Home >> Blog >> Everything You Need to Know About The RERA Act 2016

Everything You Need to Know About The RERA Act 2016


What is the RERA Act?

The Real Estate Regulation and Development Act of 2016 established RERA, or the Real Estate Regulatory Authority, to safeguard homebuyers and encourage real estate investments. 

After May 1, the RERA Act went into effect. 

At the time, only 52 of the 92 sections received the information. 

The remaining clauses came into force on May 1, 2017.

RERA Rules and Act

According to Section 84 of the Real Estate (Regulation and Development) Act of 2016, state governments are expected to establish the regulations necessary to implement the Act's provisions no later than six months after it takes effect.

Through the HUPA (Housing & Urban Poverty Alleviation) Ministry, the center published the Real Estate (Regulation and Development) Act, 2016, general rules on October 31, 2016.

The Union Territories of Chandigarh, Lakshadweep, Daman & Diu, Dadra & Nagar Haveli, and the Andaman & Nicobar Islands are subject to these regulations.

A Few Points Regarding Real Estate Development and Regulation (RERA)

  • Security: In accordance with the RERA act, at least 70% of the funds from investors and buyers must be maintained in a separate account. Then, the builders will only be given access to this money for building and land-related expenses. Before the sale agreement is signed, developers and builders are not permitted to demand an advance payment of more than 10% of the cost of the property.

  • Transparency: For every job a builder undertakes, the original paperwork must be submitted. Without the buyer's permission, builders are not permitted to alter the plans.

  • Fairness: RERA has now told developers to price properties according to carpet area rather than heavily developed area. If the project is delayed, buyers can receive their whole investment back or remain invested and receive monthly interest.

  • Quality: The builder must resolve any issues within five years of the buyer's purchase. Within 30 days of receiving the complaint, this issue must be resolved.

  • Authorization: A regulator must register with the regulator before it can advertise, sell, build, invest, or reserve a plot. Following registration, each investment-related advertisement must include a special RERA project-specific registration number.

Salient Features

RERA was established to increase transparency and accountability in real estate and housing transactions.

The key characteristics of this Act are as follows:

  • Every Indian state should establish a real estate regulatory authority to oversee, judge, and mediate any issues involving real estate projects in that state.

  • The creation of a fast-track dispute resolution process. An appellate tribunal and specialized adjudicating personnel will be used to accomplish this.

  • For the RERA to have jurisdiction over the projects, all real estate projects must be registered. If regulations have not been followed, the authority may refuse the registration of a certain project.

  • Suppose a promoter wants to transfer or assign most of the rights and duties in a real estate project to a third party in addition to the formal RERA authorization. In that case, two-thirds of the allottees must concur in writing.

  • The buyer and the promoter will be required to pay an identical interest rate if any party defaults in any way.

  • The promoter will be required to make up any losses suffered by the buyer as a result of third parties claiming ownership of property that is now under development or has already been built (defective title to land). There is currently no law restricting the amount of compensation that can be received.

  • A person can file a complaint with RERA if they are concerned that a promoter, buyer, or agent has violated any of this Act's rules or provisions.

  • RERA has the power to prevent an agent, promoter, or buyer from carrying out any actions for which a complaint has been made while an inquiry is being conducted.

  • The person who has been wronged may appeal RERA's decision regarding a complaint to the Appellate Tribunal if it is unsatisfactory.

  • The promoter will have to pay a fine if they disobey RERA's directives. This sum could equal up to 5% of the property's assessed value.

  • A fine must be paid if the Appellate Tribunal's orders are not followed. This may involve up to three years in prison, a fine equal to 10% of the project's estimated cost, or both.

  • Any person who was in charge of the firm at the time the offense was committed and the company itself shall be found liable and punished if a company violates this Act.

  • No civil court will have any jurisdiction in any subject that falls under RERA or the Appellate Tribunal's authority. As a result, no court has the authority to forbid RERA or the Tribunal from taking any particular action.

Advantages of RERA

RERA offers several advantages for the buyer, the promoter, and the real estate agent. These consist of the following:


  • Standardization of carpet area: Before RERA, a builder's method for determining the cost of a project was not specified. With RERA, there is now a common formula for calculating carpet area, though. Promoters are prevented from offering inflated carpet areas to raise rates in this way.

  • Lowering the likelihood of the builder going bankrupt: Most promoters and developers tend to work on several projects simultaneously. Previously, project creators were permitted to transfer monies raised from one project to another.

  • Previously, project creators were permitted to transfer the money raised from one project to another. With RERA, this is not feasible because 70% of the money raised must be placed in a different bank account. Only after certification by an engineer, chartered accountant, and architect can this money be withdrawn.

  • According to the regulations, a builder is not permitted to charge the customer an advance payment or application fee equal to more than 10% of the project's cost. This spares the customer from paying a significant sum of money and quickly finding finances.

  • Rights of the purchaser in the event of any defects: Within five years of taking ownership, the builder shall correct any structural or quality issues within thirty days at no cost to the purchaser.

