RERA Compliance: What Every Developer and Buyer Must Know

Introduction

The Real Estate (Regulation and Development) Act, 2016 (RERA) fundamentally transformed India's real estate landscape. For decades, homebuyers faced delayed projects, fund diversion, and unenforceable promises. RERA introduced accountability, transparency, and a dedicated adjudication mechanism.

Whether you're a developer launching a new project or a buyer investing in your dream home, understanding RERA is essential.

Key RERA Requirements for Developers

Mandatory Registration: Every real estate project exceeding 500 square meters or 8 apartments must be registered with the state RERA authority before advertising or selling.

Project Account: 70% of amounts collected from allottees must be deposited in a separate escrow account and used only for construction costs. This prevents the common practice of diverting funds to new projects.

Disclosure Requirements: Developers must upload detailed project information including:

Approved sanctioned plans
Layout plans and specifications
Completion timeline with stage-wise schedule
Type of materials used
Names and addresses of contractors

Quarterly Updates: Progress reports must be filed every quarter, allowing buyers to track construction status.

Adherence to Approved Plans: Any changes to sanctioned plans require consent from two-thirds of allottees. This prevents developers from unilaterally modifying apartment sizes or common areas.

Buyer Protections Under RERA

Right to Information: Buyers can access all project documents, including title reports and approvals, before making a purchase decision.

Carpet Area Definition: RERA standardized carpet area calculation, ending the confusion around super built-up areas and loading factors.

Interest on Delays: If a developer fails to hand over possession by the promised date, buyers are entitled to interest at the RBI's marginal cost of lending rate plus 2%.

Structural Defect Liability: Developers are liable for structural defects for five years after possession. Any defects must be rectified within 30 days of complaint.

Withdrawal Rights: If possession is delayed beyond the promised date, buyers can withdraw and claim full refund with interest.

Common RERA Violations and Remedies

Delayed Possession: The most frequent complaint. RERA authorities regularly order refunds with interest or direct developers to pay monthly compensation until possession.

Deviation from Approved Plans: Buyers discovering unauthorized changes can file complaints. Penalties can reach up to 5% of project cost.

False Advertisements: Promises made in brochures and advertisements are binding. Buyers can hold developers to marketed amenities and specifications.

Failure to Register: Selling in unregistered projects attracts penalties up to 10% of project cost, with repeat violations leading to imprisonment.

Filing RERA Complaints

Each state has a RERA authority with adjudicating officers. The complaint process is designed to be accessible:

File complaint online with supporting documents
Pay nominal filing fee (typically Rs. 1,000-5,000)
Attend hearings (often conducted via video conference)
Receive order within 60 days (in theory)

Appeals lie to the RERA Appellate Tribunal, and thereafter to the High Court.

Due Diligence Recommendations

For Buyers:

Verify RERA registration before making any payment
Check the developer's compliance history on the RERA website
Review the model Agreement for Sale
Verify that the project account is operational

For Developers:

Register projects before any public announcement
Maintain meticulous documentation
Ensure escrow account compliance
Update RERA portal regularly

Conclusion

RERA represents a paradigm shift toward buyer protection in Indian real estate. While implementation varies across states, the fundamental protections are now legally enforceable. Both developers and buyers benefit from understanding and complying with this framework.

Our Real Estate team advises developers on compliance frameworks and represents buyers in RERA proceedings.