There is list of offences and penalties under RERA Act with respect to the default of real estate agent, promoters and even allottees. Even though the main objective of RERA was to regulate and promote transparent working of real estate sector, it also mentions the offences committed by different parties and the penalties for those offences. Real Estate Regulation and Development Act 2016, was enacted to keep the property matters transparent and efficient among the parties while conducting sale or purchase of land, building or flat.
The RERA Act focuses on safeguarding the interest and rights of the consumers (allottees). The Act was enforced across India on 1st May 2017, post its enactment in 2016. Within a span of five years, RERA has been able to bring substantial relief to the homebuyers and uniform system dealing in real estate matters. The Act further aims at protecting the consumers from the harassing builders and fraud agreements. This Act supports and promotes consumers to invest more in the real estate market without any apprehension of being cheated.
Implications of RERA
Before jumping into the offences and penalties mentioned under the RERA Act, one should know the after effects of enacting the Act, especially how it has affected the real estate sector. The main aim of any legislation is to provide justice to that specific subject which can be analyzed by knowing the implications of RERA. Some of the positive consequences of implementing RERA are-
- The law abiding promoters and builders will benefit from RERA, but it shall require time as they need to understand the clauses and provisions of RERA and act accordingly. This will ensure lesser competition.
- As RERA is rewarding the law adhering developers and promoters, it will be strictly dealing with those who are not following the same and using fraudulent methods to keep the consumers in dark.
- The RERA Act will establish monetary discipline in the real estate sector
- Lastly, if the Act is efficiently executed then it will offer boom to the real estate sector as the confidence of consumers to invest in properties will increase largely, as the element of fear among the consumers will be lowered with these regulations and dispute redressal authorities.
- Implementation of this Act will compel the developers to go through a lot of procedures, for making changes in their project which will authenticate the working of the sector. This might lead to furtherance of investments by the consumers due to increased transparency.
Whether under-construction projects come within the ambit of RERA?
It is often questioned, whether ongoing projects or under construction projects come within the domain of RERA. As per the Act, the under construction projects which begun before the Act was enacted shall be covered under this Act. The Act promises the existing buyers who have not been given possession yet, both residential and commercial that such properties will come under the domain of RERA regulator.
It might get a bit tedious for the developers of under construction projects who might have to face lot of adversities due to RERA as they will have to get registered with the regulatory authority before they move ahead with the process of completing the project. The ongoing projects are not permitted to advertise or promote their property until their registration process is complete.
These steps are basically introduced to protect the interest of purchaser of property. But, it would also lead to further delay in construction and sale of property in future. RERA has made it compulsory for the builders or developers to issue the completion certificate before granting over the possession to the allottees.
This completion certificate will ensure that the builder has completed his project efficiently and only then the property will be handed over the respective buyers. But this raises another concern of, the time period within which the certificate will be issued to them by the Authorities. If the certificate is not issued within the time being, then it can lead to delay in possession for the buyers.
Offences and Penalties under RERA Act 2016
The RERA Act 2016, provides for rules and regulations to regulate the real estate sector. There are provisions stated for the process of registration of the project and maintaining transparency with the Authorities and along with these provisions, the Act prescribes penalties for different kind of offences listed for promoters, real estate agents and allottees. There are various kinds of penalties specified depending upon the offence for non-compliance with the Act, such as it mentions imprisonment for term up to 3 years or fine which may extend up to 10% of the cost estimated of the real estate project or both. Although, every State RERA has been given the liberty to add any further clauses of compounding of offence in order to avoid imprisonment.
- For Promoters
- Section 59 of the RERA Act, states the offence of non-registration of project with a penalty of 10% of the estimated cost of the real estate project. Section 59 also mentions penalty for not obeying the orders or directions in connection to the above offence, which shall lead to imprisonment of 3 years with or without fine being the same 10% of the estimated cost of project.
- Section 60 of the Act, compounds the offence of providing false information and other conventions with fine of 5% of the estimate cost of project.
- Section 61 states the offence in contravention to any of the orders passed by RERA, penalty for each day of default against the order which might be added up to 5% of the estimated cost of project.
- Section 64 of the Act states, contravention of the orders or direction of the Appellate Tribunal with imprisonment up to 3 years with or without fine summing up to 5% of the estimated amount of project.
- For Real Estate Agents
- Section 62 of the RERA Act mentions the offence of contravention to the applicable provisions of the Act, with penalty of Rs. 10,000 per day of default which might be extended up to 5% of the estimated cost of project.
- Section 65 of the Act states contravention of the orders or directions of RERA, shall have penalty on daily basis decided by the Authority cumulative extending up to 5% of estimated cost of the property.
- Section 66 of the Act states that contravention of the orders or direction of appellate tribunal will amount to imprisonment of up to 1 year with or without fine which may extend up to 10% of the estimated cost of project.
- For Allottees
- Section 67 of the Act mentions for contravention of any order of RERA by the allottees, then penalty for each day during the default continues which might cumulatively extend to 5% of the apartment or building cost
- Section 68 of the Act mentions for contravention of orders or direction of appellate tribunal amounting to imprisonment for up to 1 year with or without fine for every day during the default persists which might add up to 5% of the estimated cost of apartments or project.
State wise RERA penalties
As stated above, the main legislation gives liberty to the State RERAs for imposing any further penalties for compounding the offences in place of imprisonment, as these kinds of offences are civil in nature and penalty or fine is usually appropriate for them. Some of the State RERAs implementations are-
- The Andhra Pradesh RERA diluted the penalty by compounding the offence clause to avoid imprisonment, 10% of project cost is imposed.
- The Bihar RERA also diluted the penalty of imprisonment and imposed 10% of project cost in its place.
- Kerala RERA on the other hand has not diluted the provision and holds the same provision of imprisonment up to 3 years as stated in RERA Act 2016.
- Madhya Pradesh RERA has diluted the imprisonment clause and imposed fine of 10% of the estimated cost of project.
- The MahaRERA was not exactly on the lines of the RERA Act 2016 but it mentioned that fine imposed on builders will be wither double of the registration fees or Rs 2 lakh, whichever is higher if the provisions are not followed accurately.
- Rajasthan RERA diluted the imprisonment clause and imposed 10% of the project cost as penalty. Earlier, in Rajasthan the developers had to pay 2% of the project cost or 10 times the registration amount whichever was higher for delay in process of registration. But now, the fine is increased from 2% to 10% of the cost of project.
- Odisha RERA also diluted the compounding offence clause and substituted it with 10% of the project cost as penalty.
Thus, the offences and penalties under RERA Act 2016 are in accordance to the current times and the State RERAs have been guided to act on the same lines and avoid imprisonment for as the offences are civil in nature. The implication of RERA has shown a positive impact on the graph of real estate sector even within a short span of 5 years. But the Authorities are lacking the implementation of these provisions especially, when the order of RERA is to be executed by the builders by compensating the allottees. The only issue with RERA is that justice is being ordered, but it is not being served adequately to the aggrieved parties. Hence, for these kinds of situations such penalties can come in handy for the defaulting parties.
This article is authored by Rhea Banerjee.