Analysis of Penalties Under Real Estate Regulatory Authority(RERA)

RERA Law Insider

By Abhinav

Published on: March 23, 2022 at 10:00 IST

What is Real Estate Regulatory Authority(Rera)?

In March 2016, the Indian Government enacted the Real Estate Regulatory Bill.

The Act became effective on May 1, 2016. (with 69 sections notified). The remaining clauses took effect on May 1, 2017.

The Act was brought to Reform the Real Estate Sector.

The Act establishes a Real Estate Regulatory Authority(RERA) for the regulation and promotion of the real estate sector and ensure the efficient +and transparent sale of a plot, apartment, or building, as the case may be, or the sale of a real estate project.

It also aims to protect the interests of consumers in the real estate sector, establish an adjudicating mechanism for quick dispute resolution, and establish the Appellate Tribunal to hear appeals from the decision of the Real Estate Regulatory Authority.

Also read: What is the Tribunals Reforms Bill, 2021?

RERA is a Regulatory Agency whose primary purpose is to defend Consumer’s interests since there was an increase in the number of complaints against builders/developers in recent years, most of which are connected to delays in homeowner possession, societal flaws, and promoters’ reckless behaviour after the signing of the agreement.

Also read: Jurisdiction, Powers and Process to file complaint in Consumer Courts

The Act requires promoters to disclose to consumers information such as the Promoter’s Name, Project, layout plan, land status, permissions, and agreements and the names of Real Estate Agents, Contractors, Architects, and Structural Engineers.

This Article talks about the different kinds of Penalties under the Act and the circumstances when they will be applied.

Penalties under RERA

The Real Estate (Regulatory and Development) Act is the first to establish Rules and Regulations in the Real Estate Industry.

This Act provides the Specific Norms and Regulations for a Proper Registration Procedure and Transparency, as well as the Penalties for various types of offences.

The Act prescribes imprisonment for a term of up to three years or a fine of up to 10% of the projected cost of the real estate project, or both, as penalties for non-compliance with the Act.

Offences, Penalties, and Adjudication are addressed in Sections 59 to 72 of Chapter VIII of the Act.

The Penalties can be sub-headed into various categories.

Penalties for Promoters

The term ‘Promoter’ has a broad definition under the Act that encompasses all forms of promoters in real estate projects, including developers, builders, colonisers, contractors, and landowners.

As a result, everyone who produces and sells products falls within the definition of a Promoter.

The Act’s goal is to make anybody who has or will have a Right to a real estate project enter into a contract of sale with allottees and collect money accountable for delivery and meeting commitments.

Under the RERA Act, a promoter has several obligations, and non-compliance can result in Penalties.

Non-Registration of the Project

Section 3 of the Act Mandates that before advertising and marketing a real-estate project, the promoter must first register the project. If a promoter violates the code of conduct by failing to register under Section 59(1) of the Act, he or she may face a penalty of up to 10% of the projected cost of the real estate project. The precise charge will be determined by the Relevant Authority.

Furthermore, if the promoter fails to comply with the orders, decisions and requirements elaborated under Section 59(1) and remains unregistered despite the order, in that case, he or she may be sentenced to up to three years in jail or pay a fine of up to 10% of the projected cost of the real estate project or both.

False RERA Registration Application

Section 4(1) creates an obligation for every promoter to apply for the registration of the real estate project to the Authority.

The application form should be in a specific manner, within the time specified and should be accompanied by a fee as may be specified by the regulations made by the Authority.

The Section also contains a list of documents that the promoter requires to disclose while applying for the registration.

Suppose a promoter submits false information violating Section 4 while applying for the registration and disclosing.

In that case, the promoter may face a penalty of up to 5% of the project’s projected cost as determined by the Authority under Section 60.

Non-Compliance with Authority Orders

A promoter failing to comply with, or violates any of the Authority’s directives or directions other than those that are mentioned in Section 3 or section 4, will be fined up to 5% of the projected cost under section 61 of the Act.

Section 63 of the Act states that if a promoter fails to comply with, or contravenes, any of the Authority’s instructions or directives, he will be subject to a Penalty of 5% of the projected cost for each day that the failure persists of the Authority’s determination on the real estate project.

