What Is RERA, and How Does It Impact Homebuyers in India?
1. What is RERA?
RERA (Real Estate Regulation and Development Act, 2016) is a central legislation enacted to regulate the real estate sector in India. It aims to protect homebuyers, bring transparency, and promote accountability in real estate transactions.
Key objectives of RERA:
Protect homebuyers from delays, frauds, and unfair practices.
Ensure transparency in project information, approvals, and financial dealings.
Establish regulatory authorities in each state to oversee real estate transactions.
Promote timely delivery of projects by binding developers legally.
Applicability:
Covers all residential and commercial projects where the area is more than 500 sq. meters or more than 8 apartments.
Developers must register projects with the state RERA before advertising or selling.
2. Key Provisions Beneficial to Homebuyers
(i) Mandatory Project Registration
Builders cannot sell apartments without registering the project with RERA.
They must disclose:
Approved plan, layout, and carpet area
Status of statutory approvals
Timeline for project completion
Funds allocation (minimum 70% of project funds in escrow account)
Impact: Prevents developers from diverting homebuyers’ money.
(ii) Carpet Area Disclosure
RERA mandates sale based on carpet area, not super built-up area.
Protects homebuyers from inflated pricing based on vague measurements.
(iii) Timely Project Completion
Developers must deliver the property on the agreed date.
Delays attract penalties under RERA.
Homebuyers can demand interest compensation for delayed possession.
(iv) Legal Recourse for Homebuyers
Buyers can lodge complaints with State RERA authority for:
Delayed possession
Deviation from approved plan
False advertising or misrepresentation
State RERA can adjudicate disputes quickly, reducing reliance on long court battles.
(v) Transparency and Accountability
Developers must update project progress quarterly on RERA website.
Homebuyers can check fund utilization, approvals, and construction updates online.
3. Impact of RERA on Homebuyers
| Aspect | Before RERA | After RERA |
|---|---|---|
| Project registration | Not mandatory | Mandatory, only registered projects can be sold |
| Fund usage | Unregulated, diverted for other projects | 70% funds must be in escrow account |
| Carpet area | Often misrepresented | Sale strictly based on carpet area |
| Delayed possession | No strict penalty | Compensation & legal recourse for delay |
| Legal disputes | Long litigation in civil courts | Quick resolution through RERA tribunal |
| Buyer confidence | Low | High due to transparency and accountability |
4. Relevant Case Laws
(i) K. Raheja Developers v. State of Maharashtra (2017)
The court emphasized mandatory registration under RERA for all real estate projects.
Sale of apartments without RERA registration is illegal and non-binding.
(ii) Rera Authority v. M/s Kolte Patil Developers Ltd. (2018, Maharashtra)
Developer delayed project delivery.
RERA tribunal held that interest compensation must be paid to homebuyers for delayed possession.
(iii) Nikhil Kumar v. Rera Authority (2020)
Builder misrepresented carpet area.
RERA tribunal ruled in favor of homebuyer, ordering refund with interest and penalty for developer.
(iv) Shubhkamna Developers v. Rera Authority (2021, Gujarat)
Developer diverted project funds.
State RERA imposed heavy penalty and banned developer from future projects until compliance.
5. Key Takeaways for Homebuyers
Check RERA registration before booking any property.
Ensure the project’s carpet area, plan, approvals, and timeline are disclosed online.
Demand quarterly progress updates and track fund usage.
Use RERA tribunals for fast dispute resolution instead of long court cases.
Compensation for delay or deviation is legally enforceable.
6. Conclusion
RERA has revolutionized real estate in India by:
Protecting buyers’ rights
Ensuring project transparency
Reducing delays and financial mismanagement
Making developers accountable
Homebuyers now have legal backing to claim possession, refund, or compensation in case of default.
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