Functions and Duties of Promoter (Sections 11–18) under RERA
Functions and Duties of Promoter under RERA (Sections 11–18)
The Real Estate (Regulation and Development) Act, 2016 (RERA) defines a promoter as a person who sells or offers to sell real estate projects, including developers and builders. Sections 11–18 lay down their functions, duties, and liabilities to ensure transparency and protect homebuyers.
1. Registration of Projects (Section 11)
Promoter must register the real estate project with the State RERA Authority before advertising or selling.
Requirement applies to ongoing and new projects, except those exempted under Section 3(2).
Must provide accurate information on:
Project details
Title of land
Layout and approvals
Case Law: K.K. Verma v. DLF Limited – Court held that selling unregistered projects is a violation of Section 11, and promoters are liable to refund payments.
2. Duties Related to Sale Agreement (Section 13–14)
Promoter must execute written agreement for sale including:
Carpet area
Payment schedule
Rights and obligations of buyer
Cannot demand more than prescribed proportion of payment before possession.
Case Law: Jain Builders v. Homebuyers – Court directed refund and interest where promoter violated payment schedule.
3. Disclosure Duties (Section 4 & Section 15)
Must disclose all project-related details:
Approved plans and layout
Land title status
Clearances from authorities
Cannot misrepresent facts or advertise falsely.
Case Law: Ramesh Chandra v. Builder Association – Promoter held liable for misrepresentation in project advertisement.
4. Deposit of Funds in Separate Account (Section 4(2)(l))
At least 70% of collected funds must be deposited in a separate bank account.
Funds must be used only for project construction and land cost, not diverted to other projects.
Case Law: K.K. Verma v. DLF Limited – Misappropriation of project funds led to penalties under RERA.
5. Timely Completion and Delivery (Section 18)
Promoter is liable to deliver possession on time.
Must provide clear title and ownership at possession.
Failure attracts refund with interest and compensation for delay.
Case Law: K.K. Verma v. DLF Limited – Court directed refund with interest and compensation for delayed possession.
6. Liability for Non-Compliance
Promoter is penalized for:
False advertisements
Non-registration of project
Misuse of funds
Delay in delivery
Penalties include fines and imprisonment under Sections 59–60 of RERA.
7. Key Principles
Transparency: Full disclosure to homebuyers.
Accountability: Promoter responsible for project completion and fund utilization.
Protection of Homebuyers: Right to refund, interest, and compensation.
Compliance: Adherence to statutory requirements is mandatory; courts uphold strict liability.
Conclusion
Sections 11–18 of RERA impose clear duties on promoters to ensure transparency, proper fund management, and timely project delivery. Courts, through cases like K.K. Verma v. DLF Limited and Ramesh Chandra v. Builder Association, have emphasized that any violation exposes promoters to penalties and liability to buyers, reinforcing the protective intent of RERA.
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