The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, has revolutionised India’s real estate market since its implementation in May 2017. Anyone involved in property transactions must now understand how to navigate RERA compliance.
The RERA Act serves as a complete regulatory framework that addresses long-standing problems in the home-buying process. The legislation’s main goal focuses on reducing project delays and property fraud while building a more transparent and accountable real estate sector. Property developers must register their projects with state RERA authorities when they exceed 500 sq. mt. or include more than 8 apartments. The results speak for themselves—Maharashtra’s RERA authority (MahaRERA) has resolved 64% of roughly 6,631 complaints by April 2019.
Let’s explore the essential requirements of RERA compliance and how to verify if a project meets these standards. Understanding these regulations is a vital step to protect your real estate investments, regardless of whether you’re buying your first home or expanding your investment portfolio.
What is RERA and why was it introduced
The need for regulation in real estate
India’s real estate sector operated without proper oversight for decades. This crucial industry contributes about 6.5% to the country’s GDP. The market struggled with multiple problems before regulations came into place. Buyers had no standardisation, transparency, or protection. They faced delays in getting their homes, unclear property ownership documents, and poor construction quality. The system offered no way to address these issues.
Builders and developers often took advantage of homebuyers through unfair practices. The lack of standard rules became a roadblock to this vital industry’s growth. The real estate sector needed detailed regulations, and industry experts voiced this concern repeatedly.
What is the RERA Act: A quick overview
The Parliament of India created the Real Estate (Regulation and Development) Act, 2016 (RERA), to protect homebuyers and boost real estate investments. The law rolled out in two phases – 61 out of 92 sections started on May 1, 2016, and the rest began on May 1, 2017.
RERA covers all of India (except Jammu and Kashmir, as originally implemented) and applies to both residential and commercial properties. The law requires registration of real estate projects larger than 500 square meters or with more than eight apartments.
Key objectives of the RERA Act
RERA’s main goals include:
- Consumer Protection: The law protects homebuyers by ensuring fair practices, timely information sharing, and resolving conflicts between buyers and developers
- Transparency Enhancement: Developers must share project details, timelines, legal approvals, and financial information to help buyers make informed decisions
- Standardisation and Accountability: The law sets clear guidelines for developers about project registration, fund usage, and quality standards
- Efficient Dispute Resolution: RERA creates a system to resolve complaints and disputes quickly
The law aims to turn real estate into a professional industry where stakeholders can trust each other. RERA works to bring stability to what was once a chaotic market and helps India’s real estate sector grow responsibly.
Core Compliance Requirements Under RERA
RERA establishes significant compliance requirements that developers, agents, and other stakeholders must follow. Let’s get into these core mandates in detail.
Project registration with the state RERA
RERA requires registration for all commercial and residential projects where the land area exceeds 500 square meters or includes more than eight apartments. This rule applies to ongoing projects without completion certificates, too. Registration details must show land title information, project plans, and completion timelines. Developers who fail to register face penalties up to 10% of the project’s total estimated cost.
Mandatory disclosures by developers
Developers must provide detailed information about their projects that has layouts, sanctioned plans, land title status, construction schedules, and payment plans. It also requires them to disclose amenities, their availability dates, approval statuses, and financial details. These disclosures need quarterly updates on the RERA website to ensure transparency.
Escrow account and fund usage rules
RERA requires developers to put 70% of funds from buyers in a separate designated account used only for that project’s construction and land costs. Projects where estimated receivables are less than the estimated completion cost need 100% of collected funds in this account. Money withdrawals need certification from an engineer, an architect, and a chartered accountant to confirm they match construction progress.
Carpet area standardisation
Properties must be sold based on carpet area under RERA, defined as “the net usable floor area of an apartment, excluding the area covered by external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by internal partition walls”. This standard stops the old practice of selling based on unclear super built-up area measurements.
Timely delivery and penalties for delay
Projects must be completed within stated timelines. Delays require developers to pay buyers interest at a prescribed rate. Buyers can choose between getting interest for delayed possession or a full refund plus interest.
Registration of real estate agents
Real estate agents who handle property transactions must register with their state RERA authority. They need to keep transaction records for at least five years, show their registration numbers in all communications, and avoid misleading buyers. Breaking these rules can lead to penalties up to ₹10,000 per day.
Penalties and Legal Consequences of Non-Compliance
RERA strictly enforces penalties to make sure everyone follows its rules. Violators face heavy financial consequences and jail time in severe cases.
Fines for unregistered projects
Project promoters without RERA registration will pay fines up to 10% of their estimated project cost. Authorities can send violators to jail for up to three years after issuing a notice. They might also charge an extra 10% of the project cost, or both.
Penalties for misinformation
RERA’s foundation rests on transparency. Developers who give false or misleading details during registration will pay fines up to 5% of their estimated project cost. These violations cover wrong information about land titles, carpet areas, project schedules, or other key details.
Imprisonment clauses for serious violations
RERA mandates jail time with financial penalties for major offences. Promoters who keep breaking registration rules or ignore regulatory orders could spend up to three years in jail. The law also punishes those who don’t follow Appellate Tribunal orders with three years’ imprisonment and fines up to 10% of the project cost.
Daily penalties for ongoing non-compliance
Penalties grow each day for continuous violations. Real estate agents operating without registration pay ₹10,000 daily. Developers who ignore RERA authority orders face daily fines that add up to 5% of their total project cost. These growing penalties help protect consumers and discourage repeated violations.
How to Check if a Project is RERA Compliant
Your hard-earned money deserves protection when investing in real estate. RERA compliance verification will give a solid legal safeguard for your investment.
Using the state RERA website
Start by finding your state’s official RERA portal. Each Indian state and union territory runs its own RERA website with complete project information. The homepage has sections like “Registered Projects,” “Project Search,” or “View Registered Projects”. These portals help the public check project registration status easily.
Verifying registration number and project details
The portal lets you search using the project name, promoter/builder name, or district/city details. The project search results show vital information like RERA registration number, project details, promoter information, current status, approvals, timelines, and any legal issues. The best practice is to download and keep the official RERA registration certificate as legal proof.
Checking builder credentials and approvals
The next step is to get into the developer’s background. Click their name to see past and current projects. This history shows their track record of delivery times and quality standards. On top of that, it helps to ask for documents like the occupancy certificate, the completion certificate, and title deeds from the builder.
Red flags to watch out for
The sort of thing you need to watch for includes:
- Possession timelines that lack legal backing
- Complex pricing with hidden charges
- Poor transparency – missing website, project updates, or ownership details
- Builders who avoid or mislead about RERA details
Conclusion
RERA has changed India’s real estate world dramatically since 2017. This piece shows how the landmark legislation tackles systemic problems in the sector, especially when dealing with transparency and consumer protection. Mandatory registration requirements, escrow account provisions, and standardised carpet area measurements protect homebuyer interests and create developer accountability.
RERA compliance knowledge remains crucial for everyone involved in real estate transactions. Buyers should definitely verify project registration details before committing their money. The government’s steadfast dedication to enforcing these regulations is reflected in strict penalties, including hefty fines and imprisonment clauses.
Property verification has become easier through state RERA websites. These official portals let you check registration status, project timelines, and developer credentials quickly. This careful verification process protects your investment from fraud or project delays effectively.
RERA’s regulatory framework continues to shape the real estate market. Developers must meet higher standards while projects face increased scrutiny, and agents need proper registration. These measures promote trust between stakeholders and propel development in India’s real estate sector. Ethical developers who commit to transparent operations gain both legal compliance and market advantage through RERA.
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