Real Estate Regulation and Development Law: formula sheet

Key formulas

Objective of the Act

Regulate and promote the sector + transparent and efficient sales + protect consumers + adjudication and Appellate Tribunal

Use this four-part answer for any 'objectives of RERA' question.

Extent (Section 1)

Whole of India except the State of Jammu and Kashmir; later extended to the UTs of Jammu and Kashmir and Ladakh by notification (2019)

Commencement is by Central Government notification, and different dates may be fixed for different provisions.

Commencement dates

1 May 2016: Section 2, Sections 20 to 39 and others. 1 May 2017: Sections 3 to 19 and others

Registration (Section 3) and the promoter's obligations in Sections 4 to 19 operate from 1 May 2017.

Carpet area

Carpet area = net usable floor area, including internal partition walls, excluding external walls, service shafts, exclusive balcony or verandah and exclusive open terrace

Remember: internal walls in, external walls out.

Registration bar (Section 3(1))

No advertise, market, book, sell, offer for sale or invite to purchase without registration

Applies to the project or any part of it, in any planning area.

Exemption from registration (Section 3(2))

Land ≤ 500 sq m OR apartments ≤ 8 (inclusive of all phases); completion certificate received before commencement; renovation, repair or re-development with no marketing, selling or new allotment

The appropriate Government may lower the 500 sq m or eight-apartment threshold.

Phases (Explanation to Section 3)

Each phase = a stand-alone real estate project, registered separately

Often tested with a multi-phase facts question.

Ongoing project proviso

Ongoing on commencement + no completion certificate → apply for registration within 3 months of commencement

The three months run from commencement of the Act (the provision for registration).

Prior registration rule

No advertising, marketing, booking, selling or offering for sale without registration (Section 3(1))

Applies to projects in any planning area. Ongoing projects without a completion certificate had to apply within three months of commencement.

Size exemption

Land ≤ 500 square metres OR apartments ≤ 8, inclusive of all phases (Section 3(2)(a))

Only one limb needs to be satisfied. Appropriate Government may reduce the thresholds.

Other exemptions

Completion certificate received before commencement; renovation, repair or re-development with no marketing, advertising, selling or new allotment (Section 3(2)(b), (c))

The renovation exemption is lost if any of those four activities takes place.

Phases

Each phase = a stand-alone project, registered separately (Explanation to Section 3)

Phase-wise registration is mandatory.

Separate account

70% of amounts realised from allottees deposited in a separate scheduled bank account (Section 4(2)(l)(D))

Withdrawal is in proportion to completion, certified by an engineer, an architect and a chartered accountant in practice. Accounts are audited within six months after each financial year end.

Agent registration

Single registration for the whole State or Union territory; registration number quoted in every sale (Section 9(3)(a), 9(5))

Deemed registration if no communication on deficiency or rejection within the prescribed period (Section 9(4)).

Revocation or suspension of agent

Breach of conditions or registration secured by misrepresentation or fraud, after a hearing (Section 9(7))

No revocation or suspension without an opportunity of being heard.

Separate account rule

Amount deposited in separate account = 70% of amounts realised from allottees

Section 4(2)(l)(D). Held in a scheduled bank. Used only for construction cost and land cost of that project.

Withdrawal rule

Withdrawal allowed ∝ percentage of completion of the project

Needs certificate of an engineer, an architect and a chartered accountant in practice.

Audit rule

Accounts audited within 6 months after the end of every financial year by a chartered accountant in practice

The audit checks that money collected for the project was used for that project and withdrawn in proportion to completion.

Advertisement rule

Advertisement or prospectus must show the Authority's website address and the registration number

Section 11(2).

Quarterly updates

Update every quarter: apartments or plots booked, garages booked, approvals taken and pending, project status

Section 11(1)(b) to (e), on the promoter's web page.

Association of allottees

Where there is no local law: form within 3 months of the majority of allottees having booked

Proviso to section 11(4)(e).

Past projects disclosure

Details of projects launched in the past 5 years

Section 4(2)(b). Includes status, delay, pending cases and payments pending.

No mortgage after agreement for sale

After agreement for sale, promoter must not mortgage or create a charge on that unit

Section 11(4)(h). Any such charge does not affect the allottee's right and interest.

Information rights - section 19(1) and (2)

Allottee may obtain: sanctioned plans, layout plans, specifications + stage-wise time schedule of completion, including amenities

Section 11(3) makes the promoter responsible to provide this at booking and issue of allotment letter.

