In this article, Ruchika Daga discusses the penalties for non-compliance with different provisions of RERA.
What is RERA?
The Real Estate Regulation and Development (RERA) Act, 2016 is regarded as one of the landmark legislation passed by the Government of India. The aim of this act is a reformation of the real estate sector in India, encouraging transparency, accountability, and financial discipline. As India has a vast and growing economy this act would be very beneficial as in future many people will be investing in real estate sector. By Implementation of RERA act, it is expected to boost the demand in the real estate sector.
The Government of India passed the Real Estate Regulatory Bill in March 2016. The Act came into force from 1 may, 2016 (with 69 sections notified). Remaining provisions came into force on 1 may, 2017. As per the rating agency ICRA, though the RERA came into effect on 1st May 2016 the delay in issuing notification may dilute the proper implementation of this Act.
RERA is a regulatory body with the sole motive of protecting the interests of consumers. As there has been increasing number of complaints against the builders/ developers, mostly related to delay in possession to homebuyers, faults in the society, and irresponsible behaviour of promoters after the signing of the agreement.
The Act makes it mandatory for the promoters to disclosure information which include details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc. to the consumer.
Penalties for non-compliance with provisions of RERA
The Real Estate (Regulatory and Development) Act, 2016 is the first in Real Estate Sector that provides for rules and regulations. This Act specifies the details rules and regulation for the proper process of registration and maintaining transparency, the Act also prescribes the penalty for different kind of offences. Under penalties for non-compliance with the Act, RERA 2016 recommends imprisonment for a term which can be extended up to three years or a fine which may extend up to 10% of the cost estimated of the real estate project, or both. However, most states have added a clause of compounding of offence to avoid imprisonment.
A. Offence-wise Penalties for Promoters
| Section | Offence | Penalties |
| Section 59 | Non-registration of a project | 10% of estimated cost of real estate project |
| Section 59 | Not obeying orders or directions in connection with the above offence | Imprisonment up to 3 years with an or without fine being 10% of the estimated cost of real estate project |
| Section 60 | Providing false information etc. and other conventions | 5% of the estimated cost of real estate project |
| Section 61 | Contravention of any order of the RERA | Penalty for every day of defaults which may cumulatively extend up to 5% of the estimated cost of real estate project |
| Section 64 | Contravention of the orders or direction of the appellate tribunal | Imprisonment up to 3 years with or without fine which may cumulatively up to 5% of estimated cost of real estate project. |
B. Offence-wise Penalties for Real Estate Agents
| Section | Offence | Penalties |
| Section 62 | Contravention of the applicable provisions of the Act | Rs. 10,000 per day of defaults which may extend up to 5% of the cost of the property |
| Section 65 | Contravention of the orders or direction of the RERA | Penalty on a daily basis which may cumulatively extend up to 5% of the estimated cost of the property whose sale or purchase was facilitated |
| Section 66 | Contravention of the orders or direction of appellate tribunal | Imprisonment up to 1 year with without fine which may extend up to 10% of estimated cost of project |
C. Offence-wise Penalties for Allottees
| Section | Offence | Penalties |
| Section 67 | Contravention of any order of the RERA | Penalty for the period during which defaults continues which may cumulatively extend up to 5% of the apartment or building cost |
| Section 68 | Contravention of the orders or direction of appellate tribunal | Imprisonment up to 1 year with or without fine for every day during which such defaults continues, which may cumulatively extend up to 5% of the apartments or be building cost |
State wise RERA implementations
| State | Implementation status | Penalties for non-compliance |
| Andhra pradesh | 27 March 2017 | Diluted – Compounding of offence clause has been included to avoid imprisonment, 10% of project cost as penalty |
| Bihar | 27 April 2017 | Diluted – Compounding of offence clause has been included to avoid imprisonment and kept 10% of project cost as the penalty. |
| Kerala | 3 February 2016 | Inline – Imprisonment for a term which may be extended up to three years, or with fine which may extend up to 10% of estimated cost of the real estate project, or both. |
| Madhya Pradesh | 22 October 2016 | Diluted – Imprisonment for a term which may be extended up to three years, or with fine which may extend up to 10% of the approximate cost of the real estate project, or both. |
| Maharashtra | 20 April 2017 | Diluted – Did not mention imprisonment penalties and also there is no clarity on monetary fines/penalties as the percentage of total real estate project cost.
