RERA 2016 — Real Estate Regulation Questions
Which real estate projects must mandatorily register under RERA?
All real estate projects where the land area exceeds 500 square metres or the total number of apartments in all phases exceeds 8 must be registered with the state RERA authority before any advertising, marketing, booking, or sale. This requirement applies to both residential and commercial projects. Projects ongoing on the date RERA came into force (typically May 2017 in most states) and lacking a completion certificate were required to register within three months of commencement of the Act. Projects involving only renovation or repair — without any new marketing or allotment — are exempt from registration.
What exactly is "carpet area" under RERA, and why does it matter?
Carpet area under Section 2(k) of RERA means the net usable floor area inside an apartment, measured from the inner face of the external walls. It excludes areas under external walls, service shafts (for pipes and conduits), exclusive balcony or verandah area, and exclusive open terrace area — but it includes the area covered by internal partition walls. Before RERA, developers charged buyers based on "super built-up area" or "saleable area," which included proportionate shares of lift lobbies, staircases, common passages, and even external walls, inflating the price by 20–40% compared to what the buyer actually got to use. RERA mandates that all sale agreements and price calculations must be in carpet area terms — any attempt to quote price in super built-up area or saleable area is a violation. Buyers who were charged on a larger area basis can file a complaint to recover the excess amount paid.
What remedy does a homebuyer have for delayed possession under Section 18 of RERA?
Section 18 gives a homebuyer two clear options when the developer misses the possession date stated in the agreement for sale. First, the buyer can exit the project and demand a full refund of all amounts paid, along with interest from the date of each payment at the rate prescribed by state RERA rules (typically SBI MCLR + 2%). Second, if the buyer wishes to retain the apartment, they can demand monthly interest for every month of delay until actual possession is handed over. The interest rate for the promoter's delay is required to be the same rate the developer would charge the buyer for delayed instalments, ensuring parity. The buyer does not need to prove any special damage — the missed possession date itself triggers the right to compensation. Complaints can be filed directly on the state RERA portal, and RERA authorities typically process possession/refund complaints within 60–90 days.
Can a homebuyer approach both RERA and the Consumer Forum for the same complaint?
Yes. The Supreme Court in Imperia Structures Ltd. v. Anil Patni (2020) and in Forum for People's Collective Efforts v. State of West Bengal (2021) has confirmed that RERA and consumer forums have concurrent jurisdiction over homebuyer disputes — RERA does not bar a buyer from approaching the consumer forum. However, the consumer forum typically does not take up matters already decided or pending before RERA on the same cause of action. In practice, RERA is usually faster and more specialised for standard delayed possession and refund claims. Consumer forums may be preferred where the claim amount is small (below RERA complaint fee thresholds), where the complaint is primarily about deficiency in service rather than project registration violations, or where the developer is not registered under RERA. A buyer cannot obtain double compensation for the same loss — any amount recovered through one forum must be adjusted against any award from the other.
Can a homebuyer use the Insolvency and Bankruptcy Code against a real estate developer?
Yes, since the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, homebuyers are classified as "financial creditors" of the real estate developer. This means that homebuyers — either individually or as a class of at least 100 buyers (or 10% of total allottees, whichever is lower) — can file an application before the National Company Law Tribunal (NCLT) to initiate a Corporate Insolvency Resolution Process (CIRP) against an insolvent developer. The IBC route is typically used when the developer is genuinely insolvent and unable to complete the project — CIRP appoints a resolution professional who takes over management and can either find a new developer to complete the project or distribute assets to creditors. RERA and IBC are separate and concurrent remedies — a buyer can pursue RERA for refund and also join IBC proceedings as a financial creditor. The Supreme Court in Pioneer Urban Land & Infrastructure v. Union of India (2019) upheld the constitutional validity of treating homebuyers as financial creditors under IBC.
What is the 70% escrow requirement under RERA, and what happens if a developer violates it?