Possession and documents - section 19(3) and (5)

Allottee: possession of apartment/plot/building; association: possession of common areas; documents and plans after physical possession

Possession is claimed as per the promoter's declaration under section 4(2)(l)(C).

Refund and compensation - sections 19(4) and 18(1)

Default in possession as per agreement for sale, or discontinuance of business on suspension or revocation of registration → refund of amount paid + interest at prescribed rate + compensation

This applies on demand when the allottee wishes to withdraw from the project.

Interest if allottee stays - proviso to section 18(1)

Allottee not withdrawing → interest for every month of delay till handing over of possession, at prescribed rate

The rate is prescribed by the rules. Do not quote a figure unless the question gives it.

Defective title - section 18(2)

Loss due to defective title of land → promoter compensates; claim not barred by limitation under any law

This is the special no-limitation rule.

Other defaults - section 18(3)

Failure to discharge any other obligation under Act, rules, regulations or agreement → compensation

A general residual remedy.

Allottee's payment duties - section 19(6), (7), (8)

Pay per agreement for sale + share of registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, other charges; interest on delay; may be reduced by mutual agreement

Section 19(6) refers to an allottee who has entered into an agreement for sale under section 13.

Other allottee duties - section 19(9), (10), (11)

Participate in forming association; take physical possession within two months of occupancy certificate; participate in registering conveyance deed (section 17(1))

The two-month period runs from the occupancy certificate.

Recovery - section 40(1)

Unpaid interest, penalty or compensation → recoverable as arrears of land revenue

Applies to promoter, allottee and real estate agent.

Establishment of the Authority (section 20)

Appropriate Government + notification + within 1 year of commencement → Real Estate Regulatory Authority

Body corporate, perpetual succession, common seal. It can hold property, contract, and sue or be sued.

Core functions (section 34)

Register and regulate projects and agents; publish website records; maintain defaulter databases; fix standard fees by regulations; ensure compliance

Section 34(c) covers names and photographs of defaulting promoters (revoked or penalised). Section 34(d) covers registered agents, including those rejected or revoked.

Promotion of the sector (section 32)

The Authority makes recommendations to the appropriate Government or competent authority on items (a) to (j)

It recommends only. Examples: single window clearance, grievance redressal against competent authorities, affordable housing finance, grading of projects and promoters, conciliation of disputes, digitisation of land records with title guarantee.

Advocacy (section 33)

Reference by Government → Authority gives opinion within 60 days → opinion not binding

The Authority must also promote advocacy, awareness and training on real estate laws and policies.

Directions (section 37)

Authority may issue directions to promoters, allottees or real estate agents → binding on all concerned

The purpose is to discharge its functions under the Act, rules or regulations.

Central Advisory Council (sections 41-42)

Established by the Central Government by notification; Chairperson: Union Housing Minister (ex officio); advises the Central Government

Members include ministry representatives, five State Government and five Authority representatives by rotation, and not more than ten members for industry, consumers, agents, labourers, NGOs and academic bodies.

Complaint (section 31)

Any aggrieved person → Authority or adjudicating officer, for violation of the Act, rules or regulations

Can be against a promoter, allottee or real estate agent. Includes associations of allottees and registered voluntary consumer associations.

Appeal to Appellate Tribunal (section 44)

Time limit = 60 days from receipt of the copy of the order

Late appeal allowed if sufficient cause is shown. The Tribunal should try to dispose of the appeal within 60 days and must record reasons in writing if it cannot.

Promoter's pre-deposit (section 43(5) proviso)

Deposit at least 30% of the penalty (or higher % set by Tribunal), or the total amount payable to the allottee with interest and compensation, or both, before the appeal is heard

Applies only where the promoter is the appellant. Without the deposit, the appeal is not entertained.

Appeal to High Court (section 58)

Within 60 days from communication of the Tribunal's order, on grounds in section 100 of the CPC, 1908

High Court is the one of the State or Union territory where the project is situated. No appeal lies against an order made with the consent of the parties.

Tribunal bench (section 43(3))

Bench = at least 1 Judicial Member + 1 Administrative or Technical Member

The Government may set up more than one bench in a State or Union territory.

Bar of civil court (section 79)

No civil court jurisdiction over matters the Authority, adjudicating officer or Tribunal can decide; no injunction against action under the Act

Core reason the RERA forums are exclusive.

Promoter penalty for non-registration

Penalty up to 10% of estimated cost of the real estate project; continuing default: imprisonment up to 3 years or further fine up to 10%, or both

Trigger is section 3(1): advertising, marketing, booking, selling or inviting purchase without registration. Confirm the figures in your study material.

