Real Estate (Regulation and Development) Act, 2016
{{Short description|Act of the Parliament of India}}
{{use dmy dates|date=March 2016}}
{{use Indian English|date=March 2016}}
{{Infobox legislation
| short_title = Real Estate (Regulation and Development) Act, 2016
| imagesize = 100
| enacted_by = Parliament of India
| passed_by = Lok Sabha
| date_enacted = 25 March 2016
| date_passed = 15 March 2016
| passed_by2 = Rajya Sabha
| date_passed2 = 10 March 2016
| citation = [https://www.indiacode.nic.in/bitstream/123456789/2158/1/A2016-16.pdf No. 16 of 2016]
| date_assented = 25 March 2016
| date_commenced = 1 May 2016 - 61 of 92 sections notified
1 May 2017 - Remaining 31 Sections notified
| long_title = An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.
| bill = Real Estate (Regulation and Development) Bill, 2016
| bill_citation = [http://164.100.47.4/BillsTexts/RSBillTexts/PassedRajyaSabha/realest-238-RSP-E.pdf XLVI-C of 2013]
| bill_date = 14 August 2013
| introduced_by = Dr. Girija Vyas, Minister of Housing and Urban Poverty Alleviation
| committee_report = [http://www.prsindia.org/uploads/media/Real%20Estate/SCR-Real%20Estate%20Bill.pdf Standing Committee Report]
[http://www.prsindia.org/uploads/media/Real%20Estate/Select%20comm--Real%20Estate.pdf Select Committee Report]
| status = in force
}}
The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes a Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute resolution. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force on 1 May 2016 with 61 of 92 sections notified. The remaining provisions came into force on 1 May 2017. The Central and state governments are liable to notify the Rules under the Act within a statutory period of six months.{{cite news|title=Real Estate Bill is an act now, may protect home buyers|url=http://economictimes.indiatimes.com/wealth/real-estate/real-estate-bill-is-an-act-now-may-protect-home-buyers/articleshow/52069308.cms|newspaper=Economic Times|date=2 May 2016 |access-date=2 May 2016 |last1=Sharma |first1=Ravi Teja }}
History
The Real Estate Regulatory Authority (RERA) Bill was introduced in 2013.{{citation |title=Rahul Gandhi assures home buyers of a strong Real Estate bill |url=https://economictimes.indiatimes.com/news/politics-and-nation/rahul-gandhi-assures-home-buyers-of-a-strong-real-estate-bill/articleshow/51245942.cms |work=The Economic Times |date=3 March 2016 }} In December 2015, the Union Cabinet of India had approved 20 major amendments to the bill based on the recommendations of a Rajya Sabha committee that examined the bill.{{citation |title=Will press for Real Estate Bill in Rajya Sabha, says Rahul Gandhi |url=http://economictimes.indiatimes.com/news/economy/policy/will-press-for-real-estate-bill-in-rajya-sabha-says-rahul-gandhi/articleshow/51263105.cms |work=The Economic Times |date=5 March 2016 }} The Bill had been referred to a selection committee, which had given its report in July 2015.{{citation |title=Modi government puts real estate bill on priority list to pass it in Budget session |url=https://economictimes.indiatimes.com/wealth/real-estate/modi-government-puts-real-estate-bill-on-priority-list-to-pass-it-in-budget-session/articleshow/51161832.cms |work=The Economic Times |date=27 February 2016 }} However, Congress, Left and AIADMK had expressed their reservations on the report through dissent notes. The Rajya Sabha approved the bill on 10 March 2016 and the Lok Sabha approved it on 15 March 2016.{{citation |title=Lok Sabha takes up real estate bill, Congress assures support |url=https://economictimes.indiatimes.com/news/politics-and-nation/lok-sabha-takes-up-real-estate-bill-congress-assures-support/articleshow/51408464.cms |work=The Economic Times |date=15 March 2016 }}{{cite web|last1=Sharma|first1=Ravi Teja|title=Cheer for home buyers! After Rajya Sabha, real estate regulatory bill cleared by Lok Sabha as well|url=http://economictimes.indiatimes.com/news/politics-and-nation/cheer-for-home-buyers-after-rajya-sabha-real-estate-regulatory-bill-cleared-by-lok-sabha-as-well/articleshow/51412167.cms|publisher=Economic Tilmes|access-date=20 March 2016|date=15 March 2016}}
Subsequently, by the powers vested by Section 1 of the RERA Act, the Ministry of Housing and Urban Poverty Alleviation vide Notification S.O. 1544(E){{Cite web|title=Notification No. S.O.1544(E)|url=http://mohua.gov.in/upload/uploadfiles/files/Commencement_of_RERA_in_2016.pdf|access-date=2021-05-03|website=Ministry of Housing and Urban Affairs - Govt. of India}} dated 26.04.2016 notified 61 Sections out of 92 Sections on 1 May of 2016 and vide Notification S.O. 1216(E){{Cite web|title=Notification No. S.O.1216(E)|url=http://mohua.gov.in/upload/uploadfiles/files/commencement_of_remaining_sections_of_RERA_in_2017.pdf|access-date=2021-05-03|website=Ministry of Housing and Urban Affairs - Govt. of India}} dated 19.04.2017 notified the remaining 31 Sections.
