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RERA 2016: Project Regulation and Homebuyer Remedies
RERA regulates real estate projects and agents, requires disclosures and a separate project account, and provides remedies before the Authority, adjudicating officer and Appellate Tribunal.
Written by Mediate Editorial TeamReviewed by Gaurav Rohilla, AdvocateLast reviewed
- Instrument
- RERA Act, 2016
- Jurisdiction
- India
RERA regulates projects, promoters and real estate agents. It is both preventive—through registration, disclosure and project-account duties—and remedial—through complaints, refund, interest, compensation, penalties and appeals.
Registration threshold
Section 3 generally requires registration if the proposed land area exceeds 500 square metres or the number of apartments exceeds eight, inclusive of all phases. The appropriate government may reduce this threshold. Projects completed before commencement, certain renovation or repair projects without marketing or new allotment, and other statutory categories require separate analysis.
The separate project account
Section 4 does not merely require a generic "escrow". It requires 70% of amounts realised from allottees to be deposited in a separate account in a scheduled bank to cover land and construction costs of that project. Withdrawals must be proportionate to completion and certified by an engineer, architect and chartered accountant, with annual audit obligations.
Delay, refund and interest
Section 18 gives an allottee a statutory choice where the promoter fails to complete or give possession in accordance with the agreement or because of specified discontinuance. A withdrawing allottee may seek return of the amount with prescribed interest and compensation. A continuing allottee is entitled to prescribed interest for every month of delay until possession.
Authority versus adjudicating officer
The Act does not assign every dispute to one undifferentiated body. The Authority exercises regulatory and complaint jurisdiction. Under Section 71, compensation under Sections 12, 14, 18 and 19 is adjudicated by the adjudicating officer. In Newtech Promoters, the Supreme Court explained the respective roles, including the Authority's power in refund and interest matters and the adjudicating officer's compensation jurisdiction.
Other remedies and arbitration
Sections 88 and 89 state that RERA is additional to other law while overriding inconsistency. The Supreme Court has recognised consumer remedies as additional to RERA. An arbitration clause also does not automatically wipe out statutory rights, but the precise interaction between arbitration, RERA and consumer proceedings is more nuanced than saying all remedies simply operate "alongside" each other. Forum, relief, election, res judicata and inconsistent outcomes require legal analysis.
Mediation
Parties may mediate a real estate dispute, including online, but a private settlement's enforceability depends on how it is documented or adopted by the relevant forum. Section 27 of the Mediation Act, 2023 has not commenced and should not be described as the present enforcement route.
Key provisions in plain language
- Section 3 (Registration)
- Prohibits advertising, marketing, booking, selling or offering for sale in a covered project before registration, subject to statutory exemptions and state-reduced thresholds.
- Section 4 (Application and separate account)
- Requires disclosures and deposit of 70% of allottee receipts in a separate scheduled-bank account, with proportionate withdrawals, certification and audit.
- Section 12 (Advertisement liability)
- Provides compensation for loss caused by incorrect or false statements in an advertisement or prospectus, subject to the statutory requirements.
- Section 18 (Return, interest and compensation)
- Provides refund, prescribed interest and compensation for specified promoter default, or monthly delay interest where the allottee remains in the project.
- Section 31 (Complaints)
- Allows an aggrieved person to file a complaint with the Authority or adjudicating officer for violation of the Act, rules or regulations.
- Section 71 (Adjudicating officer)
- Assigns adjudication of compensation under Sections 12, 14, 18 and 19 to an appointed judicial officer, subject to the Supreme Court's interpretation of the Authority's and officer's respective powers.
- Sections 43–58 (Appellate Tribunal)
- Establish the Real Estate Appellate Tribunal and appeal structure, including the statutory promoter pre-deposit requirement.
General information only — not legal advice and not a solicitation.
Sources
- Real Estate (Regulation and Development) Act, 2016Checked
- Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar PradeshChecked
- Imperia Structures Ltd. v. Anil PatniChecked
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