Promoter penalty for false information or other breaches

Penalty up to 5% of estimated project cost

Lower tier than non-registration. Confirm the exact provisions in your material.

Agent penalty

Daily penalty during default, capped at a percentage of the cost of the plot, apartment or building

Trigger is acting without registration under section 9 or breaching agent duties. Revocation or suspension needs a hearing.

Offences by companies

Person in charge and responsible = deemed guilty; defence = no knowledge or due diligence

Directors, managers and secretaries are also liable if the offence was with their consent, connivance or neglect.

Authority's power to penalise

Section 38(1): penalty or interest for contravention by promoters, allottees and agents

Section 38(2): Authority follows natural justice and regulates its own procedure.

Registration exemption (section 3(2)(a))

Land ≤ 500 sq m OR apartments ≤ 8, inclusive of all phases

The appropriate Government may reduce the threshold. Each phase is a stand-alone project.

Quick revision

• No promoter may advertise, market, book, sell or offer for sale in a real estate project without registration with the Authority (Section 3(1)).
• Ongoing projects without a completion certificate had to apply within three months of the Act's commencement.
• No registration is needed if land does not exceed five hundred square metres or apartments do not exceed eight, inclusive of all phases.
• Appropriate Government may lower these thresholds for exemption.
• No registration is needed for renovation, repair or re-development that involves no marketing, advertising, selling or new allotment.
• Each phase of a project is treated as a stand-alone project and is registered separately.
• Seventy per cent of amounts realised from allottees goes into a separate account in a scheduled bank for construction and land cost.
• Withdrawal from that account is in proportion to completion, certified by an engineer, an architect and a chartered accountant in practice.
• The promoter must get accounts audited by a chartered accountant in practice within six months after each financial year end.
• Authority's directions under Section 37 bind all concerned.
• Appeals go to the Appellate Tribunal (Section 43); a promoter must first deposit at least thirty per cent of the penalty, or the total amount payable to the allottee, or both.
• Each Tribunal bench has at least one Judicial Member and one Administrative or Technical Member.

Common mistakes

• Counting internal partition walls out of carpet area, or counting external walls in. Fix: Remember: internal walls are included; external walls, service shafts, exclusive balcony or verandah and exclusive open terrace are excluded.
• Treating a tenant as an allottee. Fix: The definition of allottee excludes a person to whom the plot, apartment or building is given on rent. A later buyer through sale or transfer is covered.
• Saying exemption applies only if both land and apartments are below the limit. Fix: The text says land does not exceed 500 square metres or apartments do not exceed eight. Either limb is enough.
• Treating the limit as exceeded or not per phase. Fix: Count all phases together for the size exemption, but register each phase separately if registration is required.
• Saying the 70% is of the project cost. Fix: The 70% applies to amounts realised from allottees, not the project cost. Write it exactly that way.
• Thinking the promoter may withdraw the whole separate account once the project is launched. Fix: Withdrawal is only in proportion to percentage of completion, after certificate from an engineer, an architect and a chartered accountant in practice.
• Saying the allottee can get a refund only if they withdraw, and nothing otherwise. Fix: Remember the proviso: an allottee who stays in the project is paid interest for every month of delay till possession.
• Quoting a fixed interest rate from memory. Fix: The Act says interest at such rate as may be prescribed. Say that, and use any rate given in the question.
• Treating section 32 recommendations as binding orders. Fix: Under section 32 the Authority only makes recommendations to the appropriate Government or competent authority. Binding power comes from section 37 directions.
• Confusing the Authority with the Central Advisory Council. Fix: The Authority is set up by the appropriate Government and regulates. The Council is set up by the Central Government and advises it on implementation, policy and consumer protection.

Exam tips

• Learn the definitions of promoter, allottee, real estate project, carpet area and ongoing project in your own words, but keep every key condition (for example, rent is excluded from allottee).
• For objectives, write four points: regulation and promotion, transparency and efficiency, consumer protection, and adjudication through the Authority and Appellate Tribunal.
• In registration problems, always quote Section 3 and say whether the exemption or the ongoing-project proviso applies. State the conclusion in the last line.
• Know both commencement dates (1 May 2016 and 1 May 2017) and the extent clause, including the later extension to Jammu and Kashmir and Ladakh.
• Do not copy long definitions word for word from the Act. Write the rule clearly in short points and cite the section where you are sure of it.
• Quote the section numbers: 3(1), 3(2), 4, 9, 10, 34 and 8. Examiners reward them.
• For case-style questions, always run the exemption checklist before concluding.
• Learn the Section 4(2)(l) declaration points, especially the 70% separate account and the three certifiers.