What are the Penalties for Non-Compliance with Different Provisions of RERA?

The RERA - Real Estate Regulatory Authority Act, primarily formulated to bring transparency, accountability and to infuse trust in the Indian buyers for the realty sector.

The RERA has set up the rules for builders or developers to launch any project. They have to follow, all pre-launch and thereafter, project related procedures and seek the prerequisite timely approvals for it. They are:

• The project should have received all requisite approvals before being advertised or sold
• Each unit should be sold on the basis of carpet area and not as per built up area.
• Disclosure of information related to sanctions, project completion timeline and master plan
• A separate Escrow Account for each project should be maintained with 70% of funds as advanced deposits

The buyer can go ahead to purchase any property if above-mentioned criteria are met by the builders for any project.

The RERA has empowered the home buyer to take legal action or can seek redressal in different scenarios in the real estate property buying process, such as for

• If the builder/agent has not registered the advertised real estate project with the state’s regulatory authority
• The builder / agent has presented an incorrect or false information to the regulator or contravenes any provisions of the Act
• The builder / agent insists on charging on built-up or super built-up area
• The builder alters the building or apartment plan without seeking consent of two-third of the total allottees of the project
• The builder / promoter fails to deliver the project within the scheduled timeline
• The apartment / property / building, witnesses structural defects within five years from the date of possession

Implication of Non Compliance with RERA Rules

All stakeholders of any project - builders, developers, promoters, agents and buyers, have to follow RERA rules otherwise, they have to bear the penalties of non-compliance from the regulatory body. The various cases in which the builder, promoter, agents, buyers can attract penalties are:

The promoter has to register the project as per the Act otherwise, will be liable for a penalty of 10% of the estimated cost of the project. A continued violation of the rules can attract an imprisonment of up to 3 years or both.

The RERA holds the right to revoke the registration of a project, builder, promoter or agent (only after giving 1 month prior notice), if they default in keeping the rules of the Act, violates any of the terms and conditions of approval as given by the competent authority or is involved in any kind of unfair trade practices.

If any false information or contravene of any provisions of the act, is provided to the authority by the developer or agent, then they will be slapped with a penalty of 5% of the project cost. Any failure in complying with the orders of the Appellate Tribunal would increase the penalty to 10% of the project and may even lead to an imprisonment of up to 1 year.

If the project is delayed and the home buyer wishes to withdraw from the investment, then the promoter must return all the funds collected so far along with the interest, as prescribed in the act as arbitrated by an adjudicating officer.

If the homebuyer wishes to stay invested in the project even if it is delayed, then the promoter must pay the interest for every month of delay as compensation.

If the buyer finds a structural defect in the project within the 5 years from the date of possession, then the promoter will have to rectify it within the span of 30 days from the date of filing of the complaint. The promoter will not charge any additional charges on the allottee. If the promoter fails to do so, then the allottee is entitled to seek relevant compensation as mentioned in the Act.

The allottees, too, will be liable to a penalty of 5% of the cost of property, if they fail to comply with or contravene any order, decisions or directions of the authority.

If the allottee's payment is delayed, then, he too is liable to stringent action under the Act. The allottee is liable to pay a similar monthly interest as compensation to the promoter if they default in making timely payment of installment. A continued violation gives the promoter a right to terminate the allotment of property and refund the amount collected after deducting the booking amount and interest after issuance of notice to the allottee.

These are some of the important points of RERA Act, of which the buyer should always be cognizant, before purchasing any real estate property. The RERA has given more powers to the consumers to utilize its legal options, whenever he/she feels being cheated by the developer or agents of real estate sector. The act surely help in building more trust and accountability on both parties (builder and buyer) in long run.

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