  • Before RERA, if the promoter delayed giving the buyer possession of the property, the interest paid to the buyer was significantly lower than if the buyer delayed giving the promoter money. Since RERA, both parties are now required to pay the same amount of interest.

  • Rights of the buyer in cases of false promises: If there is a discrepancy between what the builder promised and what has been delivered, the buyer is entitled to a full refund of the upfront payment. The builder may occasionally be required to pay interest on the amount as well.

  • If there is a title defect: The buyer may pursue reimbursement from the promoter if, upon taking possession, they learn that the property's title is flawed. This sum has no upper bound.

  • Freedom of information The purchaser has a right to fully disclose all project-related facts. Plans for layout, execution and completion status are included in this.

  • Grievance Redress: The buyer, the promoter, or the agent may register a complaint with RERA if they have any grievances regarding the project. The Appellate Tribunal can also receive a complaint from someone who is unhappy with RERA's judgment.

Impact of RERA:

A project unit's selling deed cannot be recorded at the sub-registrar's office following the Real Estate (Regulation and Development) Act 2016's implementation without getting occupancy or completion certificates. Unit registrations are now being done without verification. It is taking place without acquiring occupancy or completion certificates. The potential legal repercussions don't concern anyone. The RERA Act has ramifications, but the Department of Stamps & Registrations hasn't taken the necessary action to prohibit these properties' illegal sale deed registrations. The following are a few effects:

  • As developers and project promoters take the time to comprehend the Real Estate (Regulation and Development) Act 2016, fewer projects will be introduced. However, since they will have less competition, sincere promoters, builders, and developers will profit from this situation.

  • After the RERA Act is implemented, dishonest builders will cease to exist because they will be unable to survive in the market.

  • 32 new sections in the Real Estate (Regulation and Development) Act of 2016 would encourage financial discipline in this sector.

  • If developers want to make specific adjustments to the project once it has started, they will need to follow a number of formalities after the Act is implemented. In the short term, there may be pandemonium in the real estate market, but it will increase consumer confidence and encourage more investment in the long run.

RERA Act Defines Carpet Area

Developers must offer their units based on the carpet area under the Real Estate (Regulation and Development) Act of 2016.

  • The entire floor surface that can be used inside the apartment's walls is referred to as the carpet area by the Act. Locations like open patios, shafts, balconies, etc., are not covered by this.

  • By standardizing the carpet area specification, salespeople won't be able to deceive clients.

The developer may overestimate the saleable area because of the high loading factor. As a result, the developer will be able to charge less per square foot on the inflated saleable area. This is very misleading since delighted house buyers assume they are obtaining fantastic rates. The loading factor, however, never varies regardless of the flat size.

Using the carpet area standard, the usable area will be known confidently. Additionally, it facilitates the examination of cost per square foot. It also becomes simpler to compare the various initiatives.

How to Verify a Property Is RERA Compliant?

The following are some factors to consider in order to determine whether a property is RERA compliant:


  • Builders are required to register a project under the RERA Act before beginning or selling it on a specific property with an area larger than 500 square meters.

  • Builders must provide proof that they have deposited 70% of the total sum into an independent escrow account instead of using it for another investment.

  • Builders must obtain the necessary approvals before publicizing a new project. Pre-launch offers and early bird discounts won't be accessible anymore.

Penalties Under RERA:

For Buyers:

1. Offence: Non-compliance with RERA

Penalty: Daily fines of up to 5% of the project's estimated cost

2. Offence: Non-compliance with the Appellate Tribunal

Penalty: imprisonment for up to a year, a fine equal to 10% of the project's estimated cost, or both

For Promoters:

1. Offence: Non-registration

Penalty: 10% of the anticipated project costs


2. Offence: Falsifying information

Penalty: 5% of the anticipated project costs

3. Offence: attempting to break the law

Penalty: 10% of the estimated value of the property in fines, up to three years in prison, or both

For Agents:

  1. Offense: Failure to register projects

Penalty: Rs. 10,000 per day, up to 5% of the project's estimated cost

  1. Offense: violation of the RERA

Penalty: Daily fines of up to 5% of the projected project value

  1. Offense: violation of the Appellate Tribunal's rules

Penalty: Penalty of 10% of the project's estimated cost or up to a year in jail, or both

How Promoters Can Register Projects Under RERA

Make a list of all the documents needed for registration and gather them.

  • Obtain the account number of the bank opened in accordance with the Act's Section 4 (2) (I) (D).

  • Complete Form A and send it in. This is the registration application form.

  • Complete Form B and send it in. According to RERA's Section 4, the promoter has made the following declaration.

  • Fill out and send Form G. This is the project's proposed allocation or selling agreement.

  • Submit an affidavit that the information supplied in Form G complies with RERA regulations.

  • Submit an affidavit indicating that all booking amounts were paid in accordance with Section 3 of the Act and that no money was obtained from potential customers.