The fine imposed on builders is either double of the registration fees of Rs 2 lakh, whichever is higher if the provisions are not been followed up. |
| Rajasthan | 1 May 2017 | Diluted – Compounding of offence clause has been added to avoid imprisonment, 10% of project cost as the penalty has been kept under.
Initially real estate developers had to pay 2% of the project cost or 10 times the registration fee as the penalty, whichever was higher for the delay in process of registration As of now, the fines have been increased from 2% to 10%, and this rate is now current, since October 1st, 2017. |
| Uttar pradesh | 27 October 2016 | Diluted – Compounding of offence clause is included to avoid imprisonment term, 10% of project cost as penalty
Deadline for real estate companies was set for 15 August 2017 but many companies have still not registered. Penalties were decided by the UP RERA authorities as: Registration between 16 – 31st Aug 2017 – Fine would be equivalent to 1% of the cost of the project. Registration between 1- 15th Sep 2017 – Fine would be equivalent to 5% of the cost of the project. Registration between 16-30th Sep 2017 – Fine would be equivalent to 10% of the cost of the project. |
| Odisha | 25 February
2017 |
Diluted – Compounding of offence clause which is included to avoid imprisonment, 10% of project cost as the penalty. |
Will ongoing projects be covered under RERA?
Yes, ongoing projects are covered under RERA which started before RERA was enacted.
Ongoing projects are the projects which are under construction. The RERA Act, 2016 usurps promises for the existing buyers of real estate properties, both residential as well as commercial, who have still not got possession of their properties. Now “According to the RERA Act passed by Parliament in 2016, every ongoing and under-construction project is supposed to come under the ambit of the regulator.
The developers who still has under construction projects will have to face lots of hardships due to RERA. As per the Act, all the ongoing projects will have to now get registered in the first place with the regulatory authority before moving further in the process of completing the project. They are forbidden from advertising or promoting the property before registration of the same.
These steps are beneficial for the purchaser of the property as this will protect their interest. However, this will also delay construction and sale of existing property greatly. RERA also makes it mandatory for builders or constructor to issue occupation or completion certificate before granting over possession to the respective buyer. As of today, there are lakhs of flats in all metropolitan cities of India like Mumbai and Bangalore who have failed to do so. The steps further to regularise such properties remains vague. One more concern for these developers or builders is whether they will get the certificates on time or not? And Lastly, in cases where developers seek an extension, the amount of time granted for project completion would depend upon the concerned authority.
Real Estate Appellate Tribunal
The Real estate Appellate Tribunal is a quasi-judicial body, which has been established under section 43 of the RERA act. (was required to be established within one year of commencement of section) and the Tribunal is empowered the appropriate government to assign an existing appellate tribunal (under any law in force) to function as an appellate tribunal under this act and to hear appeals from the Judgements/orders/decisions/directions of the Regulatory Authority or the Adjudicating Officer, in the case accordingly. The application form, procedure, and the fees which are payable on the filing of the appeal and the manner for hearing and disposing of the appeal are to be in the Rules which is to be made by the appropriate Government.
How Chairman and the Members of the Appellate Tribunal are appointed?
The Tribunal must comprise of minimum two Members one of whom should be a Judicial Member and the other shall be a Technical or Administrative Member. According to section 46, the Chairman of the Appellate Tribunal must be a sitting or retired Judge of the High Court. And the Members of the Tribunal on the recommendation of a standing committee which comprise of Chief Justice of HC (or else his nominee), the Law Secretary and the Housing secretary are required to be appointed by the appropriate Government. This section also provides for the qualification that is required as major criteria for the appointment of the Judicial / Administrative Members.
Can an appeal be filed against the orders of the Appellate Tribunal?
Any person aggrieved or distressed by the order of the Appellate Tribunal can file an appeal to the High Court.
What is the time period within which the appeal is required to be disposed of by Appellate Tribunal?
As per Section 44 of the act the Appellate Tribunal should venture or attempt to dispose of the appeal as efficiently as possible but it cannot take more than sixty days from the filing of the appeal. However, if the tribunal did not dispose of the case during the said period the Appellate Tribunal is required to give and record its reasons for the same.
