Penalties under RERA

The Real Estate (Regulation and Development) Act, 2016 is a game-changer for the real estate industry set to bring about transparency and accountability. RERA Act is applicable for all apartment developments with over 8 units and plots development over 500 square meters. Any real estate project that falls under the ambit of the RERA Act must obtain RERA registration. In this article, we look at penalties applicable under RERA Act for non-compliance in detail.

Promoter Penalties

A promoter is a person who is entrusted with the task of promoting the project, i.e., development and construction. A promoter has various responsibilities under the RERA Act and non-conformance could attract the following penalty.

Non-Registration of Project

A promoter is required to register a real-estate project before advertising and promoting the project. If a promoter commits a breach of conduct by not registering, he/she will be levied a penalty which may be as high as 10% of the estimated cost of the real-estate project. The exact fee will be as decided by the concerned Authority. Further, if the promoter fails to comply with this rule and continues to be unregistered, he/she will have to face imprisonment for up to three years, and/or remit a fine which could be as high as 20% of the estimated cost of the real estate project.

Incorrect Application for RERA Registration

If a promoter provides bogus information or contravenes the provisions of Section 4, which deals with application for registration of real-estate projects, he/she will be imposed with a penalty of up to 5% of the estimated cost of the real-estate project.

Non-Compliance with Orders of Authority

If any promoter fails to comply with or contravenes any of the orders or directions of the Authority, he/she will be levied with a penalty which can extend up to 5% of the estimated cost of the real estate project.

Non-Compliance with Orders of Appellate Tribunal

If any promoter fails to act in accordance with the orders, decisions or directions of the Appellate Tribunal, he/she will be imprisoned for tenure of 3 years and/or will be levied with a fine which can cumulatively extend up to 10% of the estimated cost of the real estate project.

Real-Estate Penalties

A “Real estate agent” is a person who acts on behalf of another person in a real-estate transaction, and is benefited with remuneration or fees for the service extended. RERA registration for a real-estate agent must be obtained by any person who wishes to act as a real-estate agent in a transaction involving a project registered under RERA.

Non-Registration

A real-estate agent requires registration before commencement of duties. If a real-estate agent fails to register, he/she will be imposed with a penalty of Rs 10,000 for each day of default. It may cumulatively extend up to 5% of the cost of plot, apartment or buildings of the real-estate project.

Non-Compliance with Orders of Authority

If any real estate agent fails to comply with or contravenes any of the orders or directions of the Authority, he/she will be levied with a penalty that may cumulatively extend up to 5% of the estimated cost of the real-estate project. The penalty will be applicable for each day of default.

Non-Compliance with Orders of Appellate Tribunal

If a real estate agent fails to comply with or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he/she will be imprisoned for a term that may extend up to one year and/or will be fined as high as 10% of the estimated cost of the project.

Homebuyer Penalties

A homebuyer enjoys various rights under the RERA Act. At the same time, non-compliance by a homebuyer or allottee can attract penalty under the RERA Act.

Non-Compliance with Orders of Authority

If any allottee fails to comply with or contravenes any of the orders or directions of the Authority, he/she will be levied with a penalty that may cumulatively extend up to 5% of the estimated cost of the real-estate property.

Non-Compliance with Orders of Appellate Tribunal

If an allottee fails to comply with or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he/she will be imprisoned for a term that may extend up to one year and/or will be fined as high as 10% of the estimated cost of the project.

Default by Companies

In case a default or offence is committed by the company, all persons at the helm of affairs of the Company (Managing Director, Directors & Officers) who was directly responsible for the default will be considered guilty and dealt accordingly.