  • Pay the registration fees, which vary from state to state.

  • Send a hard copy of each of these documents to the appropriate RERA authority by registered mail that has been properly signed.

  • Form C must be completed and submitted before the registration certificate is obtained.

Real estate brokers

  • Fill up the application form, and send it to RERA with the necessary paperwork and payment.

  • You'll get a registration number from us. Each property sale requires mentioning this number.

  • Books of accounts, papers, and records pertaining to every transaction must be kept up to date on a quarterly basis.

  • The buyer must have access to all project-related information and papers.

  • Your account may be suspended if you lie about yourself or engage in any fraud during the registration process.

Creating a Complaint

Complaints may be made against promoters, purchasers, or agents in accordance with Section 31 of RERA. The actions to take while registering a complaint are as follows:

  1. Locate a RERA attorney, then submit a complaint to the proper authority.

  2. Fill out the complaint in accordance with the guidelines established by the relevant state where the project is located.

  3. Add the following information:

  •  Information about the respondent and the applicant.

  • Address and project registration number.

  • A succinct description of the relevant circumstances and supporting evidence.

  • Details of any requested relief and any temporary reliefs must be provided (if any).

  1. Debit the fee. Remember that each state has a different threshold. The charge, for instance, is Rs. 5,000 in Maharashtra and Rs. 1,000 in Karnataka.

  2. Alternatively, you can submit a complaint online by going to the RERA website for your state.

  3. You have 60 days to file a complaint with the RERA Appellate Tribunal if you disagree with the RERA's decision.

  4. If you disagree with the Appellate Tribunal's ruling, you may file a case with the High Court within 60 days.

Documents Necessary for RERA Project Registration

Keep the following paperwork prepared in order to register a project under RERA:

  • The promoter's most recent three years' worth of income tax returns.

  • A promoter's audited profit and loss statement, balance sheet, and audit report.

  • A copy of the promoter's Aadhaar card and PAN card. If there are many promoters, copies of each promoter's PAN card and Aadhar card must be submitted.

  • A photo of the promoter the size of a passport. Pictures of every member, including the chairman and director, must be included if the promoter is a business or corporation.

  • The documented legal title deed and any other pertinent documents. The promoter's legal rights to the property should be reflected in these documents. The promoter must offer a non-encumbrance certificate if this is not possible. This must be obtained from a revenue officer who is at least a Tehsildar in status.

  • A copy of the collaboration agreement and the owner's permission is required if the promoter does not own the land on which the project is being developed.

  • The project's layout plan and authorized plan both of which have been approved.

  • A layout of all the facilities that will be offered. This includes infrastructure for providing drinking water, combating fires, using renewable energy, and providing for evacuation.

  • Every location-related aspect of the project. This should include the latitude and longitude of the proposed project's borders.

  • An estimated bill with information that includes the selling agreement and planned conveyance deed.

  • The size of the carpet, the number of units, the size of the open terrace, and any balconies.

  • Information about the quantity of available open parking spaces and available garages for sale.

  • Real estate agents' names and addresses (if any).

  • Names and addresses of all individuals involved in the project's creation, including structural engineers, architects, contractors, and others.

  • Statement on Form B. This statement prohibits discrimination during project allocation by the promoter or anyone authorized by the promoter.

  • Any other paperwork is needed by the state where the project is being registered.

Liked What You Just Read? Share this Post:

Viewer's Thoughts

Any Question or Suggestion

Post your Thoughts


Related Blogs

Investing in Top Railway Stocks with Just 500 INR

Finance | 27-06- 2024

Best Performing Railway Stocks...

Start investing in railway stocks with just 500 INR. Discover top picks From Railway Sector. Learn how to grow your port...

Continue Reading
Top Undervalued Private Bank Sector Stocks in India 2024

Finance | 24-06- 2024

Top Undervalued Private Bank S...

Explore the growth potential of India's private banking sector. Learn about their strong financials, technological advan...

Continue Reading
SEBI Action Against Quant Mutual Funds

Finance | 24-06- 2024

SEBI Action Against Quant Mutu...

Explore Quant Mutual Fund's front-running scandal, its implications for investors & potential impact on India's stock ma...

Continue Reading
Top 5 Websites for Traders & Investors for Indian Stock Market

Finance | 15-06- 2024

Top 5 Websites for Traders & I...

Discover essential websites for traders: TradingView for charts, Screener for fundamentals, NSE India for stock info, Fi...

Continue Reading
VWAP Trading Strategy

Finance | 15-06- 2024

Best VWAP Trading Strategy for...

Discover how the VWAP trading strategy can help you achieve profitable positional trading without needing technical or f...

Continue Reading
Best Annuity Plan in India 2024

Finance | 14-06- 2024

Best Annuity Plan in India 202...

Learn about NPS annuity plans to secure a steady post-retirement income. Discover different annuity options, compare pro...

Continue Reading
to Learn Important Strategy worth Rs.15000