All you need to Know about Real Estate Law in India


November 11, 2017

The much touted Real Estate (Regulation and Development) Act, 2016 (Real Estate Act) was given President’s assent on March 25, 2016 and came into force in May, 2017. The Act after considerable debates and deliberations was enacted with a view to establish an Authority for regulation and promotion of the real estate sector in India.


In the recent past, Real Estate sector has assumed immense prominence in India owing to unparalleled real estate development and construction being witnessed throughout the nation. This persistent demand for real estate development in India has led to assuming of dominant position by builders and developers in India. General trends followed in the real estate sector indicate that the builders frame one-sided agreements which are heavily tossed up with terms and conditions in favour of the builder. This phenomenon in several cases has led to the abuse of dominant position by the builders with buyers inter alia facing impediments like delay in delivery of possession flat, alterations in the allotment without allottee’s consent. To tackle this misuse of power by builders, the Real Estate Act was enacted by the Parliament.

Key Features of the Real Estate Act:

  1. Registration of Real Estate Projects

The Act under Section 3 mandates prior registration of real estate project with the Real Estate Regulation Authority (RERA). The said bars the builders and promoters from advertising or marketing or inviting any one for purchase of any plot, apartment or building in any real estate project without registration with the RERA.

  1. In which cases Real Estate Projects can be exempted from Registration?

The Act under Section 3(2) states that no registration of real estate project would be required:

  • Where the project admeasures 500 or less than 500 sq m.
  • The number of apartments inclusive of all phases proposed to be developed is less than 8
  • Where promoter has received completion certificate for real estate project prior to commencement of the Act
  • For the purposes of repair or renovation which does not require marketing or any new allotment under the project
  1. Checklist for Registering Real Estate Project

The promoter has to submit an application for registration of real estate project alongwith prescribed fee. Documents to be enclosed with the Application include:

  • Brief details of Promoter’s enterprise
  • Brief detail of the project to be launched by promoter
  • Copies of commencement certificate and approvals from the concerned Authorities
  • Sanctioned plan, layout plan and specifications of the project
  • Plan of works to be implemented in the project
  • Pro forma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with allottees
  • number and type of carpet area of apartments for sale in project
  • number of garages for sale in project
  • name and address of real estate agents (if any)
  • name and address of contractors, architect, structural engineers for development of project
  • Declaration by the promoter alongwith affidavit
  1. What declarations the Promoter makes in application?
    • That he has legal title to the land sought to be developed and the same is free from all encumbrances
    • The time period within which promoter intends to complete the project
    • 70% of the amount received from allottees of the project shall be deposited in a separate account with non-scheduled bank
    • That promoter will take approvals as when required under Law
  1. Under what circumstances registration of real estate project can be revoked?

The RERA may suo moto or on receipt of complaint revoke the registration when:

  • Promoter fails to do anything required under the Real Estate Act
  • Promoter violates any terms and conditions of approval given by competent authority
  • Promoter is involved in any kind of unfair practice or irregularities
  1. Registration of Real Estate Agents

Section 9 of the Real Estate Act mandates registration of the real estate agent under the Act. Without obtaining registration, a real estate agent cannot facilitate purchase or sale of any real estate project duly registered under the Act.

  1. What are the duties of the Promoter under the Act?
  • Create web page on the website of RERA and enter all the details of the proposed project for public viewing
  • Prospectus of the real estate project shall prominent mention the website address of RERA wherein details of project have been entered
  • Promoter at the time of booking and issue of allotment letter shall inform the allottee the sanctioned plans, layout and specifications of project as well as the stage-wise schedule of completing the project
  • If any person makes advance or deposit on basis of information in the advertisement or prospectus which is false or incorrect then in such a case the person shall be compensated by the promoter as provided under Section 12 of the Real Estate Act.
  • That a promoter shall not accept sum of more than 10% of the cost of allotment without entering into an agreement for sale with the allottee.
  • That the project shall be completed by the promoter in accordance of the sanctioned plans and layouts
  1. Can the promoter make alterations in the agreed project?

