RERA

Real Estate (Regulation & Development) Act, 2016

Introduction
• RERA, 2016 – Safeguard Interest of Homebuyers, provide Real Estate
sector with transparency and credibility.

• Rajya Sabha Passed the Bill on 10/03/16 and Lok Sabha Passed the bill
on 15/03/16.

• The Act was executed from May 1,2017

Key Provisions of the Act
• All commercial and residential projects greater than 500sqm in area ,
or 8 apartments need to be registered with the respective state’s
RERA before being launched,

• Failure to register a project attracts penalty of 10 % of the Total

Project Cost or imprisonment of up to 3 years,

• Brokers and Agents facilitating sale or purchase of the realty projects

also need to register with RERA.
Working Process of RERA
• All builders need to submit Approved plans and drawings of their ongoing
projects, including details of future variations, if any, to RERA,

• Additionally, Builders also need to furnish details of Revenue Collected,

Utilization of funds, construction timelines certified by authorized engineer.

• Furthermore, RERA also has to ensure publication of information relating

to each builder’s profile based on track record, litigation details, completed
projects, this is in order to enlighten the homebuyers so as to make
informed decisions.
Escrow Account
• Separate Account will have to be maintained by developer of a real
estate project. Minimum 70% of total collected funds for a specific
project have to be deposited in that separate account.

• The funds have to be used only for the construction or land cost
pertaining to the same project.
Changes proposed with respect to BUA

• Developers have to charge buyers only on the basis of carpet area,

unlike the earlier practice of charging on Built Up Area. Also, the act
bars any developer for any project to take more than 10 percent of
the total cost of apartment, plot or building as an advance payment
without entering into a written agreement of sale.
Rules related to modification of sanctioned
plans

• Act restricts the developer or promoter from making any alterations

or additions to the sanctioned plan of the apartment, building or
common areas without written consent of at least two-third of the
allotters of the residential projects.
RERA Compliant Project

• A project should have received all required approvals before being

advertised or sold,
• Information pertinent to sanctions, completion timeline and master
plan should be disclosed,
• Separate escrow account for each project should be maintained with
70% funds as advance deposits,
• Each unit should be sold as per the carpet area instead of the built-up
area.
When can a homebuyer take action against a
builder/developer?
• The builder has not registered the advertised project with the state’s
regulatory authority,
• The builder has presented false information to the regulator or contravenes
any provisions of the act.
• The builder insists on charging on the built-up area,
• The builder alters the apartment or building plan without seeking consent
of 2/3rds of the total allotters of the project,
• The builder fails to deliver the project within the scheduled time,
• The apartment or building faces structural defects within 5 years of from
the date of possession.
How will RERA tackle project delays?

• If the homebuyer wishes to withdraw the investment, the promoter

must return all the funds collected so far, along with the applicable
interest as prescribed under the rules and compensation as arbitrated
by an executive officer,

• If the homebuyer wishes to stay invested, the promoter must pay the
interest for every month of delay as compensation.
Rules pertaining to structural defects in the
project

• The promoter will have to rectify any structural defects, caused by

poor workmanship, quality or provision of services, brought into
notice within 5 years from date of possession. Allotters need not pay
any additional charge for rectification and will have to be carried out
within 30 days of filing the complaint. Failure to do so will entitle the
allotters to seek relevant compensation as mentioned in the ACT.
Will the allotter be penalized in case of
delayed payment?
• In case of a delay in payment from the allotter, the ACT enforces
similar stringent action. The allotter will be liable to pay a similar
monthly interest as compensation to the builder if they default in
making timely installments. Continued violations post issuance of a
notice gives promoter right to terminate the allotment of the
property and refund the amount collected after deducting the
booking and interest amounts respectively.
Implementation Progress
So far, only 19 states and union
territories have notified rules
on Real Estate (Regulation and
Development) Act, 2016 (RERA).
Thank You