaulters and display his
photograph on its website and also inform other Real Estate Regulatory
Authority in other States and Union territories about such revocation or
registration

§ RERA shall facilitate remaining development works to be carried out in

accordance with provisions of section 8
§ RERA shall direct the bank holding the project back account, to freeze
account, and take necessary actions, including consequent de-freezing of
said account, towards facilitating remaining development works in
accordance with provisions of section 8
§ RERA may, to protect interest of allottees or in public interest, issue such
directions as it may deem necessary

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

If Licese id Revoked allottee may suffer

How RERA tackle such situation? (Sec - 8)

RERA may, instead of revoking registration, permit registration to remain in force

subject to such further terms and conditions as it thinks fit to impose in interest of
allottees and any such terms and conditions so imposed shall be binding upon
promoter.

Upon lapse of or on revocation of registration, RERA may consult Appropriate

Government to carry out remaining development works by competent authority
or by association of allottees or in any other manner, as may be determined by
RERA

In case of revocation of registration of a project, association of allottees shall have

first right of refusal for carrying out of remaining development works

Functions and Duties of Promoter (Sec - 11) :

The promoter shall, upon receiving his login Id and password shall Create Web
page on the website of Authority and enter all details of the proposed project on
the Website for public viewing including :

§ Details of the registration granted by the Authority;

§ Quarterly up-to-date the list of number and types of apartments or plots, as
the case may be, booked;
§ Quarterly up-to-date the list of number of garages booked;
§ Quarterly up-to-date the list of approvals taken and the approvals which
are pending subsequent to commencement certificate;
§ Quarterly up-to-date status of the project; and
§ Such other information and documents as may be specified by the
regulations made by the Authority.

Advertisement or prospectus issued or published by the promoter shall mention

prominently the website address of the Authority

Responsibilities of the Promoter (Sec - 11 (4)) :

§ be responsible for all obligations, responsibilities and functions under the

provisions of this Act or the rules and regulations

§ be responsible to obtain the completion certificate or the occupancy

certificate, or both

§ be responsible for providing and maintaining the essential services, on

reasonable charges

§ enable the formation of an association or society or co-operative society,

as the case may be

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

§ execute a registered conveyance deed of the apartment, plot or building,

as the case may be

§ pay all outgoings until he transfers the physical possession of the real
estate project to the allottee or the associations of allottees, as the case
may be

§ after he executes an agreement for sale for any apartment, plot or

building, as the case may be, not mortgage or create a charge on such
apartment, plot or building, as the case may be,

§ The promoter may cancel the allotment only in terms of the agreement for
sale

etc

Extension of Time on account of Force Majeure :

Registration granted may be extended by RERA on an application made by

promoter due to force majeure. Also, RERA may in reasonable circumstances,
without default on part of promoter, based on facts of each case, extend
registration granted to a project for such time as it considers necessary, which
shall, in aggregate, not exceed a period of 1 year.

Accounts of Promoter to be Audited (Sec - 4):

The promoter shall get his accounts audited within 6 months after end of every
financial year by a chartered accountant in practice, and shall produce a
statement of accounts duly certified and signed by such chartered accountant and
it shall be verified during audit that amounts collected for a particular project
have been utilised for project and withdrawal has been in compliance with
proportion to percentage of completion of project.

Advertisement or prospectus issued by the promoter (Sec - 11):

The advertisement or prospectus issued or published by the promoter should

prominently mention the website address of the Regulatory Authority, where all
details of the registered project have been entered and include the registration
number obtained from the Regulatory Authority and other similar details of the
Project.

Where any person makes an advance or a deposit on the basis of the information
contained in the advertisement or prospectus and sustains any loss or damage
because of any incorrect, false statement included therein, then promoter shall be
liable and responsible to compensate him in the manner as provided under the
Act also he will be entitled to withdraw his entire investment from the Project.

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

Limit on receipt of advance payment (Sec - 13(1))

A promoter shall not accept a sum more than 10% percent of the cost of the
apartment, plot, or building, as the case may be, as an advance payment or an
application fee, from a person without first entering into a written agreement of
sale with such person and register the said agreement of sale, under any law for
the time being in force.

Restriction on addition and alteration in the plans (Sec – 14)

The promoter cannot make any other addition or alteration in the approved and
sanctioned plans, structural designs and specifications of the building and
common areas within the project without the previous written consent of at least
two-thirds of the allottees, who have agreed to take apartments in such a building.

Structural defect (Sec -14)

§ In case any structural defect or any other defect in the workmanship,

quality or provision of services or any other obligations of the promoter
which is brought to the notice of the promoter within a period of five years
by the allottee from the date of handing over possession, the promoter
shall rectify such defect without any further charge, within thirty days.
§ If the promoter fails to rectify such defect within such time, the aggrieved
allottee shall be entitled to receive appropriate compensation in the
manner as provided in the Act.

Restriction on transfer and assignment (Sec – 15)

The promoter shall not transfer or assign his majority rights and liabilities in
respect of a project to a third party without obtaining prior written consent from
two-thirds of the allottees and without the prior written approval of the Regulatory
Authority.

