RERA Act 2016

RERA Act 2016: Rules, Benefits and Compliance

Online Legal India LogoBy Online Legal India Published On 11 Jan 2021 Updated On 19 Apr 2025 Category Other

The Real Estate (Regulation and Development) Act, 2016, also known as RERA, is an important legal implementation in India designed to safeguard homebuyers and ensure transparency in the real estate industry. It was implemented in May 2017. RERA sets up Real Estate Regulatory Authorities (RERAS) in every state to monitor and regulate real estate projects, encourage fair practices, and address disputes. In this article, we will discuss the RERA Act 2016, its benefits and more.

What is RERA?

The Indian government introduced the RERA Act 2016 to enhance transparency and accountability in the real estate sector. It operates under state-level Real Estate Regulatory Authorities (RERAS), which regulate developers, brokers and real estate projects. RERA requires developers and brokers to register their projects and services with the relevant regulatory authority.

It also ensures that builders complete projects on time, provides mechanisms for dispute resolution and requires detailed disclosure about projects. This act helps protect homebuyers as it reduces the risk of fraud. It also ensures that all the transactions are clear and fair.  

Key provision of RERA Act 2016:

The Real Estate (Regulation and Development) Act, 2016 (RERA) includes key provisions designed to promote transparency and accountability within the real estate sector, its dealing, booking, and handover, etc.

  1. Project Registration: Developers must register their projects with the respective state's Real Estate Regulatory Authority (RERA) before they advertise, market, or sell any units. At registration, they must submit project-related information. It includes land title, approvals, layout, and completion timeline.
  2. Disclosure Obligation: Developers must provide detailed information about the project on RERA's website, including specifications, plans, and amenities.Any changes to the project must also be communicated to potential buyers.
  3. Escrow Accounts: Developers must create an escrow account for each project, where at least 70% of the funds from buyers are kept. The carpet area excludes balconies and common areas
  4. Carpet Area: Units are sold based on carpet area, which refers to the net usable area within the unit's walls. The carpet area does not include balconies and common areas. Developers must clearly state the carpet area in both advertisements and agreements.
  5. Timely Project Completion RERA stresses that developers must finish projects within the agreed-upon time frame. If there is a delay, developers are required to compensate the buyers.
  6. Real estate agents and brokers are required to register with RERA and provide correct information about their services. It includes the projects they are handling and the commissions they receive.

Prospects & Benefits of the RERA Act 2016

The Real Estate (Regulation and Development) Act, 2016 (RERA) has brought in several changes to make the real estate market in India more transparent, reliable, and fair. Here’s how it benefits buyers:

  1. Increased Transparency: RERA requires developers to share complete and accurate information about their projects, such as approvals, layout plans, and possession dates, on the official RERA platform. This transparency helps buyers make informed decisions and reduces the chances of fraud.
  2. On-Time Project Completion: Developers must follow the timelines they promise at the time of registration. In case of delays, developers are required to compensate the buyers. This provision ensures that projects are delivered on time and that buyers can move into their new homes as scheduled.
  3. Standardized Carpet Area: RERA has established a clear method to calculate the carpet area of properties. This ensures that buyers get the exact amount of space they pay for. It also eliminates any confusion or unfair practices related to inflated carpet areas.
  4. Compulsory Registration for Projects and Agents: Every real estate project and agent must be registered with RERA before they can advertise or sell properties. This ensures that only trustworthy developers and agents are allowed to operate, which offers better protection for buyers.
  5. Escrow Account for Payments: RERA mandates that developers set up an escrow account where 70% of the funds collected from buyers must be deposited. This ensures that the money is used only for the project it was intended for. It also reduces the risk of misuse or financial issues.
  6. Buyer Protection and Dispute Resolution: RERA offers a platform for buyers to lodge complaints and resolve disputes with developers or agents. Each state sets up a Real Estate Appellate Tribunal to handle such matters.

RERA’s Impact on Real Estate Agents

The Real Estate (Regulation and Development) Act 2016 brought major reforms to regulate the conduct of real estate agents in India. . They are expected to maintain professional conduct and put the buyer’s interest first. Listed below are the key impacts of RERA on real estate agents:

  • Compulsory Registration

All real estate agents must register with their respective State’s Real Estate Regulatory Authority before they promote or facilitate the sale of any project under RERA. This registration ensures that only verified and accountable agents operate in the market. The agents receive a registration number, valid documents, and advertisements

  • Legal Recognition and Monitoring

Before RERA, agents operated without clear regulations. With RERA, they are now officially recognised and regulated. Authorities can now monitor agent activities and make them part of a lawful and trackable system. This has reduced unauthorized dealing and increased government oversight.

  • Clear Responsibility in Property Transactions

Agents now have a legal responsibility to provide accurate and complete information about the project they promote. They must verify all details from the builders, such as project approvals, land titles and completion dates. Their role is no longer limited to just connecting buyers and sellers. On the other hand, they are expected to act as informed and responsible facilitators.