Section 4(2)(l)(D) of RERA requires every promoter to deposit 70% of all money collected from buyers into a separate dedicated bank account (escrow), which can only be used to fund construction costs and land costs for that specific project. Withdrawals from the escrow are permitted only in proportion to the percentage of construction completed, and must be certified jointly by a project engineer, architect, and chartered accountant. The remaining 30% can be used by the developer for other purposes, including debt servicing. The escrow obligation is designed to prevent the common fraudulent practice of diverting buyer funds to other projects or for personal enrichment. Violation of the escrow requirement is a major default under RERA — it can result in revocation of project registration under Section 7, a penalty up to 10% of the estimated project cost under Section 61, and potentially criminal prosecution under Section 65 for persistent default. In complaints by buyers, evidence of escrow underfunding is powerful and can support both RERA orders and criminal complaints for breach of trust.
Can a promoter change the building plan or reduce promised amenities after booking?
No. Section 14 of RERA prohibits any promoter from making changes to sanctioned plans, layout plans, specifications, or the nature of fixtures, fittings, and amenities without the previous written consent of the specific allottee affected (for changes to individual units) or at least two-thirds of all allottees (for changes to common areas or overall project layout). This prohibition applies even if the sale agreement purportedly gave the developer a right to make variations, because Section 89 gives RERA an overriding effect over such contractual clauses. If a developer reduces the size of the clubhouse, eliminates promised amenities, adds additional towers that consume FSI allocated for other uses, or changes the unit layout from what was shown in the brochure, affected buyers can file a complaint under Section 14 seeking restoration of original specifications or monetary compensation for the difference in value.
Must real estate agents register under RERA, and what happens if they do not?
Yes. Section 9 of RERA requires every real estate agent who facilitates the sale or purchase of any apartment, plot, or building in a RERA-registered project to obtain registration with the state RERA authority before conducting any such transactions. An unregistered agent acting in relation to a RERA-registered project faces a penalty of Rs.10,000 per day of default, which can accumulate to up to 5% of the cost of the plot, apartment, or building in respect of which the violation occurred. Registered agents are required to maintain prescribed records, not facilitate the sale of unregistered projects, and comply with the Code of Conduct specified under state RERA regulations. Buyers who paid commission to unregistered agents or were misled by agents about project details can file complaints before RERA — agent liability is distinct from promoter liability.
How can a homebuyer challenge a RERA order, and can they go to the High Court?
Any person aggrieved by an order of the RERA authority or the Adjudicating Officer may appeal to the Real Estate Appellate Tribunal (REAT) within 60 days of the order, under Section 44 of RERA. The Appellate Tribunal is required to hear the appeal and pass orders within 60 days of filing. Any person aggrieved by a REAT order may then approach the High Court under Section 58 of RERA, on questions of fact or law — unlike many tribunals whose orders are only challengeable on questions of law, RERA expressly allows High Court review on both fact and law. Interlocutory applications and stay applications against RERA orders are governed by regular High Court practice. The Supreme Court has jurisdiction under Article 136 of the Constitution against High Court orders in RERA matters.
What penalty does a developer face for selling an unregistered project?
A promoter who advertises, markets, books, sells, or offers to sell any unit in a project without first registering it with RERA faces a penalty under Section 59 of up to 10% of the estimated cost of the real estate project. If the default continues after the first penalty order, the promoter is liable to additional punishment of imprisonment up to three years, or a further fine up to 10% of the estimated project cost, or both. The Adjudicating Officer or the RERA authority determines the penalty quantum having regard to the extent of default and harm caused to allottees. All allottees who made payments for an unregistered project are entitled to a full refund with interest as a matter of right — the promoter cannot use the fact that the project was unregistered as a justification for not returning the money.
RERA Dispute or Real Estate Recovery?
Homebuyer claims under RERA intersect with IBC proceedings — the Supreme Court in Pioneer Urban Land (2019) treated homebuyers as financial creditors. Advocate Subodh Bajpai advises on RERA enforcement, IBC filings by homebuyers, and NPA recovery against real estate developers.