Real Estate (Regulation and Development) Act, 2016 –Introduction, Impact and Outcome on Real estate Sector in India by Komal Jain & Karuna Jain


The Real Estate sector is one of the most globally well-known, recognized and acquainted service sector which is largely disorganized. In India, real estate is the second largest employer which creates employment opportunities for 45 million people, directly or indirectly after agriculture and largest contributor to exchequer and is supposed to grow unprecedently at the rate of 30 per cent over the next decade. According to the report published by Government of India Ministry of Skill development and entrepreneurship, the market value of construction sector in India is projected to expand up to INR 11954 billion by2017 and is expected to contribute 8.2% to Indian GDP.

The Indian Real Estate sector is largely unorganized and dominated by a large number of small players, with very few corporate or large players having national presence compared to the other more developed Asian and Western markets. Restrictive legislations and lack of transparency in transactions are main impediments to the growth of this sector.

Lot of black money is being generated as there is no control over the registration of sale deeds with the full value of transaction. Non payment of income tax and reduced stamp duty are two areas which lead to substantial loss of revenue to the Governments. A thriving parallel economy is dangerous to the society in general. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial.

 The last few years have seen unprecedent, tremendous growth and development in the sector and prices of properties have gone up abruptly. Further, there has been a spurt in foreign investment as well. Hence, for a long time a urgent need was felt to regulate and organize this sector also.

The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. To address the emerging need, Government has been trying for several years to introduce a Real Estate Bill. A first draft was prepared by the Ministry of Housing and Urban Poverty Alleviation (the Housing Ministry) of the Government of India in September, 2009 and has undergone several revisions pursuant to detailed deliberations with State Governments and concerned Central Government Ministries. The Housing Ministry uploaded a draft of the Bill on its website in November 2011 for obtaining comments/suggestions from the public. The latest draft of the Real Estate (Regulation and Development) Bill, 2013 (the Bill) was approved by the Union Cabinet on June 4, 2013. Finally the bill was passed in both the legislative houses and received assent of president on 25th March, 2016.Union Ministry of Housing and Urban Poverty Alleviation had given time till May 1, 2017, to formulate and notify rules for the functioning of the regulator.



Reasons and Objectives for enactment of Act:

The market value of construction sector in India is projected to expand up to INR 11954 billion by 2017. Demand for affordable housing is more likely to increase from current level of 29 million households to more than 38million households by 2030. Hence to focus on eliminating the constraints of the stake holders, Government has enacted the Real Estate (Regulation and Development) Act 2016.This is forward step by the Government to usher a regulatory authority to deal with the present unorganized housing sector. A much awaited transparency and accountability of the developers towards its consumers is the major highlight

The New Act proposes to establish a regulatory oversight mechanism to enforce disclosure, transparency, fair practice and accountability norms in housing transactions and establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer.

The Act essentially seeks to protect the interest of the allottees/purchasers by promoting efficiency in the construction and execution of real estate projects by promoters. It also holds the promoters accountable for not registering their projects with the Real Estate Regulatory Authority (Regulatory Authority) or for providing insufficient information regarding their project. In addition to the promoter and allottees, the Bill also brings real estate brokers who facilitate the sale and purchase of units in a project within its ambit.

The Act would regulate the real estate sector that involves over 76,000 companies and is expected to trigger a “new era” of transparency and efficiency for both the buyers and developers


Important provisions of Act

  1. Registration:

The act makes it mandatory on real estate promoters and agents who advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building to register their projects above 500 square meters or eight apartments inclusive of all phases with RERA. For those projects which have not received completion certificate on the date of commencement of the Act, will have to seek registration within 3 months.

  1. Application and list of documents required:

Act provides that application for registration shall be made to state-level Real Estate Regulatory Authorities in specified form accompanied by fees along with following documents:-

  • Details of the promoter (such as its registered address, type of enterprise such proprietorship, societies, partnership, companies, competent authority);
  • A brief detail of the projects launched by the promoter, in the past five years, whether already completed or being developed, as the case may be, including the current status of the projects, any delay in its completion, details of cases pending, details of type of land and payments pending;
  • An authenticated copy of the approval and commencement certificate received from the competent authority and where the project is proposed to be developed in phases, an authenticated copy of the approval and commencement certificate of each of such phases;
  • The sanctioned plan, layout plan and specifications of the project, plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof and the locational details of the project;
  • Proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with the allottees;
  • Number, type and carpet area of the apartments and the number and areas of garages for sale in the project;
  • The names and addresses of the promoter's real estate agents, if any, and contractors, architects, structural engineers affiliated with the project; and
  • A declaration by the promoter supported by an affidavit stating that:
  1. he has a legal title to the land, free from all encumbrances, and in case there is an encumbrance, then details of such encumbrances on the land including any right, title, interest or name of any party in or over such land along with the details;
  2. the time period within which he undertakes to complete the project or the phase; and
  3.  70% of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.