Non-compliance with Appellate Tribunal Orders

A promoter failing to follow the Appellate Tribunal’s orders, rulings, or directives, shall be imprisoned for three years or fined for every day during which default continues cumulatively up to 10% of the Anticipated Cost of the real estate project or maybe subjected to both the penalties.

Penalties for Fraudulent Real Estate Transactions

A ‘Real Estate Agent’ is someone who operates on behalf of another person in a real estate transaction and is compensated or compensated for their services.

Any individual who desires to operate as a real estate agent in a transaction involving a RERA-registered project must first acquire RERA registration as a real estate agent.

Under the RERA Act, a real estate agent has several obligations to which failing to comply will result in penalties.

Non-Registration of the Project

Section 9(1) of the Act forbids real estate agents to involve in transactions related to the projects which are not registered under section 3.

The Agent must apply for the registration of the project before the Authority.

The Act obligates that the registered Agent shall[1]

  • Not facilitate the sale or purchase of those real estate projects or parts of it that are not registered. (10a)
  • Must maintain and preserve books of accounts, records and documents as specified. (10b)
  • Must not involve in Unfair Trade Practices, namely-
  • False Representation of Services
  • False Portrayal of Approvals or affiliation which he/she does not posses
  • Advertising a project which is not intended to be offered. (10c)
  • Discharge such other prescribed functions.

Failing to register the projector in complying with or contravenes provisions elaborated in section 9 or 10, the agent under section 62 shall be fined Rs 10,000 for each day the default continues.

The fine may total up to 5% of the total cost of the real-estate project’s land, apartment, or buildings.

Non-compliance with Authority Orders

Under section 65 of the Act, any real estate agent who fails to comply with or violates any of the Authority’s instructions or directives will be subject to a penalty that could total up to 5% of the projected cost of the real estate project. Each day of non-compliance will result in a penalty.

Non-compliance with Appellate Tribunal Orders

A real estate agent failing to comply with or violates any of the Appellate Tribunal’s orders, rulings, or directives shall be imprisoned for up to one year or fined up to 10% of the project’s anticipated cost or both under section 66 of the Act

Penalties for Allottees

‘Allottee’ means the person to whom a plot, apartment, or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who later acquires the said allotment through sale, transfer, or otherwise, but does not include a person to whom such plot, apartment, or building, as the case may be, is given on rent;

Under the RERA Act, an allottee has a number of rights. However, Non-compliance by the allottee may result in a penalty under the RERA Act.

Non-Compliance with Authority Orders

Any allottee failing to comply with or violates any of the Authority’s instructions or directives, shall be subject to a penalty during which the default continues that might cumulatively amount to 5% of the estimated worth of the real estate property under section 67 of the Act.

Non-compliance with Appellate Tribunal Orders

If an allottee fails to comply with or violates any of the Appellate Tribunal’s Orders, Judgments, or Directives, he or she may be imprisoned for up to one year or fined up to 10% of the project’s projected cost or both under Section 68 of the Act.

Penalties for Companies

If a company commits an offence under the Act, every person who is responsible for the conduct of business all people in charge of the company’s affairs who were directly responsible for the act shall be deemed to be guilty and will be punished accordingly.

However, if the person can prove that the committed act took place without his knowledge or he had exercised his due diligence to prevent the act, such person will not be subjected to a penalty. 69(1)


Anyone failing to comply with the Real Estate Act, whether a broker or a developer, will be held responsible for their conduct.

Those who do not comply with the Act’s regulations and obligations will face penalties.

This will enable and ensure that only full-time brokers take planter the field of real estate, and they will only deal with long-term developers to ensure that the product they are selling is of high quality.

This will also ensure that professional players that are registered and certified to market their goods be available to the builders.

With such legislation in place, purchasers can invest in homes that are fully protected and guarded against all angles, and in the event of a disagreement, they will be able to resolve it quickly and simply.

About the Author

The Article is written by Abhinav Gour, a student pursuing BBA LLB(Hons.) from Symbiosis Law School, Pune. The Author is in his first year and has a keen interest for legal writing and researching.

Edited by: Advocate Komal Sharma, Publishing Editor at Law Insider

Official Act here: The Real Estate (Regulatory and Development) Act

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