RERA Act, 2016
Seth & Associates
New Delhi | Lucknow
Government of India has enacted the Real Estate (Regulation and Development) Act
2016 and all the sections of the Act shall come into force with effect from May 1, 2017.
The key objectives of the Act being Ensuring Transparency & Efficiency in real estate
sector in regards to sale of plot, apartment, building or real estate project. Protecting
the interest of consumers in real estate sector. Establishing adjudicating mechanism
for speedy dispute redressal Establishing Appellate Tribunal to hear appeals from the
decisions, directions or orders of the Real Estate Regulatory Authority
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EFFICACY CONSISTENCY INTEGRITY
Before launching of project
1. Purchase land. Ensure there is clear title.
2. Get sanctioned plan, layout plan and specifications of the proposed project approved by competent authority.
3. Obtain necessary approvals and commencement certificate from competent authority.
4. Get drafted the proforma of allotment letter, agreement for sale, and conveyance deed.
Ensure that the draft agreement for sale prepared is in prescribed form and contains particulars mentioned in section
Appoint registered real estate agents to market the project. Their names and addresses are required to be mentioned
in registration application.
Prepare enterprise details, past project track record details, location details, affidavit etc. required by section 4(2) to
be submitted with registration application.
8. Decide on project completion schedule as the same has to be enclosed along with registration application.
Activities prior to making application for registration to RERA
Make application for registration to RERA in prescribed form and within the time prescribed along with documents
required to be enclosed by section 4(2). If and when online web-based system for submitting application for
registration is operationalized, apply online.
On receipt of application, RERA shall within 30 working days grant registration or reject registration if application is
not in conformity with Act, Rules or Regulations for reasons recorded in writing and after giving an opportunity of
being heard in the matter.
If registration is granted, then RERA will provide registration number including Login Id and password for accessing
website and create promoter’s website and fill therein details of the project.
If any show-cause notice for rejecting any application received from RERA within 30 working days, make
representation and rectify defects. If received after 30 working days, then preserve post-marked envelope and point it
out to RERA and request grant of registration within 7 working days.
If RERA doesn’t grant registration even after such request as in point no. 4 above, file an appeal to Real Estate Appellate
Tribunal or file writ petition requesting High Court for directions to RERA to grant registration within 7 working days
if so advised. Further appeal against Tribunal’s order to High Court is provided for. Applicant may appear in person or
authorize any practicing CA or practicing Cost Accountant or practicing CS or legal practitioner to appear before
If RERA fails to grant or reject the application within 30 working days as above, then within 7 working days after
expiry of 30 working days, RERA will provide registration number including Login Id and password for accessing
website and create promoter’s website and fill therein details of the project.
Application for registration of RERA
CREATION OF WEBPAGE ON RERA’s WEBSITE
• After receiving registration number including Logon Id and password, Promoter shall create webpage on RERA’s
website and enter all details of the proposed project for public viewing as specified in section 11(1).
• Advertisement or prospectus issued by promoter shall mention prominently the website address of RERA where all
details of registered project are entered and also the registration number.
• Do not indulge in any “unfair practice” to promote the sale of real estate project which term includes publication of
advertisement or prospectus of services not intended to be offered. Such practice can result in revocation of
registration by RERA.
SEPARATE BANK ACCOUNT TO DEPOSIT AMOUNT REALISED FROM ALLOTTEES
• Open a separate account in Scheduled Bank to deposit 70% of all realization from allottees from time to time to be
used for the project only on proportionate percentage of completion basis.
• Accept payments from allottees only by crossed account payee cheques or DDs or through internet banking such as
RTGS/NEFT in view of section 269SS of the Income-tax Act, 1961.
Obligations of promoter regarding insurance of real estate project
The promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not
limited to insurance in respect of –
• Title of the land and building as a part of the real estate project; and
• Construction of the real estate project.
• The promoter shall be liable to pay the premium and charges in respect of the insurance as above and shall pay the
same before transferring the insurance to the association of the allottees.
