Economic, Commercial and Intellectual Property Laws · Real Estate Regulation and Development Law

Functions and Duties of Promoters under RERA 2016

Updated 11 October 2026 · Fact-checked

A promoter under the Real Estate (Regulation and Development) Act, 2016 must register the project, disclose details on the Authority's website, mention the registration number in advertisements, keep 70% of allottee money in a separate scheduled bank account, obtain completion or occupancy certificates, form the allottees' association and execute the registered conveyance deed.

Understand Functions and Duties of Promoters

The Act treats the promoter as the person who controls the project and takes money from buyers. So the law puts most obligations on the promoter. These obligations start before the project is sold and continue after possession.

The first group is disclosure. Section 4(2) lists the documents filed with the registration application: details of the enterprise, past projects of the last five years, approvals, sanctioned plans, location, draft agreement for sale, and a declaration with an affidavit. Section 11 then requires the promoter to create a web page on the Authority's website and enter these details for public viewing.

The second group is money protection. In the declaration under section 4(2)(l)(D), the promoter undertakes that seventy per cent of the amounts realised from allottees will be deposited in a separate account in a scheduled bank. The money covers construction cost and land cost and can be used only for that. Withdrawal is allowed only in proportion to the percentage of completion, after certification by an engineer, an architect and a chartered accountant in practice.

The third group is delivery and after-sale duties under section 11(4). The promoter must obtain the completion or occupancy certificate, provide essential services until the association takes over, enable the association to be formed, execute a registered conveyance deed with the undivided proportionate title in common areas, and pay all outgoings collected from allottees. Responsibility for structural or other defects continues even after conveyance, for the period referred to in section 14(3).

Section 34 gives the Authority the function of ensuring that promoters comply with these obligations. It also lets the Authority publish names and photographs of defaulting promoters.

Key rules to remember

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.

How to solve Functions and Duties of Promoters questions

Most questions give a promoter's act or omission and ask whether the law was followed. Use the same path each time.

1Identify the stage: before registration, at booking, during construction, or after possession.
2Name the duty involved: disclosure, advertisement, separate account, certificate, association, conveyance, outgoings or cancellation.
3State the rule in plain words and cite the section, for example section 4(2)(l)(D) or section 11(4).
4Apply it to the facts. Check numbers, such as 70% of amounts collected, and who must certify withdrawals.
5Check for a proviso: continuing liability for defects, or liability for unpaid outgoings after transfer.
6Conclude clearly: state whether the promoter complied, and the allottee's remedy, such as approaching the Authority.

Quickest way: Stage and duty grid

When to use it: Use when you have 10 minutes or less for a short-answer question on promoter duties.

Write the stage of the project in one line.
Write the matching duty and the section number.
Write one line applying it to the facts.
Write a one-line conclusion.

Common mistakes in Functions and Duties of Promoters

Saying the 70% is of the project cost.
Students mix up cost with collections.
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.
The word 'cover the cost' sounds like free use.
Fix: Withdrawal is only in proportion to percentage of completion, after certificate from an engineer, an architect and a chartered accountant in practice.
Saying promoter liability ends when the conveyance deed is executed.
Students assume transfer ends all duties.
Fix: The proviso to section 11(4)(a) says liability for structural or other defects continues for the period in section 14(3). Unpaid outgoings also remain the promoter's liability.
Leaving out the registration number and website address in advertisement answers.
Students remember only the prospectus content.
Fix: Section 11(2) requires both. Mention them together.
Stating that the promoter can cancel an allotment at will.
Students ignore section 11(5).
Fix: Cancellation is only in terms of the agreement for sale. The allottee may approach the Authority if the cancellation is not in accordance with the terms of the agreement for sale, and is unilateral and without any sufficient cause.
Confusing the duty to pay outgoings with the allottee's duty to pay.
Both involve payment of charges.
Fix: Section 11(4)(g) makes the promoter pay outgoings it collected from allottees until it hands over possession, including land cost, ground rent, taxes and mortgage interest.

Worked examples

Example 1

Skyline Developers Pvt Ltd, Pune, collects ₹10,00,000 from an allottee for a registered project. It plans to use all the amount for buying land for a new project. Examine under RERA 2016. What minimum amount must remain in the separate account out of this receipt?

Show the solution

Provision: under section 4(2)(l)(D), seventy per cent of amounts realised from allottees must be deposited in a separate account in a scheduled bank.
Compute: 70% of ₹10,00,000 = ₹7,00,000.
The money is to be used only to cover construction cost and land cost of that project.
Application: using the money for another project breaches this condition. Withdrawals are also allowed only in proportion to percentage of completion, certified by an engineer, an architect and a chartered accountant in practice.

Answer: ₹7,00,000 must be deposited in the separate account. Using it for a new project is not permitted, as it must be used only for the registered project.

Example 2

Greenview Realty advertises a registered housing project in a newspaper without its registration number. Two years after conveyance, the allottees' association finds structural defects. The promoter says its duties ended on conveyance. Advise.

Show the solution

Advertisement: section 11(2) requires the advertisement or prospectus to mention prominently the website address of the Authority and include the registration number. Omission breaches this.
Defects: under the proviso to section 11(4)(a), the promoter's responsibility for structural or any other defect for the period referred to in section 14(3) continues even after conveyance deeds are executed.
Application: the argument that duties ended on conveyance is wrong for defects within that period.
Remedy: the allottees can approach the Authority, which ensures compliance under section 34(f).

Answer: The advertisement is non-compliant. The promoter remains responsible for the defects for the period under section 14(3), despite the conveyance.

Exam tips

Learn section 4(2)(l)(D) almost word for word, with its three provisos. It is the most likely topic for a direct question.
Write section numbers: 4(2), 11(1), 11(2), 11(3), 11(4), 11(5) and 34. Use short headings for each duty.
Always end with a conclusion line. ICSI style needs provision, application and conclusion.
In case-style questions, check three things: advertisement content, use of funds and after-conveyance liability.

Practice questions from Real Estate Regulation and Development Law

Functions and Duties of Promoters: frequently asked questions

What is the 70 percent rule under RERA?

The promoter must deposit seventy per cent of the amounts realised from allottees in a separate account in a scheduled bank. It is used only for construction cost and land cost. The promoter withdraws in proportion to the completion of the project, with required certification.

Who certifies withdrawals from the separate account?

An engineer, an architect and a chartered accountant in practice must certify that the withdrawal is in proportion to the percentage of completion of the project.

Does the promoter remain liable for defects after handing over?

Yes. The proviso to section 11(4)(a) says responsibility for structural or any other defect continues for the period referred to in section 14(3), even after conveyance deeds are executed.

What must a promoter show in advertisements?

Section 11(2) requires the advertisement or prospectus to mention prominently the website address of the Authority and include the registration number obtained from the Authority.

Can a promoter cancel an allotment?

Only in terms of the agreement for sale. The allottee may approach the Authority for relief if the cancellation is not in accordance with the terms of the agreement for sale, and is unilateral and without any sufficient cause (proviso to section 11(5)).