The Real Estate (Regulation and Development) Act, 2016, the statute the whole country calls the RERA Act 2016, is usually introduced as a homebuyers’ charter, and the description is not wrong so much as it is aimed at the wrong provision. The rights the Act gives an allottee, to information, to a written agreement before serious money changes hands, to interest when possession is late, to a refund when the delay becomes intolerable, mostly existed already in contract, in consumer law, or in the equity a court could have done between the parties. What did not exist anywhere was a rule about the money itself. Before this Act, a promoter could collect the price of flats in one project, spend the collection on land for the next project, and finance a third with the deposits of buyers in the second, and no statute said him nay until the chain broke and the buyers of the first project discovered that their building was the collateral for someone else’s ambition. The provision that changed the industry is therefore not a right at all. It is an accounting rule: seventy per cent of everything realised from the allottees of a project must sit in a separate account in a scheduled bank, usable only for that project’s land and construction cost, and releasable only against certified progress. This article explains the Act as the machine built around that rule, because the machine is the meaning of the statute.

A buyer or a developer who finishes this article should be able to answer three questions with precision. Which projects does the Act actually cover, and which does it leave outside by deliberate exemption? What must the promoter do with the money, and with the information about the project, at each stage from the first advertisement to the conveyance deed? And what follows, in money and in punishment, when possession is not given on the date the agreement promised? The article states the machinery from the bare Act, because the Act repays being read as a system: a registration gate at the entrance, a locked account in the middle, a disclosure discipline running throughout, two specialised forums at the exit, and a penalty ladder behind all of it. The remedy process a homebuyer actually follows belongs to the companion article on how homebuyers use the Act, and the comparison with the consumer commissions belongs to its own; this pillar holds itself to the statute, its institutions, and the litigation that settled its reach.

What the RERA Act 2016 replaced, and why the old law failed

The first thing to understand about the Act is that the market it entered was not lawless. It was, if anything, over-supplied with general law and under-supplied with a regulator. A buyer whose flat was delayed had a contract, and could sue on it in a civil court at the speed civil courts move. A buyer who had been misled had the consumer protection statute, and could file before a consumer forum as a consumer of services, a route the Supreme Court had opened in the housing context well before 2016. Some States had apartment ownership statutes governing the conveyance of individual units and the formation of associations, and Maharashtra had gone furthest with the Maharashtra Ownership Flats Act of 1963, a statute aimed at precisely the promoter who took advances and vanished, which required agreements to be registered and accounts to be kept. The Indian Contract Act of 1872 supplied damages. The Transfer of Property Act of 1882 supplied the conveyancing frame. What none of this supplied was a standing authority that knew, project by project, what had been promised, what had been collected, what had been built, and what remained, and could intervene before the money was gone rather than compensate after it.

The failure had a specific financial anatomy, and the statute is unintelligible without it. Residential development in the decades before the Act was financed substantially by the buyers themselves. A promoter acquired land, often with borrowed money at punishing rates, obtained approvals slowly, and then launched sales into an under-construction project, collecting the price in instalments linked loosely to construction stages he himself certified. The collections of a successful launch were liquid capital, and the industry’s growth model treated them as such: surplus from Project A grounded Project B, whose collections grounded Project C. In a rising market the chain held, because each launch refilled the pool. The arrangement contained no illegality at its centre. The agreement for sale, drafted by the promoter, typically entitled him to forfeit sums on the buyer’s default, charged the buyer interest on delayed instalments, gave the promoter wide latitude to alter plans and timelines, and treated the possession date as an estimate hedged with grace periods and force majeure clauses drawn broadly enough to cover ordinary mismanagement. The buyer signed because the alternative was not buying. When a project stalled, for reasons ranging from approval delays to a credit squeeze to simple over-extension, the buyer’s money was no longer in the project at all. It was in another project’s land, and the legal remedies, contract and consumer law alike, produced orders against a promoter whose assets were the very projects that could not be finished.

The second failure was informational. A buyer could not discover, from any public source, whether the land title was clean, whether the approvals displayed in the brochure had actually issued, how much of the project had been sold, or whether the completion date in the advertisement bore any relation to the state of construction. Carpet area, the measure on which the price was effectively computed, had no statutory definition, and the industry sold by super built-up area, a measure elastic enough to absorb loading factors that varied from promoter to promoter and were rarely explained. The third failure was institutional fragmentation: the obligations that did exist ran to different authorities, municipal bodies for approvals, registrars for conveyance, consumer forums for grievance, and none of them held the whole picture of a single project.

Reform pressure built through the housing ministry’s drafting efforts over several years, and the Bill that became the Act was introduced in the Rajya Sabha in August 2013. It was examined first by the departmental standing committee and then, after official amendments, by a Select Committee of the Rajya Sabha, whose report in July 2015 reshaped several of the operative provisions, and the Bill passed the Rajya Sabha on 10 March 2016 and the Lok Sabha on 15 March 2016. The President’s assent followed on 25 March 2016, and the statute, Act 23 of 2016, was published in the Gazette on 26 March 2016. Its commencement was staged by design, because the Act required institutions that did not yet exist. Fifty-nine sections, including the chapters establishing the regulatory authorities and the appellate tribunals and the finance and miscellaneous provisions, were brought into force on 1 May 2016. The remaining provisions, including the registration chapter in Sections 3 to 19 and the offences and penalties provisions, were notified on 19 April 2017 and took effect on 1 May 2017, by which date every State was expected to have its authority in place and its rules framed, and promoters of ongoing projects had three months to register them. The staged commencement matters to everything that follows, because the Act’s most litigated question, its application to projects already under way, is a question about what it meant for a half-built project to meet a fully formed statute on a date in the middle of its life.

How Parliament legislated on a State subject

Land sits in the State List of the Seventh Schedule, and a reader who knows that much will ask the right question: how could Parliament enact a national statute for real estate at all? The answer fixes the Act’s shape, and explains both its reach and its deliberate gaps. Parliament did not legislate on land. It legislated on the two Concurrent List entries that govern the transaction wrapped around land: Entry 6, transfer of property other than agricultural land and registration of deeds and documents, and Entry 7, contracts, including partnership, agency, contracts of carriage, and other special forms of contract. A statute that regulates the agreement between a promoter and an allottee, the registration of that agreement, the handling of the consideration, and the remedies for breach is, in pith and substance, a statute on transfer of property and contracts, even though every transaction it governs ends in a building standing on land. The division of the legislative field between the Union and the States, and the entries on which this statute rests, are mapped in the article on the three Lists of the Seventh Schedule compared, which owns the general doctrine; what matters here is the consequence for this Act.

The consequence is a statute that is deliberately incomplete at its edges, and incomplete in a particular direction. The Act does not touch title to land, land records, land revenue, or the approval of building plans, all of which remain with the States and their municipal law. It does not create a national regulator. It requires each State and Union territory to establish its own Real Estate Regulatory Authority, to frame its own rules on the matters the Act leaves open, including the form of the agreement for sale and the rates of interest, and to run its own registration and complaint machinery. The Act is therefore best understood as a central skeleton with State flesh: Parliament fixed the non-negotiables, the registration gate, the seventy per cent account, the disclosure duties, the delay entitlements, the penalty ladder, and left the working detail to thirty-odd rulebooks that were never going to be identical. The divergence that followed, over what counted as an ongoing project and therefore had to be registered, was not an accident of implementation. It was the predictable output of the constitutional design, and the section of this article dealing with the State rules treats it that way.

One more boundary belongs here, because it is fixed by the text of Section 1. As enacted, the Act extended to the whole of India except the State of Jammu and Kashmir, whose constitutional position then stood apart; after that State’s reorganisation in 2019 the central Act was extended to the successor Union territories through the Reorganisation Act’s schedule of applied laws. Subject to that history, the Act is national, and the promoter who operates in several States answers to several authorities under one statute.

The architecture of the Act

Ninety-two sections arranged in ten chapters carry the scheme, and a statute pillar earns its keep by saying which parts carry the weight. Chapter II, Sections 3 to 10, is the registration chapter, covering projects and, separately, real estate agents. Chapter III, Sections 11 to 18, sets out the functions and duties of the promoter, and it is the operative heart: disclosure, the false statement liability, the agreement discipline, the plan discipline, the defect liability, the transfer restriction, insurance, conveyance, and the delay consequences all live here. Chapter IV is a single section, Section 19, on the rights and duties of allottees, an asymmetry of drafting that itself tells a story about whom the Act was written to govern. Chapter V, Sections 20 to 40, establishes the Authority and its powers. Chapter VI creates the Central Advisory Council. Chapter VII, Sections 43 to 58, establishes the Appellate Tribunal and the appeal route. Chapter VIII, Sections 59 to 72, contains the offences, the penalties and the adjudication machinery, including the adjudicating officer. Chapters IX and X deal with finance and with miscellaneous matters, among them the bar on civil court jurisdiction, the provision that the Act operates in addition to other laws, and the overriding effect given to its provisions against inconsistent law.

Three definitions do more work than any others, and each was drafted against a known evasion. The definition of a promoter reaches beyond the person who constructs: it covers the developer, the builder, the coloniser, the person who holds himself out as developing the land, an apex or primary co-operative housing society constructing for its members, a development authority or public body constructing for allottees, and, critically, the person who acts under a power of attorney from the landowner, because the classic structure for escaping obligations was to interpose a landowner, a developer and a marketing company and let each deny being the seller. The definition of an allottee covers the person to whom a plot, apartment or building has been allotted, sold or otherwise transferred, and those who later acquire the allotment, while excluding a person who takes the unit on rent, a line that keeps tenants outside a statute about purchase. The definition of a real estate project covers the development of land into plots and the construction of buildings and apartments for sale, and it treats each phase of a phased development as a separate project, a rule that forecloses the argument that a township of ten phases is one project registrable once, or, in the alternative evasion, that no phase is complete enough to register.

The definition that buyers feel in their pockets is carpet area. Section 2(k) defines it as the net usable floor area of an apartment, excluding the area covered by external walls, areas under services shafts, exclusive balconies or verandas and exclusive open terraces, but including the area covered by the internal partition walls of the apartment. The point of the definition is not surveying elegance. It is that the price of an apartment is, under the Act’s scheme, anchored to a measure the promoter cannot inflate with loading percentages invented in the brochure, and the agreement for sale must state the carpet area of what is being sold. The super built-up area did not disappear from marketing vocabulary, but it lost its statutory footing, and a buyer comparing two projects could at last compare the same quantity.

What does the word promoter cover under the Act?

Promoter is the widest defined term in the statute. It covers the person or company that constructs the project, the landowner who develops through another under a power of attorney, a development authority or housing board building for allottees, a co-operative housing society constructing for its members, and anyone who holds himself out as the developer of the land.

The width is deliberate, so that no participant in the selling structure can say the obligations belong to someone else.

That width has a practical corollary the courts were quick to notice. Where a project is developed under a joint development arrangement, both the landowner who takes a share of the built area or the revenue and the developer who constructs can fall within the definition, and the registration application itself requires the promoter to declare the arrangement and the persons involved. The Act’s answer to the shell game is to make the net wide and let the Authority, at the registration stage, fix responsibility on the persons the documents actually disclose.

Registration: the gate at the entrance

Section 3 states the prohibition around which the whole statute turns: no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner, any plot, apartment or building in any real estate project or part of it, in any planning area, without first registering the project with the Authority of the State where it is situated. Read the verbs carefully, because they were chosen to close exits. The prohibition bites at advertisement and invitation, not merely at the execution of a sale deed, so the promoter who launches, collects booking amounts and constructs for years before troubling the registrar is inside the prohibition from the first brochure. Registration is not a licence to be obtained when convenient. It is the precondition of lawful marketing, and every later duty in the Act, disclosure, the separate account, the agreement discipline, is keyed to the registered project and the declarations made to obtain its registration.