• The insurance as above shall stand transferred to the benefit of the allottee or the association of the allottees, as the
case may be, at the time of promoter entering into an agreement for sale with the allottee.
• On formation of the association of the allottees, all documents relating to the insurance as above shall be handed
over to the association of the allottees. In view of point 2.3 above, it appears that insurances including title
insurance have to be obtained before bookings commence for flats/plots/apartments.
BOOKING AND ALLOTMENT
• Without first entering into registered agreement for sale, deposit or advance exceeding 10% of the cost of
apartment /plot / building cannot be accepted by promoter. In other words, booking amount cannot exceed 10%.
• Issue of allotment letter to buyer after processing his application and realizing booking amount.
• At the time of booking and issue of allotment letter, make available to the allottee the following information
• Sanctioned plan and specification
• Stage-wise completion schedule of the project.
AGREEMENT FOR SALE
• Enter into agreement for sale in prescribed format. Get the same registered under local state law. Then accept
further progress payments as per schedule.
• Not to mortgage or create a charge on apartment/plot/building after executing an agreement for sale. If any such
mortgage or change is created, the right of allottee is not affected.
DEPOSIT OF COLLECTIONS FROM ALLOTTEES IN SEPARATE BANK ACCOUNT AND AUDIT OF UTILISATION
• Deposit 70% of booking amount and amount received at the time of agreement for sale into the separate bank
• Withdraw amounts from the separate account for project purpose only proportionate to percentage of completion
after certification by CA or engineer or architect.
• Get accounts audited within 6 months of end of financial year by practicing CA and it shall be verified during audit
that the amounts collected for the project have been utilized for the project and withdrawal is on proportionate POC
OBLIGATIONS OF PROMOTER IN CASE OF TRANSFER OF A REAL ESTATE PROJECT TO A THIRD PARTY
• The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a
third party without obtaining prior written consent from two-third allottees, except the promoter, and without the
prior written approval of the Authority.
• For this purpose, the allottee, irrespective of the number of apartments or plots, as the case may be, booked by him
or booked in the name of his family, or in case of other persons such as companies or firms or any association of
individuals, by whatever name called, booked in its name or booked in the name of its associated entities or related
enterprises, shall be considered as one allottee only.
ADHERENCE TO SANCTIONED PLANS AND PROJECT SPECIFICATIONS BY THE PROMOTER
• Develop and complete the proposed project in accordance with sanctioned plans, layout plans & specifications as
approved by the competent authorities.
• After the sanctioned plans , layout plans and specifications and the nature of fixtures, fittings, amenities and
common areas, of the apartment, plot or building, as the case may be, as approved by the competent authority, as
disclosed or furnished to the person who agree to take one or more of the said apartment, plot or building, as the
case may be, the promoter shall not make any additions and alterations in the sanctioned plans, layout plans and
specifications and the nature of fixtures, fittings, amenities, without the previous consent of that person. However,
the promoter may make such minor additions or alterations as may be required by the allottee, or such minor
changes or alterations, as may be necessary due to architectural and structural reasons duly recommended and
verified by an authorized Architect and Engineer after proper declaration and intimation to the allottee.
• Alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common area
other than minor additions or alterations are not to be made without the previous written consent or at-least two-
third of the allottees, other than the promoter, who have agreed to take apartments in such building. For this
purpose, the allottees, irrespective of the number of apartments or plots, as the case may be, booked by him or
booked in the name of his family, or in case of other persons such as companies or firms or any association of
individuals etc. by whatever name called, booked in its name or booked in the name of its associated entities or
related enterprises, shall be considered as one allottee only.
• In case any structural defect or any other defect in workmanship, quality or provision of services or any other
obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of
the promoter within a period of five years by the allottee from the date of handing over possession, the promoter
shall rectify such defects without further charge, within thirty days.
COMPLETION CERTIFICATE / OCCUPANCY CERTIFICATE
Obtain the Completion certificate or the occupancy certificate, or both as applicable from the relevant competent authority as per
local laws or other laws and make it available to the allottees individually or to the association of allottees, as the case may be.
Obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease and
certifying that all dues and charges in regard to the leasehold land has been paid, and to make the lease certificate available to the
association of allottees.
ESSENTIAL SERVICES TO BE PROVIDED TILL TAKEOVER OF MAINTENANCE BY SOCIETY
Provide and maintain the essential services, on reasonable charges, till the taking over of the maintenance of the project by the
association of allottees.
FORMATION OF ASSOCIATION OF ALLOTTEES
Enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the
same, under the laws applicable. In the absence of local laws, the association of allottees, by whatever name called, shall be formed
within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in
PAYMENT OF ALL OUTGOINGS TILL POSSESSION
Pay all outgoings until the transfer of the physical possession of the real estate project to the allottee or the association of allottees, as
the case may be, which promoter has collected from the allottees, for the payment of outgoing ( including land cost, ground rent,
municipal or other local taxes, charges for water or electricity, maintenance charges, including mortgage loan and interest on
mortgages or other encumbrances and such other liabilities payable to competent authorities, banks, financial institutions which are
related to the project).
EXECUTION OF REGISTERED CONVEYANCE DEED AND HANDING OVER OF POSSESSION
• The promoter shall execute a registered conveyance in favor of the allottee along with the undivided proportionate
titled in the common areas to the association of the allottees or the competent authority, as the case may be, and
hand over the physical possession of the plot, apartment of building, as the case may be, to the allottees and the
common areas to the association of the allottees or the competent authority, as the case may be in a real estate
project, and the other title documents pertaining thereto within specified period as per sanctioned plans as
provided under the local laws. In the absence of any local law, conveyance deed shall be executed by the promoter
within three months from date of issue of occupancy certificate.
• Hand over necessary documents and plans to allottees. After obtaining the occupancy certificate and handing over
physical possession to the allottees as above, it shall be the responsibility of the promoter to hand over the
necessary documents and plans, including common areas, to the association of the allottees or the competent
authority, as the case may be, as per the local laws in the absence of any local law, the promoter shall handover the
necessary documents and plans, including common areas, the association of the allottees or the competent
authority, as the case may be, within thirty days after obtaining the occupancy certificate.
CANCELLATION OF ALLOTMENT
• The promoter may cancel the allotment only in terms of the agreement for sale. The allottee may approach the
Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms
of the agreement for sale, unilateral and without any sufficient cause.
• Refunds on cancellation of allotment, if any, should be made by crossed account payee cheque or DD or by internet
RETURN OF AMOUNT AND COMPENSATION
• If the promoter fails to complete or is unable to give possession of an apartment, plot or building –
• In accordance with the terms of the agreement for sale or; as the case may be, duly completed by the date
specified therein; or
• Due to discontinuance of his business as a developer on account of suspension or revocation of the registration
under this Act or for any other reason,
He shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without
prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot
or building as the case may be, with interest at such rate as may be prescribed in this behalf including
compensation in the manner as provided under this Act. Where an allottee does not intend to withdraw from
the project, he shall be paid by the promoter, interest for every month of delay, till the handing over of the
possession at such rate as may be prescribed (SBI’s highest MCLR +2%).
COMPENSATION TO ALLOTTEE FOR LOSS CAUSED BY DEFECTIVE TITLE
The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on
which the project is being developed or has been developed, in the manner as provided under this Act, and the claim
for compensation for such loss shall not be barred by limitation provided under any law for the time being in force.
COMPENSATION TO ALLOTTEES FOR FAILURE TO DISCHARGE OTHER OBLIGATIONS
If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations
made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay
such compensation to the allottees, in the manner as provided under this Act.
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Links to our RERA Presentations
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Contact for RERA
CA Dhruv Seth
Partner in Charge
New Delhi Lucknow
C-7, Sector A Ground Floor, AI Apartments
Vasant Kunj – 110070 Jopling Road – 226001
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after a thorough examination of the particular situation.