  1. Setting up online portal:

Act mandates an authority to operationalize a web based online system for submitting applications for registration of projects within period of one year.

  1. Time frame for acceptance or rejection of application:

On receipt of application, Authority can either proceed to grant registration or can reject within period of 30 days. But opportunity of being heard shall be given to applicant. Such registration shall be valid for period as mentioned by promoter. Further registration can also be extended by authority.

  1. Promoter to create web page and mention various details:

The promoter shall, upon receiving his login Id and password, create his web page on the website of the Regulatory Authority and enter all details of the proposed project including:

  1. details of the registration granted by the Regulatory Authority;
  2. quarterly up-to-date list of the number and types of apartments or plots or garages, as the case may be, booked;
  3. quarterly up-to-date status of the project along with the list of approvals obtained and approvals pending subsequent to commencement certificate; and
  4. such other information and documents as may be specified by the regulations made by the Regulatory Authority

 6. Promoter Liability:

  1. Promoter shall be liable to compensate or make good any loss/damage caused to any person who has made advance or deposit on the basis of information in notice, advertisement or prospectus.
  2. promoter shall be liable to refund the amount along with the interest, in case if he fails to complete or is unable to give the possession of property to allotees.
  3. promoter shall be labile to compensate the allottees for loss caused due to defective title of land.
  1. Maximum amount to be accepted by promoter:

 A promoter shall not accept a sum more than 10% of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale.

  1. Time frame for completion of projects:

The promoter is supposed to complete the project within the time frame mentioned in sanctioned plan, layout plan and specifications.

9. Consent to be taken for Addition or alteration in projects:

  1. The promoter cannot make any addition or alteration in the approved and sanctioned plans, structural designs, specifications and amenities of the apartment, plot or building without the previous consent of the allotees.

  2. The promoter also cannot make any other addition or alteration in the approved and sanctioned plans, structural designs and specifications of the building and common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments in such a building

10. Consent to transfer or assign rights and liabilities to 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.

11. Liability of promoter to insure and pay premium and all charges:

 The promoter shall properly insure and pay premium and all the charges not limited to land and building and construction of project. Such insurance shall be transferred to the benefit of allotee or association of allottees.

12. Establishment of Regulatory Authority:

  1. Within the period of one year from the date of enforcement of the Act, government shall establish authority known as “Real Estate Regulatory Authority”.
  2. Authority shall appoint chairman and not less than two whole time members and such number of officers.
  3. All applications, complaints or cases pending with the Regulatory Authority designated, shall stand transferred to the Regulatory Authority so established
  4.  Chairman and members shall hold office for a term of five years or until they attain 65 years. 
  5. The Authority shall meet at such places and times, and shall follow such rules of procedure in regard to the transaction of business at its meetings, (including quorum at such meetings), as may be specified by the regulations made by the Authority.

 13. Establishment of Central Advisory Council.

  1. Act empowers the Central Government to establish central advisory council which shall consist of representatives of the Ministry of Finance, Ministry of Industry and Commerce, Ministry of Urban Development, Ministry of Consumer Affairs, Ministry of Corporate Affairs, Ministry of Law and Justice, Niti Aayog, National Housing Bank, Housing and Urban Development Corporation, five representatives of State Governments to be selected by rotation, five representatives of the Real Estate Regulatory Authorities to be selected by rotation.
  2. The Central Advisory Council shall also consist of not more than ten members to represent the interests of real estate industry, consumers, real estate agents, construction labourers, non-governmental organizations and academic and research bodies in the real estate sector

14. Establishment of Real estate appellate Tribunal:
  1. Act empowers the Central Government to establish an Appellate Tribunal to be known as the — (name of the State/Union territory) Real Estate Appellate Tribunal.
  2. Every bench of the Appellate Tribunal shall consist of at least one Judicial Member and one Administrative to Technical Member.
  3. Any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer under this Act may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter.
  4.  Every appeal made under sub-section (1) shall be preferred within a period of sixty days from the date on which a copy of the direction or order or decision made by the Authority
  5. The Appellate Tribunal shall consist of a Chairperson and not less than two whole time Members of which one shall be a Judicial member and other shall be a Technical or Administrative Member, to be appointed by the appropriate Government.