Structure
The RERA Act 2016 has been divided into 10 Chapters, which is further categorised into 92 Sections.{{Cite web|title=Outline of Rera Act 2016|url=https://www.indiacode.nic.in/handle/123456789/2158|access-date=2021-05-03|website=India Code - Digital Repository of Govt. of India}}
The Act starts with the Preamble, provides title, extent and commencement, registration of real estate projects and real estate agents, functions and duties of promoter, rights and duties of allottees, about Real Estate Regulatory Authority, Central Advisory Council, Real Estate Appellate Tribunal, various offences, penalties, and adjudication, about finances, accounts, audits, and reports and other miscellaneous provisions.
Below is the outline of the Rera Act 2016 in tabular form-
| class="wikitable"
|+The Real Estate (Regulation and Development) Act, 2016 !Chapter No. !Title of the Chapter !Sections Covered |
| I
|Preliminary |1 and 2 |
| II
|Registration of Real Estate Project and Real Estate Agents |3 to 10 |
| III
|Function and Duties of Promoter |11 to 18 |
| IV
|Rights and Duties of Allottees |19 |
| V
|The Real Estate Regulatory Authority |20 to 40 |
| VI
|Central Advisory Council |41 and 42 |
| VII
|The Real Estate Appellate Tribunal |43 to 58 |
| VIII
|Offences, Penalties and Adjudication |59 to 72 |
| IX
|Finance, Accounts, Audit and Reports |73 to 78 |
| X
|Miscellaneous |79 to 92 |
Principal Provisions
= Definition Clause =
The definition clause under Section 2 of the Act enlists the meaning of multiple terms used throughout the Act.{{Cite web|title=Section 2 of Rera Act 2016|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8626§ionno=2&orderno=2|access-date=2021-05-04|website=India Code - Digital Repository of India}} Below is a table enlisting crucial definitions:-
| class="wikitable"
|+ Important Terms under Section 2 !Sub-Section !Title |
| (b)
|Advertisement |
| (d)
|Allottee |
| (e)
|Apartment |
| (k)
|Carpet Area |
| (n)
|Common Areas |
| (za)
|Interest |
| (zh)
|Planning Area |
| (zk)
|Promoter |
| (zl)
|Prospectus |
| (zn)
|Real Estate Project |
| (zq)
|Sanctioned Plan |
| (zr)
|Saving Clause |
=Registration of Real Estate Project and Real Estate Agents=
The Act enlists the registration policy of a real estate project and real estate agent and related provision under Section 3.
Sub-section (1) of Section 3 of the Act makes it mandatory for all real estate projects to register with RERAReal Estate Regulatory Authority - An Authority established under Section 20 of the Rera Act 2016. for launching a project to provide greater transparency in project marketing and execution.{{Cite web|title=Section 3 - Prior Registration of Real Estate Project with Rera|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8627§ionno=3&orderno=3|access-date=2021-05-03|website=India Code - Digital Repository of Govt. of India}} For ongoing projects which have not received a completion certificate on the date of commencement of the Act, will have to seek registrations within 3 months.
