A Comprehensive Overview of Your Rights, Builder’s Obligations, and Legal Remedies Under the Real Estate (Regulation and Development) Act
Introduction: Why Was RERA Necessary?
For decades, the Indian real estate sector was largely unregulated. Homebuyers, who often invest their life savings into a property, were left vulnerable to the arbitrary practices of developers. Common issues included significant project delays, buildings constructed with poor-quality materials, last-minute changes to sanctioned plans, and a complete lack of transparency on how their money was being used. Disputes were common, and the legal recourse was expensive, time-consuming, and often favoured the powerful developers.
To protect the interests of homebuyers and bring discipline to the sector, the Government of India introduced the Real Estate (Regulation and Development) Act, 2016 (RERA). This landmark legislation was enacted to establish a framework of transparency, accountability, and efficiency in the real estate industry. For states like Maharashtra, the governing body is known as the Maharashtra Real Estate Regulatory Authority (MahaRERA), which has been one of the most proactive in implementing the law.
This guide will explain the RERA Act in simple terms, helping you understand your rights as a homebuyer and the legal steps you can take if those rights are violated.
Key Features of the RERA Act
RERA is not just a set of rules; it is a systemic change. Here are its most important features that every homebuyer must know:
1. Mandatory Project Registration
This is the cornerstone of RERA. No builder or developer can advertise, market, book, sell, or offer to sell any real estate project without first registering it with the state’s RERA authority (like MahaRERA).
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- What this means for you: When a developer approaches you, your first question should be: “Is this project RERA-registered?” You can verify their RERA registration number on the official MahaRERA website. This single step filters out non-serious or fraudulent players.
- Exemptions: RERA registration is mandatory for all commercial and residential projects, except for projects on land less than 500 square meters or with fewer than eight apartments (inclusive of all phases).
2. The 70% Escrow Account Rule
This is RERA’s strongest financial safeguard. The Act mandates that developers must deposit 70% of all funds collected from homebuyers into a separate, dedicated bank account (an escrow account).
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- What this means for you: This money can only be withdrawn by the developer to cover the cost of construction and land for that specific project. It cannot be diverted to fund other projects, buy new land, or pay off old loans. This rule directly addresses the primary cause of project delays—the mismanagement and diversion of funds.
3. Standardization of ‘Carpet Area’
Previously, developers used ambiguous terms like “super built-up area,” “built-up area,” and “plinth area,” which often included common spaces like lobbies, stairs, and even wall thickness. This misled buyers into thinking they were getting a larger apartment.
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- What this means for you: RERA mandates that all sales must be based on ‘Carpet Area’. Carpet area is defined as the net usable floor area of an apartment, excluding the area covered by external walls but including the area covered by internal partition walls. The developer must clearly state the RERA carpet area in all agreements and marketing materials. You now pay only for the space you actually live in.
4. Promoter’s Obligations (Developer’s Duties)
RERA places a clear set of responsibilities on the developer (referred to as the ‘Promoter’ in the Act). These include:
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- Disclosing all project details on the RERA website, including sanctioned plans, project layout, and quarterly progress reports.
- Adhering strictly to the sanctioned plans. Any major change requires the written consent of at least two-thirds of the buyers.
- Ensuring the timely completion and possession of the project as declared in