15. Offences, Penalties And Adjudication
  1. If promoter does not register its project with the Regulatory Authority – the penalty may be up to 10% of the estimated cost of the project as determined by the Regulatory Authority;
  2. If promoter does not comply with the aforesaid order of the Regulatory Authority -  imprisonment of up to three years and a further penalty of up to 10% of the estimated cost, or both; and
  3. In case the promoter provides any false information while making an application to the Regulatory Authority or contravenes any other provision of the Act – the penalty may be up to 5% of the estimated cost of the project or construction

16. Constitution of fund:

Government shall constitute a fund to be called the 'Real Estate Regulatory Fund' and there shall be credited thereto,—

(a) all Government grants received by the Authority;

(b) the fees received under this Act;

(c) the interest accrued on the amounts referred to in clauses

17. Application of fund:

  1. the salaries and allowances payable to the Chairperson and other Members, the adjudicating officer
  2. the administrative expenses including the salaries and allowances payable to be officers and other employees of the Authority and Tribunal;
  3. the other expenses of the Authority in connection with the discharge of its
  4. functions and for the purposes of this Act.

18. Budget, accounts and audit:


The Authority shall prepare a budget, maintain proper accounts and an annual statement of accounts and shall cause such statements to be audited by Comptroller and Auditor General of India.

Legal remedies available to homebuyers against builders for unfair practices adopted

The residential real estate sector has been abuzz with news of frauds and project delays. A homebuyer who is the victim of the unfair, negligent or fraudulent practices of the builder has the following remedies available to him.

1. Civil remedy:

 In a situation where a builder commits a breach of obligations as per the Agreement, homebuyers can approach a Civil Court and file a suit for injunction/damages or refund of amount and interest thereof under the Code of Civil Procedure, 1908. When the builder commits any unfair trade practice during the execution of his obligations as per the Agreement between the builder and the buyer, the homebuyer can approach civil court against the builder for recovery of the amount already paid by him.

2. The Competition Commission of India:

In case where a homebuyer/consumer feels that the builder has used his dominant position leading to disadvantages to the buyer, the buyer can approach Competition Commission of India to file a complaint against a builder for abuse of dominant position as per the Competition Act, 2002. The Competition Commission of India shall investigate anti-competitive practices of the builder and impose stringent penalties on the offenders in case they’re found guilty. The Competition Commission has in fact been very active in this sphere and has imposed hefty fines against the builders taking undue advantage of their dominant position to the disadvantage of the homebuyers

3. Consumer Forum:

A homebuyer can within two years from the date of dispute with the builder regarding the property, file a complaint under section 12 of the Consumer Protection Act, 1986 before the Consumer Forum for any deficiency in services on part of builder under the agreement between homebuyer and the builder. A homebuyer is considered a consumer as per the Consumer Protection Act, 1986 provided he buys the house for his own use and not for any commercial purpose.

An example of deficiency in services is when the possession of the property is not delivered within stipulated period. The delay so caused is denial of “service”. Such disputes or claims are termed as deficiency in rendering of service of particular standard, quality or grade.

4. The Real Estate (Regulation And Development) Act, 2016:

A homebuyer/allottee can complain to regulatory authorities like RERA (Real Estate Regulatory Authority) against the non-compliance of statutory obligations imposed upon the builder. An allottee can file with the authority or the adjudicating officer, a complaint under sec. 31 of The Real Estate (Regulation And Development) Act, 2016.

In cases where the builders makes false promises to the flat purchasers and do not comply with their statutory obligations, the homebuyer/allottee now has an option to file a complaint under RERA or file criminal case in a Criminal Court against the builder along with the consumer complaint to be filed in consumer forum

5. Criminal Complaint:

The homebuyer/allottee can file a criminal complaint under the provisions of the Indian Penal Code, 1860 for cheating, breach of contract, not responding to the grievance, poor quality of construction, etc. The allottee can issue a statutory notice to the builder. In case the builder does not respond to the notice, parties have a right to approach the Criminal Court. The complainant should bring out irregularities committed by the builders.