The exemptions in Section 3(2) are as important as the prohibition, because they mark the boundary of the regulated sector and they are drawn in the alternative, a drafting detail that a great deal of popular writing gets wrong. Registration is not required where the area of land proposed to be developed does not exceed five hundred square metres, or where the number of apartments proposed to be developed does not exceed eight, inclusive of all phases. Either limb suffices. A project on a small plot with thirty apartments crosses the apartment threshold and must register; a project of six large villas on two thousand square metres crosses the land threshold and must register; only the project that is small on both measures stands outside. Registration is also not required where the promoter has received a completion certificate for the project before the commencement of the Act, the exemption for finished work, and it is not required for renovation, repair or redevelopment that does not involve marketing, advertising, selling or a new allotment of any apartment, plot or building. The renovation exemption is functional rather than generous: a housing society redeveloping its own building for its own members, without selling new units into the market, is not the Act’s target, while a redevelopment that creates sale units is, because the sale component re-enters the definition of a project being marketed.

For projects on the other side of commencement, the second proviso to Section 3(1) faced the statute squarely at the market as it stood in 2017: projects that were ongoing on the date of commencement of the Act, and for which a completion certificate had not been issued, had to be registered by application made within three months of that commencement. The completion certificate is thus the hinge of the whole coverage question. A project complete in law, whatever its physical state of polish, stood outside; a project without that certificate, however advanced its construction, however many of its flats were sold and paid for, stood inside and had to come onto the register. What “ongoing” meant in the rules some States wrote is the subject of a later section; the Act’s own test is the certificate.

The application under Section 4 is where the promoter’s declarations acquire legal consequence. The application must be accompanied by the promoter’s particulars and track record, including the projects launched in the preceding five years and their status; a brief detail of the enterprises and companies in which the promoter is involved; an authenticated copy of the approvals and the commencement certificate from the competent authority; the sanctioned plan, the layout plan and the specifications of the proposed project; the plan of development works and the facilities proposed; the location details of the project with clear demarcation of land dedicated for the project and the land used for other purposes; the proforma of the allotment letter, the agreement for sale and the conveyance deed proposed to be executed; the number, type and carpet area of the apartments for sale; the names and addresses of the real estate agents, contractors, architects, structural engineers and other persons involved; a declaration, supported by an affidavit, that the promoter has a legal title to the land or a registered development agreement, that the land is free from all encumbrances or the details of encumbrances are disclosed, and that seventy per cent of the amounts realised for the project will be deposited in the separate account; and a declaration of the time period within which the promoter undertakes to complete the project. Two features of this list matter. The completion period is the promoter’s own declaration, which converts the brochure’s optimistic date into a registered commitment against which delay is later measured. And the declarations are not decoration: Section 60 makes false information in the application itself punishable with a penalty of up to five per cent of the estimated cost of the project.

The Authority must grant registration or reject the application, with reasons recorded and after giving the applicant an opportunity of being heard, within thirty days, and on grant it issues a registration number and login credentials that unlock the project page on its website. Registration remains valid for the period declared by the promoter as the completion period. Section 6 permits the Authority to extend that registration, on application made before expiry and for reasons recorded in writing, where the delay is on account of force majeure or circumstances beyond the promoter’s control, but the extension is capped at one year in aggregate, which forecloses the older practice of rolling a project forward indefinitely on paper. Section 7 arms the Authority to revoke registration where the promoter defaults in the duties the Act imposes, makes false statements, indulges in unfair trade practices of the kinds the provision specifies, or has his approvals suspended or cancelled, after giving thirty days’ notice of the intention to revoke and an opportunity to explain. On revocation or lapse, Section 8 obliges the Authority to consult the appropriate government and to take the steps needed to facilitate the remaining development work, which may be carried out by the association of allottees or by a competent authority, with the Authority empowered to restrain the defaulting promoter from the project and to direct the bank operating the separate account. The completion of abandoned projects by their own allottees, through this route, is one of the Act’s most consequential and least celebrated mechanisms.

What must a promoter declare when applying for registration?

The application is a sworn inventory of the project. The promoter must disclose his projects of the preceding five years, the approvals and commencement certificate, the sanctioned plans, the land’s title and encumbrances by a declaration supported by affidavit, the number and carpet area of units for sale, the professionals engaged, and the period within which he undertakes to complete.

False information in this application carries a penalty of up to five per cent of the estimated cost of the project.

Agents stand inside the gate as well. Section 9 forbids a real estate agent from facilitating the sale or purchase of any plot, apartment or building in a registered project without first obtaining registration from the Authority, and Section 10 binds the registered agent to maintain books and documents, to refrain from unfair trade practices, to facilitate the allottee’s access to the information the Act guarantees, and to provide the services the engagement specifies. The agent’s registration number must be quoted in the transactions he facilitates. The point is structural: the sales channel through which most buyers meet the market was brought within the regulator’s sight, with its own penalty for default, rather than left as the promoter’s unaccountable mouthpiece.

The separate account: the provision that changed the industry

Section 4(2)(l)(D) is one clause in a long list of application documents, and it is the most important sentence in the Act. The promoter must deposit seventy per cent of the amounts realised from the allottees, from time to time, in a separate account to be maintained in a scheduled bank, to cover the cost of construction of the project and the land cost, and the amount so deposited shall be used only for that purpose. Every element of the clause repays attention. The base is the amounts realised from the allottees for that project, not the project’s total estimated receipts, not its turnover, not its profit: seventy per cent of what buyers have actually paid in. The permitted uses are two and only two, the cost of construction and the cost of the land, both of that project. The account is project-specific, so the collections of Project A cannot lawfully fund Project B even inside the thirty per cent margin that remains outside, because the seventy per cent is computed project by project and the account is maintained project by project.

The withdrawal discipline is what converts the deposit from a parking rule into a control system. The promoter may withdraw amounts from the separate account in proportion to the percentage of completion of the project, and each withdrawal must be certified by three independent professionals: an engineer, an architect and a chartered accountant in practice, certifying respectively the stage and proportion of work completed for the withdrawal claimed. The account must be audited within six months after the end of every financial year by a chartered accountant in practice, who certifies that the amounts collected were utilised for the project and that withdrawals conformed to the proportion of completion. Money therefore leaves the account only as fast as certified work replaces it, and the certification trail is what allows the Authority, the auditor and ultimately the allottees to reconstruct the money’s path. Diversion, the industry’s founding finance technique, is not merely discouraged by this scheme. It is made visible, auditable and punishable, which in a regulatory statute is the stronger condition.

Three common misstatements about the account should be retired. It is not an escrow over all receipts, despite the shorthand the provision attracts, because thirty per cent of collections remains available to the promoter outside it, for overheads, finance costs and margin, and because amounts a promoter raises from lenders or investors are not amounts realised from allottees at all. It is not a buyer-protection fund that an individual allottee can attach or draw upon, because the account serves the project’s completion, and an individual refund claim travels through the remedies the Act separately provides. And it is not a guarantee of completion, because a project whose land cost already exceeds its collections, or whose promoter has understated cost at the application stage, can fail inside the account discipline as surely as outside it. What the account changes is the distribution of failure: when the project fails, the money collected for it is still, in the main, where the money was supposed to be, available to the association of allottees or the Authority’s completion machinery rather than spent on a stranger’s land.

Who certifies a withdrawal from the separate account?

Three professionals, each certifying a different aspect of the same fact. An engineer certifies the proportion of construction completed, an architect certifies the stage of the work against the sanctioned plans, and a chartered accountant in practice certifies that the withdrawal matches the certified completion.

The promoter cannot release his own money on his own word. Their certificates accompany every withdrawal, and the annual audit of the account tests the whole trail of certificates after the event.

The State rules were given one lever inside this mechanism, and it caused argument disproportionate to its size: several States’ rules addressed what proportion of collections on account of land cost already incurred could be treated as withdrawn, and whether the seventy per cent applied to amounts already collected and spent before registration of an ongoing project. The durable position, settled by the way authorities and courts applied the scheme, is that the discipline governs the project account from registration forward, including the unutilised portion of collections on ongoing projects, which is why the first search result a buyer meets on this provision so often pairs the seventy per cent for new projects with the unutilised funds of ongoing ones. The clause’s forward grip on money already collected is precisely what made it feared, and precisely what made it work.

Disclosure: the running obligation

Registration is an event; disclosure under Section 11 is a condition that continues for the project’s life. The promoter must create his page on the Authority’s website and enter the particulars of the registered project for public viewing, and he must update the record quarterly: the list of the number and types of apartments or plots booked, the status of each approval and its stage, and the status of construction of each building and the project as a whole. Every advertisement or prospectus issued for the project must mention prominently the website address of the Authority and the registration number the project carries, so that the brochure itself routes the sceptical buyer to the regulator’s file. The quarterly rhythm is the provision’s genius and its burden in one. A buyer in the old market received information at the moment of sale and nothing thereafter until possession failed to arrive. A buyer under this Act holds a statutory right to a running record, refreshed four times a year, against which the promoter’s requests for the next instalment can be checked, and the association of allottees can organise early, on documents, rather than late, on rumour.

Section 12 attaches the liability that gives the disclosure duty its teeth at the point of sale. Where a person makes an advance or a deposit on the basis of information contained in the notice, advertisement, prospectus or agreement for sale, and sustains a loss or damage by reason of any incorrect or false statement in it, he shall be compensated by the promoter for the loss sustained, and if the person affected intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at the prescribed rate and the compensation payable. The provision converts the brochure from puffery into a representation with a price, and it is deliberately placed before the agreement provisions, because the mischief it addresses occurs before any agreement exists. The documentary habit this creates is the practical reason a promoter assembling his project files, the uploaded declarations, the approval copies and the certificates, gains from keeping them in order and reading them together in an online PowerPoint viewer when the project’s presentation materials are prepared, since the Act makes the presentation itself answerable.

The disclosure scheme has one more component that is easy to miss and expensive to ignore. The promoter is bound by what the registered record contains, including the completion period declared at application. Where the reality of approvals or construction departs from the record, the lawful course the Act contemplates is an update of the record and, where the registered completion period cannot be met, an application for extension under Section 6 within its one-year cap. The unlawful courses, silence, fresh advertisements quoting the old date, collection of instalments against stages the quarterly return does not support, are each breaches of identified duties with identified penalties. Disclosure in this statute is therefore not transparency as a value. It is a set of dated, falsifiable statements, each of which can be tested, and the testing is what the Authority’s inspection and complaint powers exist to do.

The agreement stage: ten per cent, then paper

Section 13 is the provision buyers cite most and promoters breach most casually, and its terms are exact. A promoter shall not accept a sum of more than ten per cent of the cost of the apartment, plot or building, as the case may be, as an advance payment or as an application fee, from a person without first entering into a written agreement for sale with that person, and registering the agreement under the law for the time being in force. The agreement for sale is the legal instrument around which the conveyancing of an under-construction unit is organised, and its place in the scheme of the Transfer of Property Act’s treatment of transfers of immovable property is the subject of that statute’s own article; within this Act, the agreement is the moment at which the transaction acquires its enforceable shape. Before the agreement, the promoter may take a booking amount within the ten per cent ceiling. Beyond it, every rupee must travel under a registered written contract.

The second limb of Section 13 prescribes what the agreement must contain in the form the appropriate Government prescribes by rules: the particulars of the development of the project, the dates and the manner by which payments are to be made, the stage-wise time schedule of completion of the project including the provision of water, sanitation and other amenities and services agreed to be provided, the date on which possession will be handed over, and the rate of interest payable by the promoter to the allottee and by the allottee to the promoter in case of their respective defaults. The prescribed form matters beyond its paperwork. The old builder-buyer agreement was the promoter’s private constitution for the project, and its one-sidedness, forfeiture clauses, unilateral alteration rights, possession dates expressed as expectations, was the mechanism by which the statutory absence was converted into contractual advantage. A prescribed form, identical in structure across promoters in a State, with the delay interest stated for both sides, compresses the space in which that advantage was drafted. It does not eliminate negotiation or annexures, but the load-bearing terms, possession date, payment schedule, interest symmetry, are put where the buyer can find them and the Authority can compare them.

Why does the Act insist that the agreement be registered?