Refund of amount in case of delay in handing over possession (Sec -19(4))

In case the promoter is unable to hand over possession of the apartment, plot or
building to the allottee :
§ in accordance with the terms of the agreement of sale; or
§ due to discontinuance of his business as a promoter on account of
suspension; or
§ revocation of his registration or for any other reason,

then the promoter shall be liable, on demand being made by the allottee, to
return the amount received by him from the allottee with interest and
compensation at the rate and manner as provided under the Act.

This relief will be available without prejudice to any other remedy available to the
allottee.

However, where an allottee does not intend to withdraw from the project, he shall
be paid interest by the promoter for every month of delay, till the handing over of
the possession, at a prescribed rate.

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

Offences and Penalty

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:

§ If promoter does not register its project with the Regulatory Authority – the
penalty may be up to 10% of the estimated cost of the project as
determined by the Regulatory Authority; (Sec -59(1))

§ If promoter does not comply with the aforesaid order of the Regulatory
Authority - imprisonment of up to three years and a further penalty of up
to 10% of the estimated cost, or both; (Sec -59(2)) and

§ In case the promoter provides any false information while making an

application to the Regulatory Authority or contravenes any other provision
of the Act – the penalty may be up to 5% of the estimated cost of the
project or construction. (Sec – 60)

Penal provisions against Real Estate Agent (Sec - 62)

If any real estate agent fails to comply with or contravenes the provisions of
section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for
every day during which such default continues, which may cumulatively extend
up to 5 % of the cost of plot, apartment or buildings, as the case may be, of the
real estate project, for which the sale or purchase has been facilitated as
determined by the Authority.

Penal provisions against Allottee

Penal provisions have also been prescribed for any contravention or violation
committed by the allottee.

§ If any allottee fails to comply with, or contravenes any of the orders,

decisions or directions of the Regularity Authority, there may be a penalty
for the period during which such default continues, which may
cumulatively extend up to 5% of the cost of the plot, apartment or building,
as the case may be, as determined by the Regulatory Authority. (Sec – 67)

§ Further, if any allottee fails to comply with, or contravenes any of the

orders or directions of the Appellate Tribunal, this may entail
imprisonment up to one year or with fine for every day during which such
default continues, which may cumulatively extend up to 10% of the cost of
the plot, apartment or building, as the case may be, or with both. (Sec -68)

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

Real Estate Appellate Tribunal (Sec – 43(1))

In addition to the establishment of the Regulatory Authority, the Bill also proposes
to establish a Real Estate Appellate Tribunal (Appellate Tribunal).

Appeal to Tribunal (Sec – 43(5))

Any person aggrieved by any direction or decision made by the Regulatory

Authority or by an adjudicating officer, may make an appeal before the Appellate
Tribunal within a period of 60 days from the date of receipt of a copy of the order
or direction.

Appeal to High Court (Sec -58)

Any person aggrieved by any decision or order of the Appellate Tribunal, may,
file an appeal to the High Court, within a period of sixty days from the date of
communication of the decision or order of the Appellate Tribunal.

OTHER RELEVANT PROVISIONS

§ After the promoter executes an agreement for sale for any apartment, plot
or building, no mortgage or charge can be created by the promoter on
such apartment, plot or building. If any such mortgage or charge is
created, then notwithstanding anything contained in any other law for the
time being in force, it shall not affect the right and interest of the allottee
who has taken or agreed to take such apartment, plot or building.
(Sec -11(4)(h))

§ The promoter may cancel the allotment only in terms of the agreement for
sale. However, the allottee may approach the Regulatory Authority for
relief, if he is aggrieved by such cancellation and such cancellation is not
in accordance with the terms of the agreement for sale, is unilateral and
without any sufficient cause.
(Sec -11 (5))

§ In the absence of any local laws, an association or society or cooperative

society, as the case may be, of the allottees, shall be formed within a
period of three months of the majority of allottees who have booked their
plot or apartment or building, as the case may be, in the project.
(Sec 11 (4) (e))

§ The promoter shall execute a registered conveyance deed in favour of the

(i) allottee in respect of the apartment, plot or building; and (ii) association
of allottees of competent authority in respect of the undivided
proportionate title in the common areas, and hand over possession of the
same within the period as specified under the local laws. In the absence of
any local law, such conveyance deed shall be carried out by the promoter
within three months from date of issue of the occupancy certificate.
(Sec - 17)

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By Chirag Shah & Co.,
Advocates & Solicitors
www.advocateshah.com

§ The same rate of interest will be payable by the allottee and the promoter
in the event of their respective defaults.
(Sec - 2 (za))

§ Every allottee shall take physical possession of the apartment, plot or

building as the case may be, within a period of two months of the
occupancy certificate issued for the said apartment, plot or buildings.
(Sec - 19 (10))

§ The promoter shall compensate the allottees in case of any loss caused to
him due to defective title of the land in the manner as provided under the
Act, and such claim for compensation shall not be barred by limitation
provided under any law for the time being in force.
(Sec - 18 (2))

Thank you for being so passionate about reading

these Notes, giving me opportunity to share
Knowledge and being the reason I can continue doing
what I love.

Soli. Chriag Shah

Advocate & Solicitor

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