Each State RERA must either approve or reject the application for registration within 30 days from the date of application submitted by the promoter. Upon successful registration, the promoter of the real estate project will be provided with a registration number, a login ID, and a password to fill up the essential details on the website of the State RERA.{{Cite web|title=Section 5 - Grant of Registration|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8629§ionno=5&orderno=5|access-date=2021-05-03|website=India Code - Digital Repository of Govt. of India}}
If the promoter fails to register, he shall be liable to a penalty that may extend up to a penalty of 10% of the estimated project cost. Furthermore, if he does not comply with the orders, directions or decisions issued by the State RERA, he shall be punishable with imprisonment which may extend up to three years or with a fine which may extend up to a further 10% of the estimated cost of the project.{{Cite web|title=Section 59 - Punishment for Non-registration under Section 3|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8683§ionno=59&orderno=59|access-date=2021-05-03|website=India Code - Digital Repository of Govt. of India}}{{Cite web|title=Punishment for not registering with Rera|url=https://reraact.com/not-registering-with-rera-penance/|access-date=2021-05-03|website=Rera Questions and Answers}}
Real estate agents who facilitate the selling or purchase of properties must take prior registration. Such agents will be issued a single registration number for each State or Union Territory, which must be quoted by the agent in every sale facilitated by him.{{Cite web|title=Section 9 - Registration of Real Estate Agents|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8633§ionno=9&orderno=9|access-date=2021-05-03|website=India Code - Digital Repository of Govt. of India}} If a real estate agent fails to register or contravenes section 9 (registration of real estate agent) and section 10 (Functions and duties of a real estate agent), he shall be liable to a penalty of ₹10,000 payable every day during which such default continues. This penalty may cumulatively extend up to 5% of the cost of the plot, apartment or building, as the case may be, of the real estate project.
= Establishment of Real Estate Regulatory Authority and Appellate Tribunal =
The establishment under Section 20 and 43 of the Act will help to establish state-level Real Estate Regulatory Authorities to regulate transactions related to both residential and commercial projects and ensure their timely completion and handover. Appellate Tribunals will now be required to adjudicate cases in 60 days as against the earlier provision of 90 days and Regulatory Authorities to dispose of complaints in 60 days while no time-frame was indicated in the earlier Bill.
= Offences, Penalties and Adjudication =
Sections 59 to 72 of Chapter VIII of the Act provides the provisions regarding Offences, Penalties, and Adjudication.
== Punishment for Non-Registration ==
Section 59, 60 and 62 of the Act provides the punishment to the promoters and the real estate agents for non-registration under RERA.
Below is a table describing the penalty and imprisonment-
| class="wikitable"
|+ !Section !Sub-Section !Punishment receiver !Conditions for Punishment !Penalty !Imprisonment !Punishment Clubbing |
| 59
|(1) |Promoter |If promoter contravenes Section 3{{Cite web|title=Section 59 Explanation|url=https://reraact.com/giving-false-registration-information-in-rera/|access-date=2020-05-05|website=Rera Questions and Answers}} |The amount may extend up to 10% of the estimated cost of the real estate project. |NIL |Only fine |
| |(2)
| |If promoter not follows the order, decisions or directions issued under sub-section (1) |Amount as stated under sub-section (1) + amount which may further extend up to 10% of the estimated cost of the real estate project. |The term of imprisonment may extend up to 3 years. |Either fine or imprisonment or both. |
| 60
|NA |Promoter |If Promoter provides false information under section 4.{{Cite web|title=Section 60 Explanation|url=https://reraact.com/giving-false-registration-information-in-rera/|access-date=2020-05-05|website=Rera Questions and Answers}} |The amount may extend up to 10% of the estimated cost of the real estate project. |NA |Only fine |
| 62
|NA |Real Estate Agent |If any real estate agent fails to comply with Section 9 and 10 of the Act. |Amount of ₹ 10000 every day during which such default continues. It may extend up to 5% of the estimated cost of the real estate project. |NA |Only fine |
== Punishment for non-compliance of orders, decisions or directions ==
| class="wikitable"
|+ !Section !Punishment Receiver !Non-Compliance of Order given by !Penalty !Imprisonment !Punishment Clubbing |
| 63
|Promoter |Real Estate Regulatory Authority |Penalty for every day during which such default continues and may extend up to 5% of the estimated cost of the real estate project.{{Cite web|title=Section 63 and 64 Explanation|url=https://reraact.com/penalty-for-promoter-for-not-complying-orders/|access-date=2021-05-05|website=Rera Questions and Answers}} |NA |Only fine |
