Statutory Compliance under RERA Act, 2016


Status as on- 26/10/2021


India is emerging in the real estate sector rapidly. Historically, the real estate sector was unorganized, the provisions were ambiguous and unclear which was consequent to unaccountability. Lack of uniformity in real estate laws raises enormous frauds and scams.

Though, in recent years the real estate sector has exhibited a trend towards greater organization and transparency, accompanied by various regulatory reforms. The central government has passed the Real Estate (Regulation & Development) Act, 2016(hereinafter referred to as “Act”) which came into effect on May 1, 2017. The Act specified the norm for strict compliances that had to be adhered to by each developer, builder, and construction giant in different parts of the country.

Compliances under RERA Act

Primarily, every project must obtain RERA registration under the Act. The registration specifies comprehensive details of the project to the RERA authority and public at large which would try to ensure that all compliances are met. The act requires the builder to satisfy the following compliances:

  • Upload the agreements, Plans etc. – The RERA regulations has obligate the developer or promoter to publish all agreements, plans, approval, advertisement or prospectus etc. on the website of the RERA authority for the public.
  • Updating Quarterly compliances with RERA – Every registered project is obligatory to update the quarterly compliance report of the project on the website of the RERA authority. If the developer or promoter fails to do so, maybe liable for heavy fines and penal proceeding from RERA authority.
  • To open escrow account-As per the RERA law, every developer or promoter shall keep 70% of the amount received from allottees in a separate bank account in a scheduled bank.
  • Comply with Prescribed process of booking and allotment– The regulations specifically prescribed certain obligations and responsibilities on the developers to ensure that transaction is done through RERA registered agent, copy of the approved plan,layout plans, along with specifications, approved by the competent authority, must be available to all buyers and not accept advance more than 10% of the unit costwhile booking the new flat or allotment.
  • Establishment of Welfare/Allottee’s association –The promoter or developer shall form the society/association or co-operative society as prescribed by the respective State Government.
  • Timely completion and delivery including common areas– Every builder/association is required to complete the project on given time and give possession within 3 months. All the common areas shall be transferred to the association of the allottees.
  • Review of building quality– The developer or promoter shall review the quality of the building. As per RERA law, any defects in the structure shall be rectified by the builder within 30 days of intimation without any additional cost.

Prosecution and Penalties for non-compliance of Provisions

The RERA Act specifies the following penalties for offences against non-compliance of obligations.

  • Non-Registration of the project – Section 59 of RERA Act prescribed the penalty for non-registration. The Authority may fineup-to 10% of the total estimated cost of the project. If the builder continues to violate, then he shall be punishable with imprisonment up to 3 years or with fine.
  • False or incorrect information or advertisement – Section 60 of RERA Act prescribed the penalty for providing false information. The RERA authority may impose a penalty of 5% of the estimated cost of the project to the developer or promoter.
  • Violation or contravention of any other provisions (except above) as mentioned under the RERA Act – Section 61 of RERA Act prescribed the penalty regarding contravention of any other provisions of the Act. The RERA authority may impose a penalty of 5% of the estimated cost of the project/property on promoter and agent.
  • Contravention against any order passed by Authority or Appellate Tribunal–Section 63 and 64 of the Act provides penalty if promoter fails to comply with any other passed by Authority or Appellate Tribunal. The authority may imposed up to 10% of the estimated cost of the project and with imprisonment up to 3 years or with a fine if any promoter, who fails to comply with or contravenes any of the orders, decisions, or directions of the Appellate Tribunal.


As earlier, the provisions were not sufficient to render punishment to the developer and the builder for misconducting and breaching the terms and conditions of the builder buyer agreement in the long run. The establishment of the Real Estate (Regulation & Development) Act, 2016 brings transparency and uniformity and set out strict obligations and punitive provisions to protect the interest of homebuyers and consumers from builders’ unfair practices. The builder and promoter shall comply with the obligations as mentioned under the RERA Act, otherwise may attract penal actions.


Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at

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