THE REAL ESTATE

(REGULATION AND DEVELOPMENT)

ACT, 2016.
PRE RERA SCENARIO
Consumers are exploited in the real estate industry in a
number of ways which range from :
• up-front expenses,
• misleading advertisements,
• false and misrepresented offers,
• open inspections and auctions,
• negative gearing, false advice and needless expenses.
The simple reason for the high level of exploitation is
that, the Real Estate Industry is controlled by agents of
the industry.
 Belaire Owner’s Association vs.
DLF Ltd
“The absence of any single sectoral regulator to
regulate the real estate sector in totality, so as to
ensure adoption of transparent and ethical
business practices and protect the consumers,
has only made the situation in the real estate
sector worse.”
 EXISTING LEGISLATURES
• Consumer Protection Act, 1986
• Indian Contract Act, 1872
• Specific Relief Act, 1963
• Indian Penal Code, 1860
• Competition Act, 2002
POST-RERA
• CHAPTER I – Preliminary.
• CHAPTER II – Registration of Real Estate Project
and Registration of Real Estate Agents.
• CHAPTER III – Functions and Duties Of Promoter.
• CHAPTER IV – Rights and Duties of Allottees.
• CHAPTER V – The Real Estate Regulatory
Authority.
• CHAPTER VI – Central Advisory Council.
• CHAPTER VII – The Real Estate Appellate
Tribunal.
• CHAPTER VIII – Offences, Penalties and
Adjudication.
• CHAPTER IX – Finance, Accounts, Audits and
Reports
• CHAPTER X – Miscellaneous
 CONSTITUTIONAL VALIDITY
• Decided by - Bombay High Court.

• Bench - Justices Naresh Patil and Rajesh

Ketkar.

• Articles 14, 19(1)(g), 20(1) and 300-A of the

Constitution of India.
 Retrospective application of RERA:
Section 3 -

No promoter shall advertise, market, book, sell or offer for sale, or

invite persons to purchase in any manner any plot, apartment or
building, as the case may be, in any real estate project or part of it, in
any planning area, without registering the real estate project with the
Real Estate Regulatory Authority established under this Act,

Provided that projects that are ongoing on the date of commencement

of this Act and for which the completion certificate has not been issued,
the promoter shall make an application to the Authority for registration
of the said project within a period of three months from the date of
commencement of this Act.
 Funds to be parked in an escrow
account
Section 4(2)(l)(D) -

that seventy per cent of the amounts realised for

the real estate project from the allottees, from
time to time, shall be deposited in a separate
account to be maintained in a scheduled bank to
cover the cost of construction and the land cost
and shall be used only for that purpose
 Extension of Registration
Section 6 –

The registration granted under section 5 may be

extended by the Authority on an application
made by the promoter due to force majeure
Explanation.— For the purpose of this section,
the expression "force majeure" shall mean a
case of war, flood, drought, fire, cyclone,
earthquake or any other calamity.
 Obligation of Authority consequent
upon lapse of or on revocation of
registration
Section 8 -

Upon lapse of the registration or on revocation of

the registration under this Act, the Authority, may
consult the appropriate Government to take such
action as it may deem fit including the carrying out
of the remaining development works by competent
authority or by the association of allottees or in any
other manner, as may be determined by the
Authority
 Return of amount and compensation,
Payment of interest to allottees
Section 18 –

if the promoter fails to complete or is unable to give

possession of an apartment, plot or building,
he shall be liable on demand to the allottees return the
amount received by him in respect of that apartment, plot,
building, as the case may be, with interest at such rate as may
be prescribed in this behalf including compensation
 INTERNATIONAL SCENARIO
• USA
There is no single regulatory body, but rather a series of bodies that
regulate different ownership and usage aspects. These are dealt with
in a legal contract. If a purchaser enters a contract with the developer,
and the developer does not deliver on the terms agreed upon in the
contract, the developer can be taken to court for breach of contract.

• The United Kingdom

There is an absence of a regulator to monitor the sector. The Financial
Services Authority (FSA), which is now part of the Bank of England,
regulates almost all the investments in real estates. The Property
Misdescriptions Act of 1991 prohibits the making of false or misleading
statements on property matters in the course of estate agency
business and the property development business.
• Germany
In principle, no regulatory authority exists. According to the German
Civil Code, the seller is generally liable to the buyer for damage
compensation, if the delivered property deviates from the description
in a guaranty or in a brochure. The seller is generally also liable for
damage compensation in case of delayed deliverables.

• The United Arab Emirates

The UAE Government is considering the establishment of a federal real
estate regulatory authority. Currently, the government does not have a
body to supervise the sector, although emirates such as Dubai and
Ajman have their own real estate regulatory authorities — Real Estate
Regulatory Authority (RERA) in Dubai and Ajman Real Estate
Regulatory Authority (ARRA) in Ajman. The Land Department of Dubai
is proposing the Real Estate Investor Protection Law.