Registration of the agreement for sale does three jobs at once. It fixes the transaction in a public record before the bulk of the price is paid, so the unit’s encumbrance can be traced. It converts the promoter’s brochure promises into dated contractual commitments, the possession date among them, against which the delay provisions of the Act are measured.

And it brings the document within the prescribed form, so the terms on payments, amenities and interest are stated in the structure the rules require rather than buried in the promoter’s own draft.

The ten per cent rule and the registered agreement together reorder the sequence of trust in the transaction. Under the older practice, the buyer’s commitment ran far ahead of the promoter’s paperwork: large fractions of the price were paid against allotment letters and payment plans, and the formal agreement, when it came, recorded a relationship already too expensive to leave. Under the Act, the promoter’s paperwork must run ahead of the buyer’s money. The inversion is small in words and large in consequence, and enforcement practice reflects it: a promoter who has collected forty per cent of the price on the strength of a booking form has not made a shrewd sale, he has committed the specific contravention Section 13 describes, and the allottee’s complaint writes itself.

Obligations while the project is built

Section 14 binds the promoter to the project he registered. The promoter must adhere to the sanctioned plans, layout plans and specifications as approved by the competent authority, and after handing over possession the structural architecture of the obligation continues: no addition or alteration in the sanctioned plans, layout plans and specifications, and no change in the nature of fixtures, fittings and amenities described in the advertisement, prospectus or model apartment, may be made without the previous written consent of at least two-thirds of the allottees, other than the promoter, who have agreed to take apartments or plots in the project. The exclusion of the promoter from the two-thirds count is the detail that gives the rule force, since a promoter holding unsold inventory could otherwise supply his own consent. A narrow carve-out permits minor additions or alterations necessitated by architectural or structural reasons, duly recommended and verified by an authorised architect or engineer, after proper declaration and intimation to the allottee; the carve-out exists because buildings cannot be frozen at the drawing stage, and its conditions, professional verification and intimation, are what distinguish it from the general liberty it does not confer.

Two further obligations protect the project’s identity while it is incomplete. Section 15 forbids the promoter to transfer or assign his majority rights and liabilities in respect of the project to a third party without first obtaining the written consent of two-thirds of the allottees and the written approval of the Authority, and it protects concluded allotments from the change: a transfer does not affect the allotment or the sale of apartments, plots or buildings already made, nor does it relieve the incoming promoter of the obligations the Act imposed on his predecessor. Section 16 requires the promoter to obtain all such insurances as may be notified by the appropriate Government, including insurance of the title of the land and building and insurance for construction, to pay the premiums and charges, and to hand over the documents and benefits to the allottee or the association on the transfer of the project. The two provisions answer the same fear from different directions. A buyer who chose a promoter for his record should not wake to find the project sold to a stranger of unknown capacity, and a project whose title or works are destroyed mid-course should not leave its buyers to an uninsured ruin.

Why does the Act make the promoter insure the project?

Insurance under Section 16 is the statute’s admission that some project failures are nobody’s breach. The promoter must obtain the notified insurances, covering among them the title of the land and building and the construction itself, must keep the premiums paid while the obligation subsists, and must hand the benefit of the policies over with the project.

If the works are destroyed or the title fails, the loss then falls on an insurer who priced the risk, rather than on allottees whose money built the structure and who cannot diversify it.

Read together, Sections 14 to 16 explain why the Act treats a real estate project as a continuing regulated object rather than a series of private sales. The plans are fixed against the buyers’ consent, the developer is fixed against unapproved substitution, and the risks of the interval are fixed against insurance. What the allottee bought is, as nearly as law can arrange it, what will be built, by the person who sold it, with the hazards of the interval carried by an insurer.

Failure to give possession: Section 18 and the allottee’s election

Section 18 is the provision that converts delay from a grievance into an entitlement, and it is drafted as an election. If the promoter fails to complete the project or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale, or by the date specified in it, or because of the discontinuance of his business as a developer on account of suspension or revocation of the registration or for any other reason, the allottee has the choice. If he wishes to withdraw from the project, the promoter shall return the entire amount received from him in respect of that unit, with interest at the rate prescribed, including compensation in the manner provided by the Act. If the allottee does not intend to withdraw, the promoter shall pay interest for every month of delay, at the rate prescribed, till the handing over of possession. The same consequences attend the promoter who fails to discharge any other obligation imposed on him, where the allottee’s claim is for the interest and compensation the adjudicating machinery awards.

Three features of this drafting deserve emphasis, because later litigation turned on each of them. The right to withdraw and to a refund is not conditioned on the allottee proving anything beyond the failure itself and the expiry of the agreed date; the text attaches the entitlement to the failure to give possession by the date specified, not to fault, fraud or abandonment. The two limbs are structured as alternatives held by the allottee, not as remedies in the promoter’s gift, and the staying allottee’s monthly interest is not a penalty negotiated in the agreement but a statutory rate, prescribed by the rules, that runs for the delay’s duration. And the interest is compensation for the time value of money locked in an un delivered asset, which is why the Bombay High Court in the Act’s first great validity challenge characterised the interest provisions as compensatory rather than penal, and why the Supreme Court later described the allottee’s Section 18 entitlement in unqualified terms. How a homebuyer actually frames, files and pursues this entitlement before the Authority is the working ground of the article on how homebuyers actually use RERA, which owns the remedy process; this pillar’s concern is that the entitlement exists in the text, unqualified, and that everything in the complaint machinery is downstream of that drafting choice.

The general position set out here is information about the statute, not advice on an individual purchase, and a buyer confronting a live default should take advice on the particular facts and dates, because the choice between withdrawing and staying is consequential and the forum and limitation rules that govern it are unforgiving.

Section 18 also has a third limb, less quoted and practically important: where the promoter’s failure relates not to the whole project but to the obligations in the agreement in respect of an individual unit, and the allottee continues in the project, the compensation route through the adjudicating officer prices the shortfall. The statute thus offers exit, waiting money, or measured compensation, and forbids the fourth outcome the old market normalised, in which the buyer waited without money, without interest and without a date.

Completion: conveyance and the five-year defect liability

The promoter’s obligations do not end at possession; they change character. Section 17 requires the promoter, subject to the law governing the transfer of common areas in the State, to execute a registered conveyance deed in favour of the allottee in respect of the apartment, plot or building, and of the undivided proportionate title in the common areas, together with handing over physical possession and the other title documents; where local law does not provide for conveyance of common areas to the association of allottees, the promoter must hand over the possession of the common areas to the association. The conveyance obligation is the point at which the registered project dissolves into individual titles and collective ownership, and its historic neglect, societies administering buildings for decades on the strength of agreements while title slept with a promoter or his heirs, is one of the quiet scandals the provision was written to close. The Act reinforces it from the allottee’s side: Section 19 gives the allottee the right to obtain the stage-wise time schedule of completion, to claim possession in accordance with the agreement, and to obtain the necessary documents and plans, including that of the common areas, after handing over of physical possession.

Section 14(3) then imposes the obligation that outlasts the conveyance: in case any structural defect, or any other defect in workmanship, quality or provision of services, or any other obligation of the promoter as per the agreement for sale relating to such development, is brought to the notice of the promoter within a period of five years from the date of handing over possession, it shall be the duty of the promoter to rectify the defect without further charge within thirty days, and on his failure the aggrieved allottees are entitled to appropriate compensation. The five years run from the handing over of possession of the unit in question, not from the project’s completion certificate, a distinction that matters in phased handovers. The defect must be brought to notice within the period; the rectification window is thirty days; and the compensation route for failure is the adjudicating officer’s, measured on the principles Section 72 supplies. The provision is among the most under-claimed in the Act, because buyers who discover seepage, cracking or failed services in year three commonly treat the matter as a maintenance dispute with their own association, never noticing that the statute kept the promoter answerable for half a decade after he handed over the keys.

The allottee’s side of the bargain

Section 19 is a single section doing symmetrical work, and its brevity should not be mistaken for lightness. The allottee is entitled to the information the project record holds, to the stage-wise schedule, to possession on the agreement’s terms, and to the documents of title and of the common areas after possession. In exchange, the allottee must make the payments the agreement schedules, at the times and in the manner agreed, and is liable to pay interest at the prescribed rate for any delay in payment, the same prescribed-rate discipline the Act imposes on the promoter for delay in possession. The allottee must also take physical possession within the period the law or the agreement specifies after the occupancy certificate, must participate in the registration of the conveyance deed, and must take part in forming the association of allottees when the majority of units in the project have been booked. The symmetry of the interest provisions is a design statement: the statute prices time for both parties at a common prescribed measure, replacing the old agreements in which the buyer’s delay was charged at a punitive contractual rate while the promoter’s delay was compensated, if at all, at a token one.

The allottee provisions have teeth on the enforcement side too. An allottee who fails to comply with the orders of the Authority or of the Appellate Tribunal faces daily penalties and, for defiance of the Tribunal, imprisonment of up to one year or a fine measured against the cost of the unit, or both. The Act is a regulatory statute for a transaction, not a charter for one side of it, and the discipline it imposes on buyers, payment, timely possession, participation in the association, is part of the same settlement that produced the promoter’s heavier duties: a project is a collective enterprise with hundreds of principals, and the statute governs the collective, not only its organiser.

The institutions: Authority, adjudicating officer, Tribunal

A regulatory statute is its institutions, and the Act builds three tiers. The first is the Real Estate Regulatory Authority of each State and Union territory, which the appropriate Government was required to establish within one year of the Act’s commencement. The Authority is a body corporate chaired by a person of the seniority the Act prescribes, selected on the recommendation of a selection committee, with members appointed for a term of five years or until the age of sixty-five, and its composition is meant to combine administrative, legal and technical experience of the sector. Its functions under Section 34 run wider than adjudication: it registers projects and agents and maintains the public register and website; it ensures compliance with the obligations the Act casts on promoters, allottees and agents; it promotes the growth and orderly development of the sector; and it advises the appropriate government on matters the Act enumerates. The register is not an administrative by-product. It is the public face of the disclosure scheme, the place where the quarterly updates live, and the first port of call for any buyer conducting the diligence the Act makes possible.

The Authority’s powers match that width. Under Section 35 it may call for information, conduct investigations and appoint persons to inquire into compliance; under Section 36 it may pass interim orders restraining a promoter, allottee or agent where the Act or the rules stand contravened; under Section 37 it may issue directions to any of them for the discharge of its functions; and under Section 38 it is vested, for the purposes of inquiry and specified proceedings, with the powers of a civil court in summoning witnesses, requiring discovery and production of documents, and requisitioning public records, while its proceedings are treated as judicial proceedings for the purposes the provision specifies. Complaints may be filed with the Authority or with the adjudicating officer under Section 31 by any aggrieved person, in the prescribed form and on payment of the prescribed fee, in respect of any contravention of the Act or the rules, and the Authority itself is not confined to complaints, since its inspection, investigation and direction powers answer to contraventions it finds by other means.

Can the Authority act on its own motion, or only on a complaint?

The Authority is not a passive forum waiting to be moved. Its powers to call for information, to investigate contraventions, to pass interim orders restraining a promoter or agent, and to issue directions for the discharge of its functions are exercisable on material that reaches it by inspection, audit or report as well as by complaint.

The complaint under Section 31 is the ordinary door for an aggrieved allottee, but the registration, disclosure and account disciplines are policed by the Authority as a regulator, on its own motion where the record justifies it.

The second tier is the adjudicating officer, appointed by the Authority in consultation with the appropriate Government under Section 71 from among judicial officers of district judge rank. The division of labour the Act sketches, and the Supreme Court later confirmed, is that the Authority adjudicates the regulatory entitlements, refund of the amount paid with interest, interest for delay and the penalties the Act fixes, while compensation, the quantified reparation for loss that requires an assessment of damage, is adjudged by the adjudicating officer. Section 72 directs that assessment: the adjudicating officer shall have due regard to the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; the amount of loss caused as a result of the default; the repetitive nature of the default; and such other factors as he considers necessary. These factors convert compensation from a guess into a structured enquiry into gain, loss and repetition, and they explain why the Act separated the function: a regulator processing thousands of refund and interest claims cannot also conduct a damages enquiry in each, and a damages officer should not be asked to police a register.

