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Protecting_the_Buyer’s_Rights_Key_RERA_Clauses_&_Penalty_Provisions

Protecting the Buyer’s Rights: Key RERA Clauses & Penalty Provisions

The Real Estate (Regulation and Development) Act, 2016 (RERA) was a long-awaited reform in India’s real estate sector, enacted to bring transparency, accountability, and fairness to the home-buying process. Before RERA, property transactions were largely unregulated, often resulting in project delays, false promises, and poor grievance redressal for buyers.
RERA has since transformed the landscape by placing legal obligations on builders and creating a regulatory mechanism that empowers buyers with rights, timelines, and remedies. In this article, we explore the critical RERA provisions that protect homebuyers — along with the penalties builders face for non-compliance.

Why RERA Matters for Homebuyers

RERA applies to:
  • Residential and commercial projects over 500 sq. m or 8 units.
  • Ongoing projects without a completion certificate (CC) as of 1 May 2017.
  • Every state and union territory has its own RERA authority (e.g., K-RERA in Karnataka).
Key Objectives:
  • Standardizing builder-buyer agreements.
  • Mandating project registration before advertisement or sale.
  • Enforcing timely delivery, financial discipline, and disclosure norms.

Key Provisions That Protect Buyers

  1. Mandatory Registration of Projects (Section 3)
Promoters must register all eligible projects with the respective RERA authority before marketing or selling. The registration includes key disclosures:
  • Sanctioned plans, layout approvals
  • Project completion timelines
  • Promoter’s past projects
Unregistered projects are illegal to market or sell.
  1. Advance Payments Capped (Section 13)
A promoter cannot collect more than 10% of the cost of the apartment/plot without entering into a written agreement for sale with the buyer. This agreement must be transparent and in accordance with the model format prescribed.
  1. Escrow Account Requirement (Section 4)
Developers must deposit 70% of the project funds into a separate bank account. This amount is to be used only for land and construction expenses of that specific project, ensuring the money isn’t diverted elsewhere.
  1. Timely Possession & Compensation (Section 18)
If a developer fails to complete or hand over possession by the promised date:
  • The buyer is entitled to refund with interest OR
  • Continue with the project and receive monthly interest for delay until delivery
This provision also applies if the buyer is unable to take possession due to defective land title.
  1. Defects Liability for 5 Years (Section 14(3))
If any structural defect or quality issue arises within five years of possession, the promoter is legally bound to rectify it at no cost within 30 days of complaint.
  1. Transparency in Advertising (Section 12)
Builders are liable to compensate the buyer if there is any false information in the advertisement or prospectus. This includes misleading statements on amenities, carpet area, or project approvals.

Penalties Under RERA for Non-Compliance

RERA imposes strict penalties for violations by promoters, agents, and even allottees (buyers), ensuring all parties are accountable.
Penalties on Promoters:
  • Non-registration of project: Fine up to 10% of project cost.
  • False information or violation of terms: Fine up to 5% of project cost.
  • Failure to deliver possession/refund: Daily interest + refund + penalty.
  • Continued non-compliance: May lead to imprisonment up to 3 years.
Penalties on Real Estate Agents:
  • Failure to register with RERA: Fine of ₹10,000 per day, up to 5% of project cost involved in the transaction.
  • Misrepresentation: License suspension or cancellation.
Penalties on Buyers (Allottees):
Buyers must make timely payments and comply with clauses in the agreement. Failure to do so can attract interest liability or other penalties under RERA.

RERA in Karnataka: Special Notes

Karnataka has implemented RERA through K-RERA. Some key features include:
  • Online project and agent registration at https://rera.karnataka.gov.in
  • Buyer can file complaints directly online
  • Authority conducts hearings and passes binding orders
In Karnataka, certain exemptions apply to revenue sites, layouts without formal conversion, or projects under BMRDA or Panchayat areas — making legal due diligence even more essential.

Filing Complaints Under RERA

Homebuyers can file complaints against the builder or agent directly on the state RERA portal. There is no need for a lawyer, and proceedings are time-bound.
Process:
  1. Register on RERA portal (e.g., K-RERA)
  2. Submit details and pay the nominal fee
  3. Attend hearing; receive order within 60 days (in most cases)
If unsatisfied, one can file an appeal before the RERA Appellate Tribunal or even approach High Courts.

Final Thoughts

The Real Estate sector, once riddled with opacity and delays, is now shifting toward buyer-centric transparency, thanks to RERA. Whether you are buying your first apartment or investing in a second home, understanding RERA’s protective clauses is key to making legally sound decisions.
Real estate developers are no longer beyond accountability — and buyers are no longer without remedy.
At RealtyLegal, we help clients navigate project due diligence, verify RERA compliance, and ensure legal clarity in every transaction.
For more legal insights and property law updates, visit RealtyLegal.in Need help with RERA compliance or dispute filing? Contact us today.

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