  • Penalties for Misconduct:

If agents provide false information, promote unregistered projects or violate RERA norms, they are subjected to penalties. This may include fines, suspension or cancellation of their registration. This system encourages agents to remain fair, transparent and law-abiding.

  • Encouragement of Ethical Practices

RERA promotes ethical behaviour. It makes agents follow clear rules and avoid hidden charges or misleading advertisements. They are required to uphold professional conduct and prioritize the buyer's interests. This is important to rebuild public trust in the real estate market.

  • Boost in Professionalism

RERA has encouraged agents to raise the quality of their services. Many agents now receive formal training to learn about legal rules, project information, and necessary paperwork. The focus has shifted from casual brokering to professional consultation, which benefits both buyers and developers.

  • Better Dispute Resolution

Buyers can now file complaints directly against agents if any issue arises. RERA authorities have the power to investigate and resolve these complaints quickly. This gives consumers a direct channel for justice and encourages agents to be more careful.

 

Fees and Penalties for Non-Compliance with RERA:

Under RERA, 2016, specific penalties are imposed on promoters (builders), real estate agents and allottees (homebuyers) for non-compliance. The following are the penalties applied to each category:

Category

Offence

Penalty

Promoter(builder)

Not registering the project

Up to 10% of the estimated project

cost

Not complying with RERA.

Authority orders

An additional 10% of the Project cost

and/or imprisonment up to 3 years

Giving false information during

Registration

Up to 5% of the estimated project

Cost

Not complying with the Appellate.

Tribunal Orders

Up to 10% of the project cost and/or

Imprisonment up to 3 years

Real Estate Agents

Not registering as an agent

Rs. 10,000 per day, up to 5% of

The cost of the unit

Not complying with RERA.

Authority orders

Up to 5% of the cost of the unit

Not complying with the Appellate.

Tribunal Orders

Up to 10% of the unit cost and/or

Imprisonment up to 1 year

Allottee(Homebuyers)

Not complying with RERA

Authority orders

Up to 5% of the cost of the unit

 

Not complying with the Appellate.

Tribunal Orders

Up to 10% of the unit cost and/or

Imprisonment up to 1 year

How to find RERA-registered projects in India

RERA-registered project ensures transparency and compliance with real estate. To find RERA-registered projects, people can follow the steps listed below:

Step 1: Visit the State’s RERA website

Every Indian state operates its own dedicated RERA portal. To find registered projects, you need to search online with your state’s name that is (State Name) RERA website. Once you are on the website, look for sections like “registered projects” or “Project status”. These sections will help you find a list of registered properties.

Step 2:  Use the Project Registration Number

Each RERA-registered project receives a unique identification number. Usually, the developers provide this number in their brochures or on their official websites. You may use this registration number to search for project details on the RERA portal. Post-submission, the portal will show you all the official details about the project, such as approval status, completion timeline, and any other relevant specifications.

Step 3: Search with project details or the Developer’s Name

In case you do not have the registration number, you can still find the project with its name or the developer’s name. Most RERA portals offer this option. You can select “Search by Project Name” or “Search by Developer Name” and input the necessary details. This method helps you verify the project’s status and check the developer's history.

Step 4: Check the Project Information and Compliance

When you identify the project on the RERA website, check all the related application data. The site will display details like construction phase, project timeline, approvals and developer details. This information helps you understand if the project complies with RERA regulations and if it is progressing as planned. The portal may also list any complaints or issues related to the project.

Step 5: Verify Timelines and Updates

RERA-approved projects are required to update their status regularly. Ensure the project details on the RERA website align with the timeline the developer has provided. This ensures that there are no delays or unexpected changes in the project. This will help you protect your investment.

Conclusion:

To sum up, RERA has transformed the real estate sector in India. It has introduced transparency, accountability and fairness. It ensures that homebuyers are protected, developers are responsible, and agents follow ethical standards. With clear guidelines, timely project updates, and strict penalties for non-compliance, RERA builds trust and confidence in the market.

RERA policies can be difficult to understand. To get expert assistance with RERA compliance, you can connect with Online Legal India’s trusted services platform for fast, simple and secure support.

FAQS related to RERA Act 2016:

  1. How long is RERA registration valid for developers and agents?

For developers, it’s valid till the project completion date declared during registration. For agents, it’s usually valid for 5 years. The validity of RERA registration varies from state to state.

  1. How can real estate agents renew their RERA registration?

Agents must apply before expiry through the state RERA portal, submit the renewal form, documents, and fees.

  1. Do developers need to register every new project separately?

Yes, every new project requires a separate RERA registration, even if the developer is already registered. Each project receives a unique registration number.

  1. What are the registration fees for RERA project registration?

The RERA registration fee depends on the state and the type of project. It is usually calculated as per square meter or unit basis. Developers should check their state’s RERA website for exact fees.


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