The third tier is the Real Estate Appellate Tribunal, which the appropriate Government was likewise required to establish within one year, sitting in benches of at least one Judicial Member and one Administrative or Technical Member. Any person aggrieved by a direction, decision or order of the Authority or of an adjudicating officer may appeal to the Tribunal under Section 43(5), and the Explanation to that provision makes clear that an association of allottees and a registered voluntary consumer association rank as persons for this purpose. A promoter’s appeal carries the condition that defines the appellate economics of the whole Act: the appeal shall not be entertained unless the promoter has first deposited with the Tribunal at least thirty per cent of the penalty imposed, or such higher percentage as the Tribunal determines, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or both, as the case may be. The deposit is not a fee and not a discretionary indulgence; it is the price of being heard, set so that an appeal cannot be used as a free instrument for deferring a refund. From the Tribunal, Section 58 carries a further appeal to the High Court, within sixty days of the communication of the Tribunal’s decision, on any of the grounds specified in Section 100 of the Code of Civil Procedure, which confines the second appeal to substantial questions of law; the High Court may entertain a delayed appeal where sufficient cause prevented its timely filing, and no appeal lies from a decision the Tribunal made with the parties’ consent. The Act also constitutes a Central Advisory Council under Section 41, chaired by the Union Minister in charge of housing, to advise the Central Government on the Act’s implementation and on the growth of the sector, a soft institution whose existence acknowledges that a statute run by thirty State authorities needs a table at which their experience can be compared.

Two boundary provisions complete the institutional map. Section 79 bars the jurisdiction of civil courts in respect of any matter the Authority, the adjudicating officer or the Tribunal is empowered to determine, and forbids injunctions against action taken under the Act. And Sections 88 and 89 work as a pair: the Act’s provisions are in addition to, and not in derogation of, other laws in force, while the provisions of the Act prevail over anything inconsistent contained in another law. The first limb preserves the buyer’s parallel remedies in principle, and the structured comparison between this Act’s forums and the consumer commissions, including which route serves which grievance, belongs to the comparison article on RERA and consumer protection; the second limb is what ultimately undid a State’s attempt to run a parallel housing statute of its own, as the State rules section explains.

Penalties, offences and recovery

Chapter VIII prices disobedience, and its ladder is carefully graduated by the gravity of the duty broken. At the top stands the registration duty. A promoter who contravenes Section 3 by marketing an unregistered project is liable under Section 59 to a penalty that may extend to ten per cent of the estimated cost of the real estate project as determined by the Authority, the largest percentage in the Act, reflecting that the unregistered project defeats every other protection at once. If the promoter does not comply with the Authority’s order or continues to violate Section 3, he is punishable with imprisonment for a term that may extend to three years, or with a fine that may extend to a further ten per cent of the estimated cost, or with both. The criminal sanction is thus reserved for defiance, not for the initial default, a graduated design in which imprisonment answers the promoter who treats the penalty as a cost of doing business.

Below the registration offence, the ladder continues by subject. Section 60 fixes a penalty of up to five per cent of the estimated cost where the promoter provides false information or contravenes Section 4, the application provision. Section 61 is the residual clause: contravention of any other provision of the Act, or of the rules and regulations, by the promoter carries a penalty of up to five per cent of the estimated cost. Section 62 prices the agent’s defaults, a penalty of ten thousand rupees for every day the default continues, cumulatively capped at five per cent of the cost of the plot, apartment or building whose sale or purchase he facilitated, where he fails to obtain registration or contravenes Sections 9 or 10. Sections 63 to 68 then handle disobedience of orders, and they run in a deliberate symmetry: a promoter who fails to comply with the Authority’s orders pays a penalty for every day of default, cumulatively up to five per cent of the estimated cost, and a promoter who defies the Appellate Tribunal’s orders faces imprisonment of up to three years or a fine of up to ten per cent of the estimated cost, or both; allottees and agents who defy the Authority’s orders face daily penalties measured against the cost of their unit, and those who defy the Tribunal’s orders face imprisonment of up to one year or a fine of up to ten per cent of the cost of the unit, or both. Offences committed by companies are dealt with by attributing liability to the persons in charge of the company’s business at the time, subject to the due diligence defence the provision states, and cognizance of offences under the Act is confined to complaints made by the Authority, which keeps the criminal process a regulator’s instrument rather than a private weapon.

Money awards under the Act would be paper without a recovery engine, and Section 40 supplies a deliberately unglamorous one. If a promoter, an allottee or a real estate agent fails to pay any interest, penalty or compensation imposed under the Act or the rules, the amount is recoverable from him in the manner prescribed, as an arrear of land revenue. The phrase imports the entire coercive machinery of revenue recovery, attachment and sale through the district administration, and spares the allottee a separate execution suit in a civil court. In practice the recovery certificate issued to the district authorities became the point at which many orders slowed, a matter of administrative capacity rather than statutory design, and the Supreme Court in the Newtech litigation treated the Authority’s competence to set that recovery in motion for refund and interest as part of its adjudicatory power rather than a favour dependent on further process.

The insolvency interface belongs in this section because it is where the Act’s protections are tested hardest. When a promoter enters insolvency, the allottees’ statutory claims meet a collective proceeding in which individual enforcement pauses, and the treatment of the homebuyer in that proceeding was transformed by Parliament’s decision to recognise allottees under real estate projects as financial creditors in the insolvency statute, a recognition the Supreme Court upheld in Pioneer Urban Land and Infrastructure Ltd. v. Union of India in 2019, reasoning from the amounts raised from allottees having the commercial effect of a borrowing. The interaction between the two statutes, including the moratorium’s effect on pending complaints and the position of the project account inside a resolution process, is intricate enough to belong to the guide to the Insolvency and Bankruptcy Code and to the remedies article in this cluster; the pillar records the junction and the direction of travel, which is that the allottee’s money is treated, in both statutes, as finance entrusted for a purpose, and not as the promoter’s free capital.

Imprisonment of up to three years stands at the top of the ladder, and it is reached by two paths. A promoter who, having been penalised for marketing an unregistered project, fails to comply with the Authority’s order or continues the contravention is punishable with imprisonment of up to three years, or a further fine of up to ten per cent of the estimated cost of the project, or both. A promoter who defies an order of the Appellate Tribunal faces the same maximum. Imprisonment in this Act punishes defiance of the regulator, not the original delay or defect.

That reservation of prison for defiance, rather than for commercial failure, is a considered legislative choice worth naming, because it is often misread as softness. A statute that imprisoned promoters for late possession would be prosecuting the business cycle, and would be unenforceable at scale. A statute that penalises default in percentages of project cost, and imprisons only the man who will not obey the regulator’s order, keeps its criminal law credible: narrow, graduated, and aimed at the contempt that would otherwise dissolve the regulatory settlement itself.

The promoter’s obligations by stage

The statute reads most clearly when its duties are laid along the life of a single transaction, which is what the table below does. Each row is a stage the Act governs; the columns state what the promoter must do, what the allottee is entitled to, and the consequence the Act attaches to default.

Stage	What the promoter must do	What the allottee is entitled to	Consequence of default
Before advertising	Register the project with the Authority before any advertisement, marketing, booking or offer for sale	A project whose declarations, approvals and title the regulator holds on file	Penalty up to ten per cent of the estimated cost of the project; on continued defiance, imprisonment up to three years or a further fine, or both
Registration	Declare title and encumbrances by affidavit, approvals, sanctioned plans, track record, unit count and carpet areas, and the completion period he undertakes	A public record against which every later promise can be tested, including the promoter’s own completion date	Penalty up to five per cent of the estimated cost for false information or contravention of the application provisions
Agreement for sale	Accept no more than ten per cent of the cost before a written agreement for sale is entered into and registered, in the prescribed form	A registered contract stating payments, the stage-wise completion schedule, the possession date and the interest payable on either side’s default	The excess collection is a contravention of the Act, punishable under the residual penalty of up to five per cent of the estimated cost and remediable on complaint
Construction	Deposit seventy per cent of amounts realised from allottees in the separate account, withdraw only against certified completion, and adhere to the sanctioned plans	Money confined to the project’s land and construction cost, released only as certified work replaces it, and the building sold rather than a substitute design	Revocation of registration for default or false statement; residual penalties; alteration without two-thirds consent of allottees is unlawful
Quarterly disclosure	Maintain the project page on the Authority’s website and update bookings, approvals and construction status every quarter; carry the registration number and the Authority’s website in every advertisement	A running public record, refreshed four times a year, against which instalment demands can be checked	Directions and penalties for contravention; false statements to buyers answered in compensation and refund under Section 12
Completion	Obtain the completion certificate, and where registration will lapse or stand revoked, cooperate in the Authority’s arrangements for the remaining work	A project that can be finished by the association of allottees or a competent authority under the Authority’s supervision if the promoter fails	The Authority may restrain the promoter and facilitate completion by others, with the separate account directed as the Act provides
Possession	Hand over possession by the date in the agreement, with the occupancy certificate and the documents of title	Possession on the promised date, or the election Section 18 gives: withdraw with refund, interest and compensation, or stay and receive interest for every month of delay	Interest at the prescribed rate runs automatically on delay; the refund entitlement on withdrawal is unqualified
Conveyance	Execute a registered conveyance deed of the unit and the undivided share in common areas in favour of the allottee or the association, and hand over the title documents	Individual title to the unit and collective title to the common areas, with the insurance documents and benefits transferred	Complaint and directions from the Authority; compensation through the adjudicating officer for loss the failure causes
Defect liability period	Rectify structural defects and defects in workmanship, quality or services brought to notice within five years of handing over possession, without charge, within thirty days	Five years of promoter answerability for the building’s soundness after the keys are handed over	On failure to rectify within thirty days, appropriate compensation to the aggrieved allottees as adjudged under the Act

State rules and the ongoing projects fight

Section 84 required every appropriate Government to make its rules under the Act within six months of the Act’s commencement, and the requirement was honoured in the letter more than in the spirit of uniformity. The rules are where the Act’s open texture lives: the form of the agreement for sale, the rates of interest payable on delay and on late payment, the fees for registration and for complaints, the manner of recovery, and, most consequentially, the definition of an ongoing project for the purposes of the registration duty that fell due in the three months after 1 May 2017. On that definition, the Act itself had spoken in terms of a single test, the absence of a completion certificate. Several States, Uttar Pradesh prominently among them, framed definitions that excluded whole classes of uncertified projects from the registration net: projects where an application for a completion certificate had been made, projects where a stated proportion of development work was complete, projects where a stated proportion of units had been sold or conveyance deeds executed. Each exclusion had a local logic, usually the claim that a nearly finished project would be burdened rather than helped by registration, and their combined effect was to withdraw from the Act precisely the inventory its buyers were trapped in, the half-finished, heavily sold projects of the preceding boom.

The divergence deserves to be analysed as design rather than denounced as sabotage, because it teaches the central lesson of this statute’s federal structure. Parliament, legislating on contracts and transfer of property, had to work through State authorities and State rulebooks; it fixed the completion-certificate test in the proviso to Section 3(1) but left the administrative definition of the registration exercise to the rules; and a definition left to rules will be written by governments that face the industry being regulated as a constituency, an employer and a source of stamp duty. The remedy, when it came, came from the courts reading the Act over the rules: the Supreme Court’s treatment of the question in 2021, examined in the next section, proceeded on the Act’s own terms, under which a project without a completion certificate on the date of commencement was registrable and within the Act, whatever a State rule said about proportions of work or sale. Where a State went further and enacted a parallel statute of its own for the housing sector, as West Bengal did with its Housing Industry Regulation Act of 2017, the conflict became constitutional rather than administrative, and in Forum for People’s Collective Efforts v. State of West Bengal, decided in 2021, the Supreme Court struck the State statute down as repugnant to the central Act, holding that the field of promoter-allottee regulation stood occupied by Parliament’s legislation and that the State law, which diluted the central protections, could not stand beside it. The episode is the cleanest demonstration in the Act’s short life of what Sections 88 and 89, read with the repugnancy doctrine, were designed to secure: parallel State experimentation ends where it contradicts the central settlement.

