Buying a home represents the most treasured desire for individuals. The real
estate industry plays a pivotal role in realizing this dream by establishing
residential communities and townships. However, we have witnessed numerous
instances of unscrupulous builders perpetrating fraud to deceive innocent home
To address this issue, the Real Estate (Regulation and Development) Act,
2016 (RERA) was enforced as a measure to combat such misconduct. This
legislation aims to bring transparency in the real estate sector and to address
the grievances of home buyers, builders, brokers, and agents.
Need for the RERA Act, 2016:
- To regularize the real estate sector. Earlier, home buyers had a remedy under the Consumer Protection Act, 1986. But it was inadequate to deal with the grievances of home buyers. Hence, the need was felt to enact a separate and stringent legislation that effectively deals with the issues of home buyers and promoters.
- To protect the home buyers from frauds and to uplift the investments in the real estate sector.
- To establish an authority which could act as a watchdog for the real estate sector and provide speedy dispute resolution to home buyers.
- To balance the interests of home buyers and promoters by fixing a set of responsibilities on both.
- To fix accountability on builders towards allottees and consumers.
Key Provisions under RERA Act, 2016:
- Section 3 of RERA Act, 2016 states that no promoter can advertise, book, sell
or offer for sale the project without prior registration with RERA. However,
certain categories are exempted from registration as given under proviso to
Section 3 of the act.
- Section 13(1) of the RERA Act, 2016 establishes a limit on the initial
payment, commonly referred to as token money, that a builder can request from a
buyer during the booking process. This section stipulates that the promoter may
only receive up to 10% of the total property cost as an advance payment from the
buyer after formalizing a written sale agreement. In commercial terms, this
agreement is know as Builder Buyer Agreement (BBA).
- RERA Act states that at least 70% of the buyer's and investor's money
will be deposited in a special account known as "Escrow Account". The funds
held in Escrow Account must not be redirected or used for any other purpose.
- Promoters failing to follow RERA rules may face penalties of up to 5% of
the property's estimated cost
- Section 34 of RERA Act, 2016 states that to maintain transparency and
accountability, promoters shall make periodic submissions to RERA authority
about project's development. Home buyers can also track the progress of project
on the RERA website.
- RERA Act, 2016 has standardized and codified "Carpet Area". As per
section 2(k) of RERA Act, 2016, "carpet area" means the net usable floor area of an
apartment, excluding the area covered by the external walls, areas under
services shafts, exclusive balcony or verandah area and exclusive open terrace
area, but includes the area covered by the internal partition walls of the
apartment. After introduction of RERA Act, 2016, builders and agents are
mandated to sell apartments/property based on carpet area only.
RERA Carpet Area=Net Usable Area of Apartment + Internal Partition Wall Areas
- Restriction on delay of projects-As per RERA Act, 2016, builders must complete
the project within the stipulated time as per agreed contractual terms. If
builder fails to so, it will attract penalty and allottee can claim delayed
possession interest from RERA Court. (DPI shall be 2% + Lending rate offered by
How to file RERA Complaint?
Section 31 of the RERA Act, 2016 prescribes complaint procedure. Any aggrieved
person may file a complaint with the RERA authority or adjudicating officer for
any violation or contravention of provisions of this act against any promoter,
allottee or real estate agent. Process of filing a complaint can be initiated
The following steps outline the process for filing a complaint:
Step -1. Go through the HRERA (filing of Complaints) Regulations carefully. 
Step-2. Go to the Home Screen of HRERA-Panchkula/Gurugram web portal and click
on tab "Complaints".
Step-3. Fill up the complaint registration form and follow the steps prompted by
Step-4. After submitting the form, you will receive an online complaint no from
system. This complaint number will be used for all future correspondences.
Step-5. Make payment of requisite fee, Complaints fees @ Rs.1000 per complaint
plus Rs.10 per annexure attached with the complaint by way of Demand Draft in
favour of Haryana Real Estate Regulatory Authority (Gurugram), payable at
Gurugram Bank Branch/Online Payment Gateway/ Online Payment Gateway.
Step-6. Take a printout of the Registration Form (Performa-B) and make 03
Step-7. Separately type out the Detailed Complaint in the format prescribed in
the Regulation. Make 03 copies of the detailed complaint form and attach with
the documents as mentioned in Step-6.
Step-8. Annex a copy of a certificate declaring that a self-signed copy of
complaint has been sent to the Respondent directly and attach that certificate
with the Complaint.
Step-9. Physically deliver 03 copies of the set comprising of Complaint
Registration Form and Annexure and Demand Draft of Fees Paid and Detailed Typed
Complaint and Self-declared and signed certificate (Step 8) in the office of
Authority by hand or by post at the address.
Step-10. Check the status of complaint regularly on www.haryanarera.gov in by
entering the complaint details.
Vinod Kumar Agarwal v. Jaipur Development Authority (Rajasthan RERA)Here the issue was whether the provisions of RERA will have an overriding effect
over the provisions of local laws?
Can the promoter demand cost of plot more than 10% before execution and
registration of sale agreement?
It was held that provisions of RERA have an overriding effect over the
provisions of local laws.
The forum further directed that the promoter of a real estate project shall not
accept amount of more than 10% of the cost of the plots as advance payment
without first entering into an agreement recording the transaction.
Baldev Singh v. Ultratech Township Developers Private Limited (Panchkula RERA)The question, in this case, was whether an allottee can demand a refund while
withdrawing from a project which was nearing completion?
The Authority held that it not only protects the interest of the buyers but
promotes orderly growth of the real estate industry through efficient project
execution in the interest of the larger public. In case the relief of refund is
granted to the complainant, interests of the rest of the non-complainant
allottees could also get seriously jeopardised. Moreover, the flat of the
respondent is complete and ready for possession and the complainant can take
possession of the flat after clearing his pending dues.
Pioneer Urban Land and Infrastructure Limited vs. Union of India
(Supreme Court)In 2018, the Insolvency and Bankruptcy (Second Amendment) Act, 2018 was passed
by the Parliament of India. The said amendment introduced a deeming fiction that
definition of "Financial Creditors" shall include "Allottees" of a real estate
project under its ambit. In this case, the constitutionality of the said
amendment was challenged.
The Apex Court upheld the constitutionality of the amendment and recognized the
inclusion of "allottees" of real estate project within the definition of
"Financial Creditors". This case involved a 'committed returns scheme', under
which the homebuyers pay for their property while the developer makes periodic
payments to the homebuyers until the handing over of possession. In this case,
"committed return" was accepted as "consideration for time value of money".
The RERA Act has become a protective shield for homebuyers, and the way forward
entails the rigorous enforcement of its provisions. This legal framework has
brought about a positive transformation in the entire real estate sector. To
maximize its benefits, it is essential to expedite the disposal of cases.
would further add on that Government accountability is also crucial here
because, in some instances, government agencies are responsible for project
approval delays. These delays ultimately result in builders being unable to
provide buyers with timely property possession, causing significant hardship for
homebuyers due to bureaucratic hurdles.
- Complaint no.92 of 2020
- 2019 SCC OnLine SC 1005
Award Winning Article Is Written By: Ms.Radhika Verma
Authentication No: NV332932960526-25-1123