By Legum Pacific Editorial ·
Suppose you have booked a flat and paid instalments from your savings or a housing loan. The builder shows a brochure, takes money and promises a date of possession. Months or years pass and work is late. You worry about your money and future EMI burden.
What does the law say?
The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to regulate the contractual relationship between homebuyers and promoters. The law aims to bring transparency and accountability in the real estate sector. It requires registration of projects and creates State/UT Real Estate Regulatory Authorities, Adjudicating Officers and Appellate Tribunals to deal with disputes. The law calls for quicker disposal of matters, and for homebuyers to be protected from unfair practices.
How does project registration work?
RERA requires promoters to register eligible projects with the Regulatory Authority before any advertisement, marketing, booking or sale. The official material gives an example threshold: projects above 500 square metres and projects with more than eight apartments require registration.
At registration the promoter must furnish project details. These include the sanctioned plan, layout plan, project specifications, the proforma of allotment letter, the agreement for sale and the proposed conveyance deed. The promoter must also state the number and type of units, the carpet area of apartments and garages, and the time period for completing the project.
The promoter must mention the RERA registration number in every advertisement or prospectus for the project. Real estate agents who deal in projects also need to register with the State Regulatory Authority.
What financial protections exist for homebuyers?
RERA requires that 70% of the money collected from homebuyers for a project be kept in a separate bank account. That money may be used only for the construction of that project and for the land cost. Withdrawals from this account are linked to certifications by the engineer, architect and chartered accountant about project progress.
The law also states that no deposit or advance should be taken by the promoter without first entering into an agreement for sale with the homebuyer. These measures aim to reduce diversion of funds and protect amounts paid by buyers.
The Ministry press material also states that a promoter who advertises, markets, books or sells a project without registration can face a penalty. The press release notes the penalty can be up to 10% of the estimated cost of the project, as determined by the Regulatory Authority.
What happens if the developer delays possession or breaks promises?
If the promoter fails to complete the project as per the terms of the agreement for sale, the homebuyer has two remedies described in the official material. A homebuyer can seek a refund of the amount paid along with interest. Alternatively, the homebuyer can claim interest for every month of delay until handing over of possession.
The law also states that a promoter cannot change the sanctioned plans, layout plans or specifications of the project without the previous written consent of at least two-thirds of the allottees. This prevents unilateral changes to the project after sale.
RERA requires equal treatment on interest rates for delays: the promoter is obliged to pay similar rate of interest to the homebuyer in case of delay.
How are disputes decided and what enforcement tools exist?
Each State/UT is to establish a Real Estate Regulatory Authority, an Adjudicating Officer and an Appellate Tribunal. The official material says that matters are to be decided within sixty days from the date of application or appeal to ensure faster resolution.
The Ministry’s press release also notes that Section 40 of the Act provides for recovery of unpaid interest, penalty or compensation from the promoter as arrears of land revenue. The Adjudicating Officer, the Regulatory Authority or the Appellate Tribunal have power to issue necessary orders or directions for recovery.
Section 41 establishes a Central Advisory Council to advise the Central Government on implementation matters, including safeguarding homebuyers’ interests.
What does this mean for ordinary people?
If you have paid for a flat in a registered project, the law gives specific information and financial protections. Project details must be disclosed, payments are to be used only for that project (subject to the 70% rule), and remedies are available if the promoter delays. If a promoter advertises or sells an unregistered project, the promoter can face a substantial penalty according to the press material.
The State Regulatory Authorities and Adjudicating Officers are the statutory bodies created to hear complaints. The official material highlights that the framework aims to give faster, more transparent relief than older options.
Key points
- RERA requires registration of covered projects before advertisement, marketing, booking or sale; projects above 500 sq m or with more than eight units typically require registration.
- Promoters must provide prescribed project details at registration and must mention the RERA registration number in advertisements.
- Seventy per cent of amounts collected for a project must be kept in a separate bank account and used only for that project and land cost; withdrawals require professional certification.
- No deposit should be taken without an agreement for sale; real estate agents must register with the Authority.
- If the promoter delays completion, the homebuyer can obtain a refund with interest or claim interest for each month of delay until possession.
- Matters are to be decided within 60 days; unpaid interest, penalty or compensation can be recovered as arrears of land revenue under the Act (Section 40); a Central Advisory Council is provided under Section 41.
Laws referred to
- The Real Estate (Regulation and Development) Act, 2016 (RERA) (as cited in the supplied Ministry of Housing & Urban Affairs/Press Information Bureau sources)
- The Real Estate (Regulation and Development) Act, 2016 — Section 40 (recovery as arrears of land revenue) (as cited in the supplied sources)
- The Real Estate (Regulation and Development) Act, 2016 — Section 41 (Central Advisory Council) (as cited in the supplied sources)
Official sources
This guide explains what the law itself says. Court rulings interpreting these provisions can also affect how they apply in a particular case. It states the position under the official texts listed above, as at 24 October 2026.
Source: Official text (static.pib.gov.in) (opens in a new tab)