Maharashtra’s experience ran the other way and is equally instructive. The State with the oldest promoter-regulation statute of its own framed rules that tracked the central test closely, built its authority early, and treated the registration of ongoing projects as the centre of the exercise, with the result that the largest inventory of stuck projects in the country entered the register and became visible to their buyers. The contrast between the two State experiences is not a contrast between virtue and vice. It is a contrast between two readings of what registration of a half-built project is for: a burden on the promoter, to be minimised where the project is nearly done, or a rescue mechanism for the allottees, most valuable exactly where the project is nearly done and the money is nearly gone. The Act’s text supports the second reading, and the courts, when the question reached them, said so.

Why did the same Act produce different coverage in different States?

Because the Act is a central skeleton with State flesh, and the definition of an ongoing project sat in the flesh. Parliament fixed the test in the statute, a project without a completion certificate at commencement must register, but left the registration exercise to State rules, and several States wrote exclusions for projects substantially complete or substantially sold.

Until the courts read the Act over the rules, a buyer’s statutory protection therefore depended on the accident of the project’s State, which is the predictable cost of the Act’s federal design.

The courts settle the reach of the Act

The first great challenge arrived at once, because the Act’s commencement programme required promoters of ongoing projects to register within three months, and the industry attacked the statute itself. Promoters across the country filed writ petitions questioning the constitutional validity of the registration duty for ongoing projects, the separate account, the interest and penalty provisions and the composition of the Tribunal, and in September 2017 the Supreme Court directed that the petitions be heard together by the Bombay High Court. The judgment in Neelkamal Realtors Suburban Pvt. Ltd. v. Union of India, delivered on 6 December 2017, upheld the Act. The High Court held that the provisions were a reasonable exercise of legislative power in the public interest of protecting homebuyers, that applying the registration and account disciplines to ongoing projects was not retrospective in the sense the Constitution forbids, because the Act governed the projects’ future conduct from registration forward rather than reopening completed transactions, that the interest payable on delay was compensatory in character rather than a penalty, and that the penalty provisions operated on defaults occurring under the Act’s regime. One provision fell: the clause of Section 46 that made a member of the Indian Legal Service who had held the post of Additional Secretary eligible for appointment as a Judicial Member of the Appellate Tribunal was struck down, the court holding that the qualification did not answer to the judicial character of the office. The rest of the statute, including every operative provision this article has described, survived its first examination intact.

The questions the High Court’s framing left open were the ones the Act’s second phase of litigation pressed, and they reached the Supreme Court in a batch of appeals by promoters against orders of the Uttar Pradesh authority directing refunds with interest. The judgment in M/s Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh, delivered on 11 November 2021, is the authoritative settlement of four contested points, and each should be stated narrowly, as the Court stated it. First, on reach: the Court held that the Act’s application is retroactive in character in the limited sense that it fastens on projects that were ongoing at commencement, while projects already completed, or to which the completion certificate had been granted, stand outside its fold; the ongoing project, once registered under Section 3, must thereafter follow the Act’s mandate prospectively. The certificate test in the statute, not the exclusionary definitions in a State’s rules, decides coverage. Second, on the refund entitlement: the allottee’s right under Section 18(1) to withdraw and obtain a refund of the amount paid, with interest, on the promoter’s failure to hand over possession by the agreed date is unqualified, and does not depend on the allottee establishing any further default or on the Authority’s discretion; the promoter who has taken the money and missed the date faces a right, not a request. Third, on the division of adjudicatory labour: the Authority is competent to direct the refund of the amount with interest under Section 18, while compensation, which requires the assessment Section 72 structures, is the province of the adjudicating officer; the promoter argument that refund orders required the adjudicating officer’s involvement, and were void when passed by a single member of the Authority under its internal delegation, failed on both points, the Court upholding the Authority’s power to delegate complaint disposal to single members. Fourth, on the appeal condition: the pre-deposit required by the proviso to Section 43(5) is mandatory, and the requirement is neither discriminatory nor a violation of the promoter’s rights under Articles 14 and 19(1)(g) of the Constitution; a promoter’s appeal cannot be entertained without the deposit the provision prescribes, of at least thirty per cent of the penalty or of the total amount payable to the allottee including interest and compensation, as the case may be.

The combined effect of the two judgments is that the statute this article describes is the statute as enacted, not the statute as variously diluted. Validity was settled in 2017; reach, refund, forum and appeal were settled in 2021. Litigation continues at the margins, on interest computation in particular cases, on the treatment of projects inside insolvency, on the force of agreements that predate the Act, but the architecture is no longer in issue, and a pillar article can state the law of the Act as a settled structure rather than as a set of propositions awaiting a verdict.

Who and what the Act binds: the edges of coverage

Coverage questions decide more real disputes than any other part of the Act, and they are answered by combining the definitions with the Section 3 exemptions rather than by intuition about fairness. The Act covers residential and commercial projects alike: the definitions speak of plots, apartments and buildings without confining them to dwelling, and a commercial complex, an office building sold in units, or a mixed development marketed to purchasers stands inside the registration duty on the same terms as a housing project. It covers the sale of plots in a plotted development, not only constructed units, because the definition of a real estate project includes the development of land into plots for the purpose of selling them, and the purchaser of a plot in a promoter’s layout is an allottee with the Act’s entitlements in respect of that plot. It covers the public developer as much as the private one: a development authority, a housing board or another public body that constructs buildings or apartments for allotment to the general public falls within the definition of a promoter for that activity, and its projects are registrable, a point of real consequence in States where parastatal development was historically the least accountable segment of the market. It covers the landowner-developer structure through the width of the promoter definition already described. It does not cover a transaction of pure letting, because the allottee definition excludes the person who takes a unit on rent; it does not cover a resale between two private holders, because no promoter sells in that transaction, though the agent who facilitates it answers to his own registration duties; and it does not cover the project that stays beneath both exemption thresholds, the subject of the assessment below.

Two boundary questions recur often enough to deserve the statute’s own answers rather than folklore. The first is whether an agreement executed before the Act, in a project that had to register as ongoing, is governed by the Act or by its own terms. The settlement the courts reached is that the Act’s disciplines apply to the registered project from registration forward, that the possession date and the parties’ accrued positions under the earlier agreement remain the measure against which Section 18 operates, since the section speaks of the date specified in the agreement for sale, and that the Act’s entitlements therefore ride on top of the old contract rather than annulling it. The second is whether the Act approves projects. It does not. Registration is not an approval of title, of plans or of viability, and the Act’s scheme presupposes the municipal and environmental approvals that other law requires, which the promoter must obtain and disclose. The Authority registers on the basis of the promoter’s declarations and the documents filed, and a registration number is evidence that the declarations were made and the project is on the register, not a State warranty that the title is good or the building will be sound. Buyers who treat the registration number as a guarantee misread the instrument, and promoters who market it as one commit precisely the false representation Section 12 prices.

The commencement structure adds a third boundary that matters in practice. Because the registration chapter took effect on 1 May 2017 while the institutional chapters had operated from 1 May 2016, there was a year in which authorities existed, rules were being framed and the Central Advisory Council stood constituted, but no project could yet be registered and no penalty for non-registration could attach. The Real Estate (Removal of Difficulties) Order of October 2016 used the Act’s own removal-of-difficulties power to smooth specific frictions of that interval. The sequence explains a feature of the early record that otherwise looks like laxity: enforcement before May 2017 was institution-building, and the Act’s teeth are dated, for every project and every default, from the second commencement.

A single project through the Act

The scheme assembles most clearly when followed through one project’s life, in the stylised form in which the Act imagines it. A promoter assembles land for a housing project of two towers. Before a single advertisement may lawfully run, he applies for registration, filing the sanctioned plans as approved by the municipal authority, the commencement certificate, his title declaration supported by affidavit, the encumbrance position, the proforma agreement and conveyance, the count and carpet areas of the units, the professionals engaged, and his declaration of the period within which he undertakes to complete. The Authority grants registration within thirty days, and the project acquires its public page. Sales open. Booking amounts are taken within the ten per cent ceiling, and every buyer who crosses it signs and registers the prescribed agreement for sale, which states the stage-wise completion schedule and the possession date. Collections flow seventy per cent into the separate account; each withdrawal from it is certified by the project’s engineer, architect and chartered accountant against the stage of construction reached, and the account is audited after the financial year closes. Each quarter, the promoter updates the register: how many units of each type stand booked, the state of the approvals, the percentage of construction. A buyer in the second tower can watch the first tower’s record and his own instalments’ destination from the public page.

Suppose the project slips, as projects do, because an approval is delayed beyond the promoter’s control. The Act’s answer is procedural rather than indulgent: before the registered period expires, the promoter applies for extension under Section 6, the Authority records its reasons, and the extension is capped at one year in the aggregate. Suppose instead that the promoter simply slows as collections thin. The quarterly returns show it, the association of allottees forms on the statutory trigger, and the allottees’ election under Section 18 matures on the possession date: those who withdraw claim their refunds with interest and compensation, those who stay claim interest for each month of delay, and the Authority, not a civil court of first instance, is where those claims begin. Possession, when it comes, is accompanied by the occupancy certificate, the conveyance deed of the units and the undivided shares in the common areas, and the transfer of the insurance documents to the association. A structural defect appearing in the third year after handover is notified to the promoter, who must rectify it within thirty days at his own cost, failing which the allottees’ compensation is adjudged on the Section 72 factors. At every stage of that narrative, the obligation that bites is one this article has identified in the text, and the narrative’s point is the density of the net: there is no stage of a real estate project’s life, from the first hoarding to the fifth year after possession, at which the Act is silent.

The same walkthrough, read from the promoter’s chair, is a compliance calendar rather than a trap, and the distinction matters to the assessment that follows. Every duty in the narrative is knowable in advance, dated, and priced. The promoter who builds the calendar into his project management faces a statute of unusual predictability; the promoter whose business model required the free use of buyers’ collections faces a statute that abolishes his model. The Act does not confuse the two, and neither should its readers.

The two cases, stated fairly

The developer’s case against the Act’s design, made in the constitutional challenges and in the industry’s evidence to Parliament, deserves to be put at its strongest, because it identifies real costs that the statute consciously imposes. The separate account constrains cash flow in an industry that historically financed later phases from earlier receipts; a promoter who must leave seventy per cent of collections locked against certified construction loses the working-capital engine that made aggressive pricing and rapid land assembly possible, and the predictable consequences, consolidation toward larger and better-capitalised developers, the exit of small builders, and higher financing costs priced into homes, are costs borne in part by buyers themselves. The delay liability is asymmetric in a way the text does not disguise: the promoter answers in interest, refund and compensation for a missed possession date, while the approvals on which the date depends issue from authorities answerable to no equivalent discipline, and a project can be made late by a sanctioning body that pays nothing for its own delay. The interest symmetry the Act advertises is, on this reading, a symmetry between the parties to the agreement only, while the third party who controls the critical path, the State as approver, stands outside the pricing of time altogether. The pre-deposit for appeals adds a further asymmetry of process: a promoter who believes an Authority’s order is wrong must fund the award, in whole or in the statutory proportion, before a Tribunal will hear him, a condition no allottee appellant bears.

The buyer’s case, made by the consumer collectives that campaigned for the statute (the Forum for People’s Collective Efforts, the collective behind the Fight for RERA campaign, intervened in the Bombay High Court proceedings in support of the Act) and accepted in substance by both courts that upheld it, answers each point at the level of the practice the Act displaced. The cash-flow model the escrow constrains is not a neutral financing technique; it is the precise mechanism by which buyers in a stalled project lost both the flats and the money, because the money had been spent on land for projects in which they had no interest, and a financing model that requires the next project’s buyers to rescue the last project’s is not made legitimate by being customary. The approval-delay argument proves too much unless it engages with the Act’s own answers: the completion period is the promoter’s own declaration, made with knowledge of the approval landscape; extension for circumstances beyond his control exists within its statutory cap; and the promoter, unlike the buyer, contracts with the approving authorities, prices approval risk into his land bid, and chooses when to launch sales relative to the approvals in hand. The asymmetry of appeal deposits answers a documented abuse, appeals filed to defer refunds indefinitely at no cost, and the deposit is not a forfeiture but money held against the outcome. On the deepest point the buyer’s case is simple: a promoter who accepts the price of a home against a promised date is the party best placed to bear the risk of the date, and a legal regime that leaves the risk with the party who can neither manage it nor diversify it has the allocation backwards.