| 64
|Promoter |Real Estate Appellate Tribunal |Penalty for every day during which such default continues and may extend up to 10% of the estimated cost of the real estate project. |Term of imprisonment may extend up to 3 years |Either fine or imprisonment or both |
| 65
|Real Estate Agent |Real Estate Regulatory Authority |Penalty for every day during which such default continues and may extend up to 5% of the estimated cost of the real estate project. |NA |Only fine |
| 66
|Real Estate Agent |Real Estate Appellate Tribunal |Penalty for every day during which such default continues and may extend up to 10% of the estimated cost of the real estate project. |Term of imprisonment may extend up to 1 year |Either fine or imprisonment or both |
| 67
|Allottee |Real Estate Regulatory Authority |Penalty for every day during which such default continues and may extend up to 5% of the estimated cost of the real estate project. |NA |Only fine |
| 68
|Allottee |Real Estate Appellate Tribunal |Penalty for every day during which such default continues and may extend up to 10% of the estimated cost of the real estate project. |Term of imprisonment may extend up to 1 year |Either fine or imprisonment or both |
=Protection of Homebuyers=
The Act prohibits unaccounted money from being pumped into the sector, and as of now 70% of the money has to be deposited in bank accounts through cheques compulsorily.{{citation |title=Big cheer for homebuyers! Rajya Sabha passes Real Estate Bill|url=http://economictimes.indiatimes.com/wealth/real-estate/big-cheer-for-homebuyers-rajya-sabha-passes-real-estate-bill/articleshow/51344724.cms |work=The Economic Times |date=10 March 2016 }} A major benefit for consumers included in the Act is that builders will have to quote prices based on carpet area and not on super built-up area. The Act states that the carpet area include usable spaces like kitchen and toilets. Under RERA, its mandatory for the builders to disclose the carpet area. RERA possesses the authority to intervene and safeguard the interests of homebuyers, even in cases where a bank is enforcing its security interest under the SARFAESI Act.{{Cite web |last=A |first=Aruna |date=2024-09-30 |title=RERA vs SARFAESI: Homebuyers Can Use RERA to Stop Bank Recovery Actions, Overriding SARFAESI |url=https://www.legalbay.co.in/post/supreme-court-confirms-homebuyers-can-use-rera-to-stop-bank-recovery-actions-overriding-sarfaesi |access-date=2024-10-01 |website=Legal Bay |language=en}}
State Regulations under RERA
Section 84 of the Act{{Cite web|title=Section 84|url=https://www.indiacode.nic.in/show-data?actid=AC_CEN_17_19_00033_201616_1517807328405§ionId=8708§ionno=84&orderno=84|access-date=2021-05-04|website=India Code - Digital Repository of Govt. of India}} provides that within six months of the Act being enforced, each State Government shall make rules for carrying out the provisions of the Act. The said Rules are to be notified by the State Government. As late as 31 October 2016, Central Government, released the Real Estate (Regulation and Development) (General) Rules,{{cite web|title=Rera General Rules|url=http://www.bareactslive.com/ACA/ACT2892.HTM|access-date=2021-05-05|website=Bare Acts Live|publisher=}} 2016, vide Notification by the Ministry of Housing & Urban Poverty Alleviation (HUPA).{{cite web|url=http://pib.nic.in/newsite/PrintRelease.aspx?relid=153141|title=Real Estate Rules notified today|website=pib.nic.in}} The Rules so issued by the Central Government are applicable to the five Union Territories without Legislature viz., Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep, and Chandigarh. The Rules have been issued after the prior release of Draft for comments.{{Cite web | archive-url=https://web.archive.org/web/20160705015734/http://mhupa.gov.in/writereaddata/Draft_Rules-seeking-comments.pdf | title=Notification | url=http://mhupa.gov.in/writereaddata/Draft_Rules-seeking-comments.pdf | archive-date=2016-07-05}}
As of 13 July 2019, Arunachal Pradesh, Meghalaya, Sikkim and Nagaland have not notified the Rules. In the case of five north-eastern states, the RERA Act is facing certain constitutional challenges as the land in those states are community owned. West Bengal notified a similar law called the West Bengal Housing Industry Regulatory Act, 2017, which came into effect from 1 June 2018.{{cite web |title=Housing Industry Regulatory Authority |url=https://hira.wb.gov.in/ |publisher=Housing Industry Regulatory Authority |access-date=27 September 2018 |archive-date=27 September 2018 |archive-url=https://web.archive.org/web/20180927085654/https://hira.wb.gov.in/ |url-status=dead }} However, as of July 2019, many states have not implemented the law and failed to notify a Permanent Regulator, Appellate Authority or a website. A chart showing the implementation status by different states as of July 2019 can be seen [http://mohua.gov.in/upload/uploadfiles/files/RERA_Status_Tracker%20(13-07-2019).pdf here].