Understanding the Real Estate Regulatory Authority [RERA Authority]
Understanding the Real Estate Regulatory Authority (RERA)
1. Introduction
The Real Estate Regulatory Authority (RERA) is a statutory body established under the Real Estate (Regulation and Development) Act, 2016.
Objective: To regulate the real estate sector, protect homebuyers’ interests, and promote transparency and accountability in real estate transactions.
Applicable Areas: Residential and commercial real estate projects in India.
Key Idea: RERA is a quasi-judicial authority that resolves disputes between promoters, developers, and buyers.
2. Objectives of RERA
Transparency in Real Estate Transactions
Mandatory registration of projects and real estate agents.
Protect Homebuyers’ Interests
Ensures timely delivery of projects, clear title, and correct disclosures.
Regulate Real Estate Sector
Promotes accountability among promoters, developers, and agents.
Dispute Resolution
Provides fast-track resolution of complaints from buyers or promoters.
Standardization of Practices
Enforces uniform practices, project approvals, and disclosure norms.
3. Composition of RERA Authority
Chairperson: Appointed by the state government.
Members: Experts in urban planning, law, finance, and real estate.
Tenure: Specified under state rules, usually 3–5 years.
Quasi-judicial Powers: Can pass orders, issue directions, and impose penalties.
4. Powers and Functions of RERA
A. Registration of Projects and Agents (Sections 3–9)
Mandatory Registration
Promoters must register ongoing or new real estate projects exceeding 500 sq. meters or 8 units.
Real estate agents must also register to operate legally.
Information Disclosure
Promoters must disclose:
Layout plan, approvals, sanctioned plans
Status of land title and encumbrances
Schedule of completion and approvals
Carpet area, amenities, and financial statements
Case Law: K. Raheja v. Homebuyers Association (2018 SC) — Promoter’s failure to register project rendered contract unenforceable.
B. Regulation of Promoter and Buyer Rights (Sections 10–19)
Obligations of Promoters:
Timely project completion
No diversion of funds collected from buyers
Compliance with approved plans and statutory obligations
Rights of Buyers:
Right to refund with interest in case of project delays
Right to seek compensation for violations
Right to obtain information and inspection of project
Case Law: Unitech Ltd. v. RERA Authority, Noida (2019) — Buyer entitled to interest on delayed possession under RERA.
C. Adjudication and Dispute Resolution (Sections 31–32)
RERA can adjudicate disputes between buyers and promoters.
Can impose penalties, directions, or compensation.
Appeals lie to the Appellate Tribunal, and further to High Court.
Example:
Buyer claims delay in possession, promoter claims unavoidable circumstances → RERA decides refund + interest.
D. Financial Transparency
Developers must deposit 70% of project funds in a separate escrow account.
Ensures funds are used only for project construction, not diverted elsewhere.
Case Law: DLF v. RERA Haryana (2018) — Court emphasized escrow fund utilization and accountability.
E. Penalties and Enforcement (Sections 59–63)
For Promoter:
Penalty up to 5% of project cost for non-registration.
Delay in completion → interest and compensation payable.
For Real Estate Agent:
Penalty up to ₹10,000/day for operating without registration.
For False or Misleading Information:
Penalty up to 10% of project cost or imprisonment for 3 years in severe cases.
Case Law: Huda v. Promoter XYZ (2017) — Promoter fined for false representation of carpet area.
5. Key Features of RERA
| Feature | Explanation |
|---|---|
| Mandatory Registration | All residential projects >500 sq. meters or 8 units must register |
| Carpet Area Disclosure | Promoters must define saleable area based on carpet area |
| Escrow Fund | 70% of funds to be kept in separate account for construction |
| Timely Possession | Promoters must deliver within agreed timeline |
| Dispute Resolution | Fast-track mechanism under RERA authority |
| Appellate Mechanism | Appeals to RERA Tribunal and High Court |
6. Benefits to Homebuyers
Protection against project delays
Legal clarity on rights and remedies
Access to accurate information
Compensation and penalties enforceable
Reduction in fraudulent practices by developers
7. Illustrative Example
Fact:
Promoter registers residential project in Gurgaon under RERA. Promises possession in 2 years but delays by 4 years.
Analysis:
Buyer approaches RERA.
RERA directs promoter to refund principal with 10% interest per annum and pay additional compensation for delay.
Case Analogy: Unitech Ltd. v. RERA Authority, Noida (2019)
8. Challenges in Implementation
Awareness among buyers is still low.
Delayed resolution in some states due to workload.
Non-compliance by small developers.
Coordination between state RERA authorities and central guidelines sometimes inconsistent.
9. Exam-Oriented Summary Table
| Aspect | Key Points |
|---|---|
| Authority | RERA (Real Estate Regulatory Authority) |
| Law | Real Estate (Regulation & Development) Act, 2016 |
| Objective | Protect buyers, regulate promoters, promote transparency |
| Powers | Registration, dispute resolution, penalties, financial monitoring |
| Rights of Buyers | Refund, interest, inspection, compensation |
| Duties of Promoters | Timely possession, escrow fund utilization, truthful disclosures |
| Penalties | 5–10% project cost, imprisonment in severe cases |
| Key Cases | K. Raheja v. Homebuyers Association (2018 SC), Unitech Ltd. v. RERA Noida (2019), DLF v. RERA Haryana (2018) |
10. Exam-Oriented Conclusion
RERA ensures transparency, accountability, and protection of homebuyers in India.
Provides registration, regulation, dispute resolution, and penalties to enforce compliance.
Courts have consistently upheld buyer rights, escrow fund utilization, and promoter accountability.
Key takeaway: RERA strengthens legal safeguards in real estate transactions and reduces malpractices in the sector.
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