The verdict this article defends follows from the statute’s own structure rather than from sympathy with either side. The Act’s burdens on promoters are real, and they are the price of the only reform in the package that could not be contracted around: rights can be waived in a one-sided agreement, interest can be drafted down, forums can be chosen, but a rule that takes the money out of the promoter’s hands operates regardless of what the agreement says, which is why the industry resisted the account more than any entitlement and why the account is the Act’s centre. Where the developer’s case succeeds is at the margins the Act left genuinely unpriced, above all the approval timeline risk that no provision allocates to the authorities who generate it; where it fails is in treating the pre-Act financing model as a baseline of entitlement rather than as the pathology the statute was passed to cure.

The gap below the thresholds

Candour about the Act requires a section on the buyers it does not reach. The exemption thresholds in Section 3(2) withdraw registration from the project on five hundred square metres or less of land and from the project of eight apartments or fewer, and since either limb suffices, the project must merely be small on one measure to stand outside. The rationale is administrative proportionality: the compliance apparatus of registration, quarterly returns and certified accounts is a heavy yoke for a single small building, and every regulatory statute draws a line below which the activity is left to general law. The consequence, however, is unevenly distributed across the country’s housing market. In the metropolitan markets the thresholds exclude little that matters, since projects are large. In smaller towns, where development characteristically proceeds building by building, in developments of six or eight flats by local builders, a substantial share of the market can stand outside the Act altogether, and the buyer in such a project has no registration record to inspect, no separate account protecting his payments, no Section 18 election on delay, and no Authority to complain to under this statute. His remedies are the older ones the Act was passed because they failed: the contract, the consumer forum, and the civil court.

The gap is not an oversight that interpretation can repair, and the courts have not treated it as one; the thresholds are the legislature’s line, drawn in figures, and a promoter beneath them is not evading the Act but standing where the Act placed him. What can be said is that the line’s placement is a policy choice open to the same criticism as any de minimis rule: it is measured by the size of the project rather than by the vulnerability of the buyer, and the buyer of one of eight flats in a small town is not obviously better placed to bear a promoter’s failure than the buyer of one of eight hundred in a metropolis. State legislatures cannot lower the central Act’s thresholds by rule, and the West Bengal episode warns against parallel statutes that contradict the central scheme; the threshold question therefore belongs to Parliament, and it remains the Act’s clearest unfinished business on the coverage side.

What the Act does not do

An honest pillar must also mark the statute’s self-denying boundaries, because the most common disappointments with the Act are disappointments of expectations it never raised. The Act does not guarantee title: registration proceeds on the promoter’s declarations and filed documents, and the Authority does not warrant that the land is the promoter’s to sell. It does not guarantee completion: the account discipline and the completion machinery raise the probability and discipline the failure, but a project can still fail, and the Act’s answer is an orderly completion process and priced entitlements, not a State assurance. It does not control price: nothing in the Act caps the price of an apartment, prescribes the rate of return a promoter may earn, or reviews the commercial terms of a fairly disclosed bargain beyond the structural disciplines of form, disclosure and interest symmetry. It does not approve buildings: sanction of plans remains with the municipal authorities under planning law, and the Act’s interest in approvals is confined to requiring that they exist, be disclosed, and be current on the register. And it does not displace the rest of the legal system: Section 88 keeps other laws alive beside it, the consumer commissions continue to exercise the jurisdiction their statute gives them, the insolvency statute governs the insolvent promoter’s estate, and the criminal law of cheating and forgery remains available for conduct that is fraud rather than default. The Act is a regulatory spine for one transaction, and it is at its worst when read, by promoters or by buyers, as either a charter of immunity or a promise of rescue.

Assessment and verdict

Measured against the problem it was built to solve, the Act’s record divides into what the design got right and what depends on capacities the statute could not itself create. The design choices that have worn best are the mechanical ones. The registration gate converted an invisible market into a documented one, and the document is public. The separate account attacked the diversion of buyer money at the level of banking mechanics rather than exhortation, and the certification chain made each withdrawal an evidenced event. The prescribed agreement form and the ten per cent rule reordered the sequence of the transaction so that paper precedes money. The delay election in Section 18 replaced a negotiation the buyer always lost with an entitlement the courts could describe, in the Supreme Court’s word, as unqualified. And the penalty ladder, reserving imprisonment for defiance of the regulator rather than for commercial failure, kept the criminal law credible enough to be usable.

The weaknesses are of two kinds. The first is capacity: an Authority is only as good as its staffing, its website, its recovery follow-through with district administrations, and its willingness to use the inspection and direction powers on its own motion, and these vary by State in ways the central text cannot control; the Act’s federal design purchased constitutional safety at the price of uneven machinery. The second is the pair of gaps this article has marked rather than hidden: the threshold exemptions that leave the small-project buyer outside, and the unallocated approval risk that leaves the promoter answering in interest for delays the State’s own bodies cause. Neither gap is an argument against the statute’s centre. Both are arguments about where its next amendment should aim.

The series to which this article belongs keeps finding that a statute’s operative provision is not the one it is celebrated for, and this Act is the pattern’s purest instance. The RERA Act 2016 is celebrated for the homebuyer’s rights, and its rights are real, but rights of that kind were available in embryo in contract and consumer law and were defeated in practice by the absence of the money when judgment came. The provision that changed outcomes is the one nobody marches for: a percentage, an account in a scheduled bank, three certificates and an audit. The escrow is the reform. Everything else in the Act, the register, the disclosures, the forums, the penalties, exists to make that single accounting rule visible, enforceable and impossible to draft around, and the Act should be judged, as this article has tried to judge it, by whether the money is where the statute put it.

The price of time: interest as the Act’s measuring rod

A reader who wants the Act’s philosophy in miniature should study its treatment of interest, because interest is the instrument the statute reaches for at every pressure point. The promoter who delays possession pays interest for every month of delay to the allottee who stays, and interest on the whole amount to the allottee who withdraws. The allottee who delays a scheduled payment pays interest to the promoter. The buyer misled by a false statement recovers his investment with interest. The rates are not fixed in the Act; they are prescribed by the rules of each State, and the State rules have commonly pegged them to a public benchmark, a margin over the State Bank of India’s marginal cost of funds based lending rate, so that the price of time under the Act tracks the price of money in the economy rather than a figure frozen in a schedule. The Supreme Court’s Newtech record itself shows the mechanism working: the Uttar Pradesh authority’s refund orders carried interest at the rate the State’s rules prescribed, expressed there as the lending benchmark plus one per cent.

The design choice embedded in this arrangement is symmetry of measure. The old agreements characteristically charged the buyer’s late instalment at a penal contractual rate, compounded in effect by forfeiture clauses, while compensating the buyer for the promoter’s late possession at a nominal rate per square foot that bore no relation to the money locked up. The Act replaces both figures with a single prescribed measure running in both directions, and the Bombay High Court’s characterisation of the promoter’s delay interest as compensatory rather than penal is the jurisprudential recognition of that design: interest under this Act is the rent of money for the period another party kept it, and it prices the delay instead of punishing the delayer. That is also why the withdrawal limb of Section 18 returns the entire amount with interest rather than merely the deposits forfeited under the old forfeiture architecture. The statute treats the allottee’s payments as money held against a promised performance, and when the performance fails, the money goes home with its time value attached.

Development below the level of amendment

Parliament has left the Act’s text substantially as it was enacted, and the statute’s development has run almost entirely through the channels beneath an amending Act: rules, regulations, orders and judgments. The rulebooks came first, under the six-month discipline of Section 84, and for the Union territories without legislatures the Central Government itself framed general rules in 2016, which served as the working model several States adapted. The Authorities followed with regulations under Section 85, governing their own procedure, the formats of registration and complaint, and the conduct of their proceedings, so that much of what a practitioner experiences as the Act is in truth this second layer, and it differs, legitimately, from State to State. The Removal of Difficulties Order of October 2016 used the Act’s transitional power to resolve frictions of the first commencement, and the courts supplied the rest of the development: validity in 2017, reach and refund in 2021, the repugnancy settlement for parallel State legislation in the same year, and the insolvency interface through the 2018 amendment of the insolvency statute and its defence in Pioneer Urban in 2019.

This pattern of development is worth naming because it explains the Act’s texture for a researcher. The stable layer is the central text: thresholds, proportions, periods and penalties stated in this article are Parliament’s figures and have not moved. The moving layer is everything around them: the rule definitions that decide borderline coverage, the interest rates the rules prescribe, the regulations that shape procedure, and the case law that has fixed the meaning of the open phrases, ongoing project, unqualified refund, compensation. A reader who cites the Act should therefore cite it in two parts, the section for the rule and the State’s rulebook or the governing judgment for the rule’s local content, and a researcher comparing States is comparing the second layer, not the first. The pillar’s discipline in this article has been to state the first layer from the bare Act and to identify, at each point where the second layer governs, that it does and whose it is.

The promoter’s continuing functions under Section 11

Section 11 rewards a second reading, because beneath the disclosure duties that headline it sits the Act’s charter of the promoter’s continuing functions, in sub-section (4), and several of the most litigated everyday obligations live there. The promoter is responsible for providing and maintaining essential services, on reasonable charges, until the maintenance of the project is taken over by the association of allottees, a provision that answers the historic interval in which a completed project’s lifts, water and common lighting belonged to nobody because the promoter had exited and the association had not formed. He must prepare and maintain the documents, records and plans the project generates and make them available as the Act requires. He must enable the formation of an association or co-operative society of the allottees, and where no local law governs the matter, the association, by whatever name called, is to be formed within three months of the majority of allottees having booked their units in the project. And he must not mortgage or create a charge on an apartment, plot or building after executing the agreement for sale for it; if he does, the mortgage or charge does not affect the rights and interests of the allottee who has taken the unit, a sentence that quietly reverses the priority contest that used to ruin buyers when a promoter’s construction finance collapsed and the lender’s charge met the buyer’s paid-for flat.

The association provisions deserve their weight. The Act’s design repeatedly routes power to the allottees acting collectively: consent of two-thirds for alterations and for transfer of the project, completion of the remaining work on the promoter’s failure, receipt of the conveyance of common areas, and the taking over of maintenance. None of that machinery works if the association does not exist, and the promoter’s incentive, left alone, would be to postpone its formation indefinitely, since an unorganised body of buyers cannot give or withhold a two-thirds consent, cannot take a conveyance, and cannot complete a project. Section 11(4) therefore makes the promoter the midwife of the body that will hold him to account, with a three-month clock running from majority booking where local law is silent. It is one of the Act’s most quietly radical arrangements, and it explains why the association appears in this statute not as a residents’ welfare afterthought but as a completion authority, a consent authority and a title-holder, constituted by the promoter’s own statutory duty.

The essential-services obligation completes the picture of the interval between possession and self-government. Possession under the Act is not the end of the promoter’s presence; he remains the maintainer of the project’s essential services, at reasonable charges, until the association takes over, and the obligation bridges the period in which the building is occupied but its collective owner is still organising itself. Read with the conveyance duty and the defect liability, the scheme is continuous: the promoter builds under the register’s eye, maintains until the collective succeeds him, conveys the title to that collective, and answers for the building’s soundness for five years after he hands over the keys.

