By Nayanika Tiwari, NMIMS School of Law.

The Real Estate (Regulation and Development) Bill was passed in the year 2013 by the then existing government. This Bill led to the formation of Real Estate Regulatory Authorities (RERAs).

Under this law, any residential Real Estate project has to be registered with RERA. On registering the project, the promoter has to upload all the details of the project such as site and layout of plan and date of completion etc on the website of RERA.

The promoters, on collecting money from the buyers, have to deposit 70% of the total amount in a separately maintained bank account and this money can only be used for the construction of the project.


However the amount of money deposited in the account is subject to change to the decision of the State Government.

The salient features of the Bill are

(1) Applicability of the Bill:

The proposed initial Bill was applicable for residential Real Estate. It is now proposed to cover both residential and commercial Real Estate;

(2) Establishment of Real Estate Regulatory Authority:

The Bill provided for the establishment of one or more ‘Real Estate Regulatory Authority’ in each State/ Union Territory (UT), or one Authority for two or more States/UT, by the Appropriate Government for Real Estate transactions, To appoint one or more adjudicating officers to settle disputes and impose compensation and interest;

(3)Registration of Real Estate Projects and Registration of Real Estate Agents:
Mandatory registration of Real Estate projects and Real Estate agents who intend to sell any plot, apartment or building, with the Real Estate Regulatory Authority;

(4)Mandatory Public Disclosure of all Project Details

Mandatory public disclosure norms for all registered projects such as details of promoters, project, layout plan, plan of development works, land status, status of statutory approvals and disclosure of proforma agreements, names and addresses of Real Estate agents, contractors, architect, structural engineer etc.;

(5)Functions and Duties of Promoter

Disclosure of all relevant project details ,Adherence to approved plans and project specifications;
Obligations regarding veracity of the advertisement for sale or prospectus;
rectify structural defects; refund money in cases of default.

(6)Compulsory deposit of 50 percent –

To compulsorily deposit 50 percent (or such lesser percent as notified by the Appropriate Government) of the amounts realized for the Real Estate project from the allottees in a separate account in a scheduled bank within a period of fifteen days to cover the cost of construction to be used for that purpose;

(7)Adherence to declared plans –

To bar the promoter from altering plans, structural designs and specifications of the plot, apartment or building without the consent of two-third allottees after disclosure;
· However, minor additions or alterations permissible due to architectural and structural reasons;

(8)Functions of Real Estate Agents –

Real Estate agents to sell properties registered with the authority, maintain books of accounts, records and documents, not to involve in any unfair trade practice

 (9)Rights and duties of allottees

Right to obtain stag-wise  schedule of project, claim possession as per promoter declaration, refund with interest and compensation for default by the promoter, allottees have to make payments and fulfill responsibilities as per agreement.

(10)Functions of Real Estate Regulatory Authority

The Authority to act as the nodal agency to co-ordinate efforts regarding development of the Real Estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive Real Estate sector;

 (11)Establishment of central authority council

To advise the Central Government on implementation of the Act, recommend policy, protection of consumer interest and to foster growth and development of the Real Estate sector;

(12)Punitive provisions

Punitive provisions including de-registration of the project and penalties in case of contravention of provisions of the Bill or the orders of the Authority or Tribunal;

However the Bill created a few issues, discussed below –

  1. A few states have enacted their own laws relating to Real Estate which may differ with the Bill on some aspects. The Bill will override the state laws due to these inconsistencies
  2. According to the Bill 70% of the amount collected from the buyers of a project should  be used only for construction of that particular project.  However, in certain cases, the cost of construction could be less than 70% and the cost of land more than 30% of the total amount collected.  This implies that part of the funds collected could remain unutilized, necessitating some financing from other sources.  This could raise the project cost.

A standing committee was created to look into these issues. The committee gave the following recommendations –

 (a) the Bill should also regulate commercial Real Estate

 (b) smaller projects should also be covered

 (c) all Real Estate agents must be required to register.

Amendments to the Bill

However the next year itself, the government decided to amend the Bill. According to the government, this amendment will provide for transparency and fair play in Real Estate transactions. The amendments also propose stricter penalties and even jail term for a maximum of three years for developers. It provides for a clear definition of the ‘carpet area’ and would prohibit private developers from selling houses or flats on the basis of ambiguous ‘super area’.

Through the amendments to the Bill of 2013, the Cabinet has extended the applicability of the Bill to commercial Real Estate also. Ongoing projects that have not received completion Certificates have also been brought under the purview of the Bill and such projects will need to be registered with a proposed regulator within 3 months.

Another major modification is that promoters will not be allowed to change plans and structural designs without the consent of 2/3rd of consumers of a project, according to an official statement.

However the Bill has met with a lot of opposition from the industry. They have raised concerns over the strict penalties/punishment which will be imposed on developer if they fail to comply with certain provisions. It also makes it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.

Why is the Bill being opposed in the Rajya Sabha ?

Even though the current government has been insisting that the Bill is aimed to regulate and promote Real Estate sector and protect the interest of consumers, the other political parties have been opposing it vehemently.

The government’s argument for the passing of this Bill is that the Standing Committee had representation from all political parties, and that it went ahead with amendments only after having “exhaustive consultations” with all stakeholders.

However, last week, the Congress Vice -President met various organizations representing home-buyers to discuss concerns about the new Real Estate Bill proposed by the Bharatiya Janata Party-led National Democratic Alliance government. He has called the Bill anti-consumers as it allegedly dilutes penalties for late delivery of homes. The Bill allegedly does not safeguard against money being diverted from one project to another.

However due to the strong opposition from other political parties the passing of the Bill has become a hurdle for the government.

Legal aspect

The following are the legal aspects of the Bill –

Establishment of Real Estate Appellate Tribunals

The Bill envisages the formation of  appellate tribunals. This is done in order to make Real Estate agents punishable for non-compliance of orders of regulatory authority.

Fast track dispute mechanism

Fast track dispute mechanism means solving the cases in a more simplified and faster manner so as to prevent back logs.

Rules and regulations

Appropriate government or government authorities will be given the power to make the rules and regulations for the proper implementation, execution and functioning of the Bill


Adjudicating officers will have rank equivalent to that of District Judges. This will help give them the power required to give justice accordingly. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court, with one judicial and one administrative/technical member

Penal provisions

Penal provisions include payment of 10% of project cost for non-registration and payment of another 10 % of project cost or 3 year imprisonment or both if still not complied with.

For wrong disclosure of information or for not complying with the disclosures and requirements, payment of 5% of project cost will be imposed.

Bar of Jurisdiction

This Bill provides provisions to bar the jurisdiction of the other courts over cases related to Real Estate.


The Real Estate Bill in its current form has certain areas of improvement to make it more robust and more equal for both the parties without having any bias; however, even so, it is a law that is urgently required in India. The Real Estate sector has been an opaque and consumer unfriendly. It is also an avenue for hoarding black money. The proposed Bill can, even with its current flaws, can go a long way in regulating this very important sector.

Thus I feel this Bill is the need of the hour and should be passed unanimously without any opposition.