Main concerns of the aggrieved home buyers
The aggrieved buyers have resorted to all types of measures to express their anger and frustration starting from conducting a demonstration to the filing of FIRs/consumer complaints against the Builder. Even after a lot of positive and favourable judgments by the Courts in favour of the home buyers, still, not even 10% of the distressed home buyers have approached the Court or authorities for redressal of their grievances. One of the major reason for not approaching the Court is the anticipation or expectation of Real Estate (Regulation and Development) Act, 2016 (RERA) and its effect on dispute resolution.
Before RERA Act there were a lot of problems faced by the home buyers that are as follows:
- Delay for Possession
- For some of the projects, construction not even started and money of the buyers are already invested.
- Increasing demands by the Builders at the time of giving possession like charging for an increase in the super area etc.
- Change in the layout plan or building plan by the Builder, leading to frustration to the purchaser of the home buyer.
- Builder defaulting on payment of EMIs to the bank.
How can buyers approach RERA against dishonest builders?
Jurisdiction (Where to file the case) – A buyer can file the complaint with the Authority of the State where ever the property is situated.
Appeal (After the verdict, where will the appeal lie) – After adjudicating the dispute by the concerned Authority under RERA, an appeal will lie to the Appellate Authority, after Appellate Authority to the HC (High court) of the State where the property is situated or constructed and then finally to the SC (Supreme Court).
Projects which have been delivered and the Ongoing project – Projects where the completion and occupation certificates have been granted are outside the scope of RERA. Since RERA has been diluted under the Rules by many of the states, home buyers for the on-going projects where the builder has already obtained part completion certificate will be outside the scope of RERA.
Another Legal remedy during pendency – The Rules for most states, an undertaking is taken from the Complainant at the time of filing a complaint to the Authority under RERA, that the buyer has not made any other complaint. But this clearly restricts the right of the buyer to claim relief.
Procedure to file a complaint under RERA
Step 1: A consumer or any association of distressed buyer can approach the Real Estate Regulatory Authority (RERA) or the adjudicating or determining officer in charge to file a complaint.
Step 2: The authority decides the fees.
Step 3: It is the discretion of the authority whether to direct the grievances to be heard and adjudged by a single bench of either the chairperson or any member of the authority.
Step 4: After the appointment of an adjudicating officer, the Appellate Tribunal holds an inquiry in an authorized manner, after giving any person a reasonable opportunity of being heard.
Step 5: The case is to be settled within 60 days from the date of receipt of application. Redressal for claiming compensation would be dealt by the adjudicating officer in charge as efficiently and speedily as possible.
Is there any time restriction for filing a complaint under RERA?
If any kind of rules and provision laid out in RERA is found in dealing. It is advisable to act fast in filing a complaint without delays and within a reasonable time. Though there is no time limit to file a complaint under Real estate regulatory authority (RERA). Still, the provisions of Limitations Act, 1963 is to be adhered to make sure that RERA proves its efficiency when approached in a reasonable time being. Also, this Limitation Act will prevent the misuse of RERA act.
What are the Benefits for home buyers under RERA?
Buyers can get the following benefits stated below based on the nature of their complaints
- Buyers can get temporary or permanent relief depending upon the nature of the case.
- They may question the promoters or builders for late delivery or possession.
- Can expect a speedy settlement of the complaint.
- They can be assured of no ambiguity, vagueness and uncertainty in area measurements.
- Can uphold promoters or builders liable for delayed delivery or possession and claim compensation for the same.
- They enjoy security and protection from an adjudicating authority governing the real estate deals.
This bill is the best thing happened to the home buyers and buyers of properties of various kinds. With such bill in place, buyers can invest in properties fully protected and secured from all the aspects, and in case of any dispute, they are come out of it easily, in a short time span.
A very useful site. Deals with genuine questions and provides appropriate answers to home buyers.
Improving the typo errors and the grammatical issues is recommended.
Implementation of RERA has indeed made things difficult for the crooked developers. Their every detail are available to the government. And, now the home buyers are much safer than before.
Excellent article on RERA. Need to wait and see how it pans out !