Revocation in operation

The registration chapter’s final machinery deserves statement in sequence, because revocation is the point at which the Act stops regulating a promoter and starts replacing him. Section 7 permits the Authority to revoke a registration, on its own motion or on a complaint, where the promoter defaults in doing anything he is required to do by or under the Act or the rules, violates the terms or conditions of the approvals, or indulges in the unfair trade practices the provision enumerates, which include falsely representing the standard or nature of services, representing approvals that have not been obtained, and making false statements in advertisements or documents. Before revoking, the Authority must give the promoter notice of not less than thirty days of its intention and an opportunity to explain, and a registration liable to lapse for expiry of its period is treated through the same gateway. The procedural courtesies are not decoration: revocation destroys a business’s lawful market access, and the hearing is what distinguishes the regulator’s sentence from a mere administrative erasure.

The consequences Section 7 attaches to revocation reach beyond the project. The Authority may debar the promoter from access to its website in relation to the project, and the Act’s scheme requires the revocation to be public, with the Authority maintaining and publishing the record of promoters and agents whose registrations stand revoked, so that the market itself can price the information. The Authority must inform the regulatory authorities of the other States and Union territories of the revocation, which prevents the revoked promoter from presenting himself as unblemished in the next State’s register. It may direct the bank maintaining the separate account to freeze the account’s operation except as permitted for the project’s completion, preserving the buyers’ money at the moment of maximum danger. And it sets Section 8 in motion: consultation with the appropriate government and the facilitation of the remaining development work by the association of allottees or by a competent authority, with the Authority empowered to issue the directions the completion requires. Revocation, in this design, is not the project’s death certificate. It is the trigger for the project’s rescue by the people who paid for it, using the money the separate account preserved, under the supervision of the authority that holds the file. The mechanism has been used sparingly, as a rescue power should be, but its existence disciplines every negotiation between an authority and a defaulting promoter long before it is invoked.

The bar on civil courts, and the road around it

Section 79 performs the standard enclosure of a specialised regime: no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority, the adjudicating officer or the Appellate Tribunal is empowered by or under the Act to determine, and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken under the Act. The enclosure protects the machinery from the two historic solvents of Indian regulatory law, the parallel civil suit and the interim injunction that froze a project for a decade. But the enclosure has a constitutional seam, and the Act’s own biography runs through it: the writ jurisdiction of the High Courts under Article 226 is not the jurisdiction of a civil court, and it was by writ petitions that the promoters in Neelkamal carried their challenge to the Bombay High Court and the promoters in Newtech carried theirs to the Allahabad High Court and onward to the Supreme Court. The specialised forums govern the run of disputes, refund, interest, compensation, penalties, while the constitutional courts remain available for challenges to the statute, to jurisdiction, and to the legality of the machinery’s operation, ordinarily insisting that the statutory appeal be exhausted where the grievance is one the Tribunal can decide. The settlement is characteristic of the Act’s realism about its own place in the legal system: it encloses the transaction, and it does not pretend to enclose the Constitution.

Phases: the stand-alone project rule

Why does the Act treat each phase as a separate project?

Because accountability attaches to the registered project, and a township built over a decade would otherwise dissolve that accountability into a distant promise. The Explanation to Section 3 makes every phase a stand-alone real estate project requiring its own registration, so each phase carries its own declarations, its own separate account, its own completion period and its own quarterly record.

A buyer can therefore test the promoter’s performance against the phase he paid into, rather than against the progress of a development most of which he did not buy.

Large developments are rarely built or sold at once, and the Act’s treatment of phasing quietly determines how much protection a buyer in a late phase actually has. The Explanation to Section 3 provides that where a real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under the Act for each phase separately. The rule cuts in two directions at once. Against the promoter, it forecloses the township defence, the argument that a two-hundred-acre development is a single project whose registration, account and completion period can be managed as one undifferentiated whole while sales proceed everywhere. In the buyer’s favour, and less obviously, it insulates him: the separate account is maintained for the registered project, and where each phase is a project, the collections of the buyer’s phase answer for that phase’s land and construction cost, so a failure in an early phase does not automatically consume the money of a later one, and the completion period declared for the buyer’s phase is the measure of his Section 18 rights rather than the promoter’s horizon for the entire township.

The stand-alone rule also sets the clocks by which the allottees of each phase live. The completion period declared at the registration of a phase is that phase’s promise, and the Section 18 election of a phase’s allottees matures on that phase’s date even if the wider development of which it forms part has years left to run. Possession, conveyance and the five-year defect liability likewise run phase by phase, from the handing over of possession in that phase, so a buyer in an early tower is not asked to wait for the township’s last tower before his conveyance falls due or his defect period begins. The promoter’s extension application, where delay strikes, is likewise made for the registration it concerns. A phased development is therefore not one promise with instalments. It is a sequence of complete statutory relationships, each with its own register entry, its own account, its own date and its own remedies, and the buyer who understands that his phase is the project, for the Act’s purposes, understands the protection he actually holds.

The stand-alone rule also disciplines the exemption thresholds and the disclosure record. The eight-apartment exemption is reckoned inclusive of all phases, so a promoter cannot slice a project into registrations of convenience to slip beneath the ceiling, while the quarterly record, the approvals and the construction status are maintained phase by phase, which is the granularity at which a buyer can actually verify progress. Phasing has a legitimate commercial logic the Act respects, since approvals, finance and construction genuinely proceed in tranches, but the statute insists that the tranche the buyer paid into is the unit of accountability. The promoter who sells across five phases administers five registered projects, five accounts and five completion promises, and the multiplication of paperwork that promoters complain of is, from the allottee’s side of the table, the multiplication of the points at which the Act can see him.

The sales channel: agents and advertising

The Act regulates the route by which projects reach buyers as carefully as it regulates the projects, because the pre-Act market’s misinformation travelled through that route. The definition of advertisement in Section 2 is wide: any document described or issued as an advertisement through any medium, including any notice, circular or other document or publicity in any form, informing persons about a real estate project or offering plots, apartments or buildings for sale or inviting persons to purchase or to make advances or deposits. Nothing in the definition confines it to print or to the promoter’s own publications, and the duties that hang on it, the prominent display of the Authority’s website address and the project’s registration number, and the Section 12 liability for false statements that induce an advance, therefore travel with the project’s marketing wherever it appears.

The agent provisions complete the channel’s regulation. Registration under Section 9 is personal to the agent and is granted for the State or Union territory, and Section 10 fixes the registered agent’s functions: he shall not facilitate the sale or purchase of, or act on behalf of any person to facilitate the sale or purchase of, any unit in a project that is not registered with the Authority; he shall maintain and preserve the books of account, records and other documents the rules require; he shall not involve himself in any unfair trade practice of the kinds the Act specifies, which include making false representations about the nature of the project or its approvals; he shall facilitate the possession of all information and documents to the allottee at the time of booking as the allottee is entitled to receive under the Act; and he shall provide such other services as may be prescribed. The first function is the structural one: the agent is made a checkpoint, forbidden to lend his services to the unregistered inventory, so that the registration gate cannot be bypassed by the simple device of selling through intermediaries. An agent who breaks the discipline faces the daily penalty Section 62 prescribes and the loss of the registration that is his licence to practise in the regulated market, and the promoter who routes sales through unregistered hands answers for his own contraventions in doing so. The Act’s bet, borne out by the register’s growth into the market’s first reference point, is that a sales channel that must quote a registration number in every transaction will, in time, refuse to carry what it cannot quote.

The Central Advisory Council and the Centre’s continuing role

One institution in the Act looks upward rather than downward. Sections 41 and 42 constitute a Central Advisory Council, chaired by the Union Minister in charge of the Ministry of Housing and Urban Affairs, with representation drawn from the Central Government, the State Governments, the Authorities, and the interests the Act affects, to advise the Central Government on the implementation of the Act, on major questions of policy, and on the protection of consumer interest and the growth and development of the real estate sector. The Council decides nothing and binds nobody, and its inclusion remains a considered piece of design. A statute executed by more than thirty State authorities and rulebooks will drift, and some of that drift is the federal bargain working as intended; the Council is the forum in which the drift is made visible to the one government that can propose a legislative correction, and in which a State authority’s working solution to a common problem, a recovery practice, a conciliation experiment, a registration format, can be carried to the others without any of them surrendering jurisdiction. The Centre’s other continuing roles are of the same character: it frames the rules for the Union territories without legislatures, it receives the Authorities’ annual reports through the appropriate Governments, and it alone can move Parliament if the thresholds, the proportions or the penalty ladder require recalibration. The Act’s federation is thus not a one-time division of labour settled in 2016. It is a standing structure in which the Centre owns the text, the States own the machinery, and the Council owns the conversation between them.

The filed proformas: the project’s paper constitution

Among the documents Section 4 requires with the registration application, the three proformas are the least discussed and among the most consequential: the proforma of the allotment letter, the proforma of the agreement for sale, and the proforma of the conveyance deed proposed to be executed with the allottees. Their filing means that the documents through which every buyer in the project will pass are on the public record before the first unit is sold. The allotment letter a buyer receives can be compared with the allotment proforma the Authority holds. The agreement for sale he is asked to sign can be measured against the filed proforma and against the prescribed form the rules mandate. The conveyance deed that will eventually carry his title exists in draft from the project’s first day, so the destination of the transaction is documented before the journey begins.

The discipline this creates is easy to underestimate because it operates silently. A promoter who wishes to insert an unusual forfeiture clause, an aggressive alteration right or a possession date hedged beyond recognition must either file the clause in the proforma, where the Authority and every prospective buyer can read it before any money moves, or omit it from the proforma and insert it at execution, where its absence from the filed record is itself the evidence of the deviation. The old market’s documentary practice depended on the buyer meeting the agreement for the first time at the moment of signing, with the booking amount already paid and the negotiation already over. The proforma regime reverses the information sequence in the same way the ten per cent rule reverses the payment sequence: the paper precedes the commitment. Read together with the quarterly disclosure of the documents’ subject matter, the approvals, the bookings and the construction, the filed proformas complete the Act’s theory of the transaction, which is that a real estate purchase should be the most documented purchase an ordinary family ever makes, documented in advance, in public, and in a form the buyer did not have to commission a lawyer to reconstruct after the event.

The Authority’s own accountability

A regulator armed with registration, penalty and revocation powers invites the obvious closing question, and Chapter IX of the Act, on finance, accounts, audits and reports, supplies the formal answer. The Authority is funded through grants and loans from the appropriate Government and through the fees and charges the Act authorises it to collect, paid into the fund the chapter constitutes, and its accounts are audited in the manner the chapter prescribes, with the certified accounts and the audit report forwarded to the appropriate Government. The Authority must prepare an annual report of its activities in each financial year, and the report is laid before the State Legislature, or, for a Union territory, before Parliament, as the case may be. The discipline is conventional, and deliberately so: the Authority that can freeze a promoter’s bank account and publish his name as a defaulter is itself a creature of audited accounts and a laid report, answerable in the ordinary way for money and obliged, once a year, to render a public account of the register it keeps, the complaints it has processed and the state of the sector it regulates. The annual reports of the working authorities have become, in consequence, one of the primary sources from which the Act’s operation can be studied at all, which is the final sense in which this statute is a machine for producing a record: it documents the promoters, it documents the projects, and it documents itself.

The publicity runs through the whole of the Authority’s output and not only its reports. Its regulations are published, its orders are public documents, and the project register it maintains is the authoritative public description of every registered project, the record against which advertisements are tested, agreements are measured and complaints are framed. Litigation under the Act therefore has a documentary centre that litigation under the old dispensation lacked. A dispute about what was promised begins from the filed plans, the filed proformas and the quarterly returns, rather than from the parties’ competing recollections of a sales office conversation, and that evidentiary settlement, quiet as it is, may in the long run matter as much as any single entitlement the Act confers.

Frequently Asked Questions

Q: Which projects must be registered under RERA?

Every real estate project that a promoter wishes to advertise, market, book or sell must be registered with the State’s Real Estate Regulatory Authority before any of that activity begins, unless an exemption in Section 3 applies. Registration is not required where the land proposed to be developed does not exceed five hundred square metres, or where the number of apartments does not exceed eight inclusive of all phases, either limb being sufficient. Projects that had received a completion certificate before the Act commenced are also exempt, as is renovation or repair that involves no marketing, advertising, selling or new allotment. Projects under way without a completion certificate at commencement had to register within three months of 1 May 2017.