6. Arbitration Clause:

If there is an ‘Arbitration Clause” in the Builder Buyer Agreement, Arbitration can be preferred under the Arbitration and Conciliation Act, 1996.wherein an independent person can be mutually appointed to resolve the dispute.

Important legal documents that home buyers should be aware of before buying a property:

Buying real estate property can be an expensive affair and it is next to impossible to buy a house without financial assistance. It is therefore necessary to take precautions and ensure that the hard earned money invested into such property is not only safe but secured to the fullest extent. This highlights the need for a proper due diligence. Also, a purchaser needs to be aware of the following the basic legal documents before purchasing an immovable property

  1. Original Title Documents

The title documents means the flow of title devolution from one owner to another and culminating with the current owner/ seller who is selling the property. In case the original title documents are not with the seller, then there are chances that the title documents are deposited with the banks/ financial institution for the purpose of creation of mortgage and the same also needs to be verified by the purchaser

  1. Search Report

The title search report is usually issued by the search clerk after conducting searches in the offices of the concerned sub-registrar of assurances, to verify the entries on record in relation to the subject property, and by virtue of that, one can trace of the flow/ devolution of title as mentioned aforesaid. Additionally, the search clerk also reports, as to whether there is any Lis Pendens (pending litigation) notice registered with the office of concerned sub-registrar of assurances.

  1. Title Certificate

Title Certificate is issued by an Advocate based on the Title Search Report and the title documents verified by the Advocate in respect of the subject property. The Advocate should ideally also search in the concerned Courts as to whether any litigation is pending in relation to the subject property. Such a certificate should also cover the claims, if any received, in response to the public notice issued in the local newspapers, to be published, one in English and other in the Regional language.

  1. No Due Certificate

No Due Certificate is issued by banks/ financial institution after repayment of the loan and clearance of charge/ mortgage by the banks/ financial institution, so as to rule out any claims by the Banks and to assure that the subject property is free from encumbrance.


  1. Sanctioned Layout Plans

It means the layout plans of the structure, which has been duly sanctioned/ approved by the concerned competent authority including the municipal corporation. In case the subject structure is not in terms of the sanctioned layout plans, then it is not advisable to purchase such property, since it is a clear indication of violation of the sanctioned layout plans and applicable laws

  1. Occupation Certificate

The occupation certificate is issued by the corporation, certifying that the subject property/ structures constructed upto relevant floors of the building, can be occupied by the purchaser. This indicates that the developer/ erstwhile owner/ seller has constructed the structure in terms of the sanctioned layout plans and has also complied with various other building norms and obligations

  1. Bills and Receipts

Latest Property Tax bills, Electricity bills, maintenance bills together with the paid receipts should be verified, since the same clarifies about the arrears, if any, in relation to the subject property.

  1. For Purchase of Land

In case of purchase of land, in addition to some of the above mentioned documents, one must also verify (i) Extracts: This document indicates the name of the owner, name of the person having other rights such as, lessee/ mortgagee, the area admeasurements and cultivation in the land, and/ or (ii) Mutation Entries: This document records entries regarding devolution of title in relation to the subject property.

Role and Opportunities for Company Secretaries:

With the arrival of new legislature act, ample of new opportunities has also arrived. Company secretary being compliance and governance officer is supposed to play advisory role to advise and guide the promoters and real estate agents in relation to subject matter of the RERA Act and shall explain the procedural aspects for obtaining registration, opening of bank accounts and other compliance related matter that are required to be fulfilled in true letter and spirit.

Company secretary can provide guidance to promoters required in discharging their duties, responsibilities and powers under the said act.

Company secretary can act as legal representor before various appellate and advisory authorities established under Act in relation to compounding of offences.

Being a good draftsmen, Company secretary have to present and prepare search and status report and vetting of various agreements like sale deed, agreement for sale, power of attorney, etc.


With exponential growth of real estate sector need was felt to regulate and legislate it. RERA act being enacted for the first time in the Indian history is considered to be trend setter in whole world. This act is expected to evict and expel all the illegal transactions that were done by promoters and real estate agents. It has been estimated that total FDI in real estate sector would reach to US $ 180 Billion by 2020 and would account for 8.4% of total inflows into the country. The implementation of this act poses big challenge to legislators. Being citizen of India, We all shall take pledge to promulgate this act and to work in more transparent and efficient manner towards contribution of robust economy thereby making Indian Real estate sector more organized one.


Author's Details:-

Komal Jain, ACS                                                                                                             

Karuna Jain, ACS

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