The promoter cannot make any alterations in the sanctioned plans and specifications of the project unless the same is consented by the allottee. However, minor alterations if required due to architectural reasons can be made by the promoter.

To rectify any structural defect in the allotment if the same is brought to the notice of the promoter within a period of 5 years from the date of possession of allotment.

  1. What is the duty of promoter when project is transferred to a third party?

In the event of transfer of project to a third party, the promoter has to obtain consent from two-third allottees. On transfer the promoter has to comply with the pending obligations under the Act.

  1. What happens if the promoter fails to handover possession within the stipulated time period?

If the promoter fails to deliver possession of allotment by the specified date then he shall be liable to refund the amount alongwith prescribed rate of interest to the allottee if the allottee wishes to withdraw from the project. In such case, the promoter has to also compensate the allotee in the manner provided under the Act.

Also read Property Dispute – Builder not giving me refund against cancellation

Also read Sample Questions – Real Estate

  1. What are the rights of a homebuyer/alottee under the Act?
  • To be informed about sanctioned plans, layouts and specifications of the project.
  • To be informed about stage-wise time schedule of completion of project
  • Entitled to claim possession of allotment
  • Entitled to claim refund of amount alongwith interest if the promoter fails to give possession of allotment
  1. What is RERA?

RERA is the Authority established under the Real Estate Act for the regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be or sale of real estate project is done in an efficient and transparent manner and to protect consumers in the real estate sector.

RERA comprises of a Chairperson and not less than two whole-time members appointed by the appropriate Government.

  1. What are the functions of RERA?
  • Protect interests of allottees and promoters
  • Ensure clearances for timely completion of project
  • Create transparent grievance redressal mechanism
  • Encourage investment in the real estate sector
  • Facilitate amicable conciliation of disputes between promoters and allotees
  • Facilitate digitization of land records
  • Register and regulate real estate agents
  • Maintain website for public viewing of all real estate projects
  • To call for information and conduct investigation wherever it considers it expedient to do so
  • Issue interim orders to restrain any promoter, allottee or real estate agent from carrying on acts in contravention to the Act
  • Issue such directions to promoters, allotees or real estate agents whenever it considers it necessary to do so
  • Impose penalty on promoters, allottees or real estate agents for any contravention of obligations
  • If RERA is of the view that any agreement or action may have effect of market power of monopoly situation then RERA may make reference of such an issue to the Competition Commission of India (CCI)
  1. Central Advisory Council

The Act provides that the Central Advisory Council shall be established by the Central Government and is entrusted with the following functions:

To advise Central Government on:

  • Matters concerning implementation of Real Estate Act
  • On questions of Policy
  • Towards protection of consumer interest
  • Foster development of real estate sector
  1. Real Estate Appellate Tribunal

Any person aggrieved by the decision of the RERA may appeal to the Real Estate Appellate Tribunal within 60 days from the date on which the copy of decision made by the RERA is received by the competent authority. The orders passed by the Appellate Tribunal are executable as decrees and a person aggrieved by the decision of Appellate Tribunal may appeal to the High Court within 60 days from the communication of order.

  1. What are the penal provisions under the Real Estate Act?

The Act entails punishment on failure to register real estate project. It states that if promoter fails to register the project as provided under Section 3 of the Real Estate Act then he shall be liable to a penalty which may extend to 10% of the estimated cost of real estate project.

The Act provides penalty for furnishing of false information i.e. details furnished by promoter while registering a real estate project.

In the last few years, there has been an enormous upsurge in the real estate sector and buildings are mushrooming in every nook and cranny of metropolitan cities in India. Owing to this extensive growth of the sector and consumers’ willingness to invest in real estate, the builders have occupied a position of dominance and the formation of standard form contracts or one-sided agreements has further worsened the situation.

However, the formulation of Real Estate Act and the recent judicial scrutiny of the alleged unfair practices carried on by builders has been exemplary. The Real Estate Act being a beneficial legislation is being liberally interpreted by the Judiciary and every effort is being made by Judiciary to mitigate difficulties being faced by homebuyers in obtaining possession of their homes for which they shell out their investments and incomes. Hence, the Act and the judicial dictums have to a great extent strengthened the position of homebuyers.