Q: What is the seventy percent escrow requirement?

Section 4 of the Act requires the promoter to deposit seventy per cent of the amounts realised from the allottees of a project, from time to time, in a separate account in a scheduled bank. The money may be used only to cover the cost of construction of that project and the cost of its land. Withdrawals are permitted only in proportion to the percentage of the project’s completion, and each withdrawal must be certified by an engineer, an architect and a chartered accountant in practice. The account is audited within six months after the end of every financial year. The discipline prevents collections from one project being diverted to finance another, which was the practice the Act was principally designed to end.

Q: What must a promoter disclose and how often?

At registration the promoter must disclose his track record, the project’s approvals and commencement certificate, the sanctioned and layout plans, the title to the land and its encumbrances by a declaration supported by affidavit, the number, type and carpet area of the units for sale, the professionals engaged, and the period within which he undertakes to complete the project. Disclosure then continues for the project’s life. The promoter must maintain the project’s page on the Authority’s website and update it quarterly, covering the units booked, the status of approvals and the stage of construction. Every advertisement or prospectus must prominently carry the Authority’s website address and the project’s registration number, so that a buyer can test the sales material against the regulator’s file.

Q: What happens if possession of a flat is delayed?

Section 18 gives the allottee an election. If the promoter fails to complete the project or to give possession in accordance with the agreement for sale or by the date specified in it, the allottee who wishes to withdraw is entitled to the return of the entire amount he has paid, with interest at the prescribed rate and compensation in the manner the Act provides. The allottee who does not wish to withdraw is entitled to interest for every month of delay, at the prescribed rate, until possession is handed over. The Supreme Court in Newtech Promoters v. State of Uttar Pradesh (2021) described the withdrawing allottee’s right to a refund with interest as unqualified, not dependent on the Authority’s discretion.

Q: How long is a promoter liable for structural defects?

For five years from the date of handing over possession of the unit. Under Section 14(3), if a structural defect, or any other defect in workmanship, quality or provision of services, or a failure of any other obligation of the promoter under the agreement for sale, is brought to the promoter’s notice within that five-year period, the promoter must rectify it without further charge within thirty days. If he fails to rectify it within that time, the aggrieved allottees are entitled to appropriate compensation, which is adjudged by the adjudicating officer on the factors Section 72 specifies, including the loss caused and the repetitive nature of the default. The five years run from the possession of the individual unit, not from the project’s completion.

Q: Can a promoter change the sanctioned plans after selling?

Only within narrow limits. Section 14 requires the promoter to adhere to the sanctioned plans, layout plans and specifications approved by the competent authority. After units are sold, no addition or alteration to those plans, and no change in the fixtures, fittings or amenities described in the advertisement, prospectus or model apartment, may be made without the previous written consent of at least two-thirds of the allottees, excluding the promoter himself, who have agreed to take apartments or plots in the project. A narrow exception permits minor additions or alterations made necessary by architectural or structural reasons, where an authorised architect or engineer has recommended and verified them and the allottee has been given proper declaration and intimation.

Q: What penalties does RERA impose on a promoter?

The heaviest attaches to the registration duty: marketing an unregistered project carries a penalty of up to ten per cent of the estimated cost of the project, and a promoter who disobeys the Authority’s order or continues the contravention faces imprisonment of up to three years, or a further fine of up to ten per cent of the estimated cost, or both. False information in the registration application carries up to five per cent of the estimated cost, and contravention of any other provision of the Act or the rules carries up to five per cent under the residual clause. Disobeying the Authority’s orders adds a penalty for each day of default, cumulatively up to five per cent, and defying the Appellate Tribunal carries imprisonment of up to three years or a fine of up to ten per cent.

Q: Does RERA apply to projects already under way in 2016?

Yes, if they were still ongoing when the registration chapter commenced on 1 May 2017 and no completion certificate had been issued for them. The second proviso to Section 3(1) required the promoters of such projects to apply for registration within three months of that commencement. Projects already completed, or holding a completion certificate, stand outside. The Supreme Court in Newtech Promoters (2021) described the Act’s application as retroactive in character in this limited sense: it fastens on ongoing projects, which must after registration follow the Act’s mandate prospectively, without disturbing completed transactions. State rules that tried to exclude classes of uncertified projects from registration could not override the completion-certificate test the Act itself prescribes.

Q: Can a promoter accept more than ten per cent of the price before a registered agreement for sale?

No. Section 13 forbids a promoter to accept a sum of more than ten per cent of the cost of the apartment, plot or building as an advance payment or an application fee from any person without first entering into a written agreement for sale with that person and registering the agreement under the law in force. Within the ten per cent ceiling a booking amount may be taken on an allotment letter. Beyond it, every payment must travel under the registered agreement, which states the payment schedule, the stage-wise completion timetable and the possession date. A promoter who collects a larger fraction of the price on the strength of a booking form alone commits the specific contravention the section describes, and the allottee’s complaint rests on the section’s own words.

Q: What must an agreement for sale under RERA contain?

The agreement for sale must be in the form prescribed by the rules of the State, and Section 13 requires it to specify the particulars of the development of the project, the dates and the manner by which payments are to be made, the stage-wise time schedule of completion including the provision of water, sanitation and other amenities and services agreed to be provided, the date on which possession of the unit will be handed over to the allottee, and the rate of interest payable by the promoter to the allottee and by the allottee to the promoter in case of their respective defaults. The prescribed form also fixes the carpet area of the unit sold, so that the price is anchored to the statutory measure rather than to a marketing measure of the promoter’s invention.

Q: What happens if a promoter transfers the project to another promoter?

The transfer is controlled by Section 15. A promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without first obtaining the written consent of two-thirds of the allottees in the project and the written approval of the Authority. The provision protects allotments already made: a transfer does not affect the allotment or sale of any apartment, plot or building in the project, and the incoming promoter takes the project subject to the obligations the Act imposed on his predecessor, including the registered completion period, the separate account discipline and the agreements already executed. An allottee body that withholds consent therefore holds a real veto over the substitution of the developer it contracted with, and an unapproved transfer is a contravention of the Act.

Q: When must the promoter execute the conveyance deed in favour of the allottee or the association?

Section 17 obliges the promoter, subject to the State law governing transfer of common areas, to execute a registered conveyance deed in favour of the allottee in respect of the apartment, plot or building, together with the undivided proportionate title in the common areas, and to hand over physical possession and the other title documents. The common areas themselves are conveyed to the association of allottees, and where the local law does not provide for such a conveyance, the promoter must hand over possession of the common areas to the association instead. The promoter must also transfer the benefit of the insurance policies obtained under Section 16. The obligation arises on completion of the project in accordance with the agreement and the occupancy or completion documentation, and an allottee may enforce it through the Authority.

Q: What can an allottee claim if the promoter’s advertisement or prospectus was false?

Section 12 gives the claim directly. Where a person has made an advance or a deposit on the basis of information contained in the notice, advertisement, prospectus or agreement for sale issued by the promoter, and sustains loss or damage by reason of an incorrect or false statement in it, the promoter must compensate him for the loss sustained. If the person affected intends to withdraw from the proposed project, he is entitled to the return of his entire investment along with interest at the prescribed rate and the compensation payable under the section. The provision is deliberately placed at the head of the promoter’s duties, because the misrepresentation it prices occurs at the marketing stage, before any agreement exists, and it converts the brochure from salesmanship into a representation with legal consequences.

Q: What duties does RERA impose on an allottee?

Section 19 balances the allottee’s rights with duties of the same statutory character. The allottee must make payments towards the cost of the apartment, plot or building in accordance with the agreement for sale, at the time and in the manner the agreement schedules, and is liable to pay interest at the prescribed rate for any delay in payment, the same prescribed-rate discipline the Act imposes on the promoter for delay in possession. The allottee must take physical possession of the unit within the period specified after the occupancy certificate is issued, must participate in the registration of the conveyance deed in his favour, and must take part in forming the association of allottees when the majority of units in the project have been booked. An allottee who defies the Authority’s or the Appellate Tribunal’s orders faces penalties, and for defiance of the Tribunal, imprisonment of up to one year or a fine measured against the cost of the unit.

Q: What is the adjudicating officer’s role under RERA?

The adjudicating officer, appointed by the Authority in consultation with the appropriate Government under Section 71 from among judicial officers of district judge rank, decides compensation under the Act. The division of labour, confirmed by the Supreme Court in Newtech Promoters (2021), is that the Authority adjudicates refund of the amount paid with interest, interest for delay and the penalties the Act fixes, while compensation, which requires an assessment of the loss actually suffered, is the adjudicating officer’s province. Section 72 directs that assessment: the officer must have regard to the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default, the amount of loss caused by the default, the repetitive nature of the default, and any other factor he considers necessary to the enquiry.

Q: What must a real estate agent do to practise under RERA?

An agent must first register with the Authority of the State under Section 9; without registration he may not facilitate the sale or purchase of any plot, apartment or building in a registered real estate project. Section 10 then fixes his functions. He shall not facilitate a transaction in a project that is not registered with the Authority. He must maintain and preserve the books of account, records and documents the rules prescribe. He must not involve himself in unfair trade practices, including false representations about a project’s approvals or services. He must facilitate the allottee’s possession of the information and documents the allottee is entitled to receive at the time of booking, and he must quote his registration number in the transactions he facilitates. An agent who fails to register or contravenes these duties faces a penalty of ten thousand rupees for every day of default, cumulatively up to five per cent of the cost of the unit whose transaction he facilitated.

Q: How does RERA define carpet area, and why did the definition matter?

Section 2(k) defines carpet area as the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah areas and exclusive open terrace areas, but including the area covered by the internal partition walls of the apartment. The definition mattered because, before the Act, apartments were marketed and priced by super built-up area, a measure with no statutory content, into which promoters loaded shares of common areas at percentages that varied from project to project and were rarely explained to the buyer. Two apartments quoted at the same super built-up area could differ greatly in usable space. By fixing carpet area in the statute and requiring the agreement for sale to state it, the Act made the quantity the buyer pays for a defined, comparable measure across every project on the register.

Q: How long does a project’s registration last, and can it be extended?

Registration remains valid for the period the promoter himself declared in his application as the period within which he undertakes to complete the project. There is no standard term, because projects differ; the registered period is the promoter’s own commitment, publicly recorded, and the delay provisions of the Act measure his performance against it. Section 6 permits the Authority, on an application made before the registration expires and for reasons recorded in writing, to extend the registration where the delay is on account of force majeure or circumstances beyond the promoter’s control, but the extension cannot exceed one year in aggregate. The cap is deliberate: it forecloses the practice of rolling a project’s completion date forward indefinitely on paper, and once the registered period and any extension have run out without completion, the allottees’ entitlements under Section 18 stand matured.

Q: Does RERA cover commercial projects as well as homes?

Yes. The Act’s definitions speak of real estate projects, apartments, plots and buildings without confining them to residential use, and the registration duty in Section 3 applies to a project being marketed for sale whatever its intended use. An office building sold in units, a retail complex, a mixed-use development and a plotted commercial layout all stand inside the Act on the same terms as a housing project, and their purchasers are allottees with the Act’s entitlements. The statute is famous as a homebuyer law because homes dominate the market it regulates and the litigation it generated, but its text governs the transaction of selling units in a development, not the domestic character of the unit sold. Pure letting stands outside, because the allottee definition excludes a person who takes a unit on rent.

Q: What happens when a project’s registration is revoked or lapses?

Revocation under Section 7 follows a notice of not less than thirty days and an opportunity for the promoter to explain, and it may rest on default in the duties the Act imposes, violation of the conditions of approval, or unfair trade practices of the kinds the section specifies. On revocation or lapse, the consequences run beyond the promoter: the Authority may debar him from the project, must inform the other States’ authorities, may direct the bank to freeze the separate account except as completion requires, and under Section 8 must consult the appropriate government and facilitate the completion of the remaining development work, which may be carried out by the association of allottees or by a competent authority under the Authority’s directions. The design treats revocation not as the project’s end but as the trigger for its completion by other hands, financed from the account the Act preserved.