The Real Estate (Regulation and Development) Act, 2016 (“RERA”) establishes a comprehensive regulatory framework governing real estate projects in India. Registration of a project under RERA is not a one-time compliance requirement but the commencement of a regime of continuing statutory obligations imposed on promoters. These obligations are enforceable throughout the lifecycle of the project and are designed to ensure transparency, financial discipline, and accountability towards allottees.

Continuous Obligations After RERA Registration

Upon registration, the promoter is bound by the obligations set out under Section 11 read with Section 4(2) of RERA and the applicable State Rules. The promoter is required to execute the project strictly in accordance with the sanctioned plans, layout plans, and specifications approved by the competent authorities.

A key financial obligation arises under Section 4(2)(l)(D), which mandates that at least seventy per cent of the amounts realised from allottees shall be deposited in a separate bank account. Such amounts are to be utilised only for the cost of construction and land cost. Withdrawals from this account are permitted only in proportion to the percentage of completion of the project and must be certified by an engineer, an architect, and a chartered accountant, thereby ensuring that funds are not diverted to other projects.

The promoter is further required to obtain and maintain all necessary approvals, licences, and permits in a timely manner and remains responsible for all obligations under the Act until the conveyance of title to the allottees or the association of allottees, as the case may be.

Ongoing Disclosure Requirements

RERA imposes a continuous disclosure obligation on promoters. Under Section 11(1) read with Section 4(2) and the applicable Rules, the promoter is required to make periodic disclosures on the website of the Authority.

These disclosures include details of the number and types of units sold, stage-wise construction progress, status of approvals obtained and pending, and any revisions to project timelines or specifications. The disclosures are required to be updated at regular intervals as prescribed under the relevant State Rules, thereby enabling allottees to monitor the progress of the project based on verified information.

Revision of Project Timelines

Timely completion of the project is a statutory obligation of the promoter. Section 6 of RERA permits extension of the registration period only in cases of force majeure, which is defined to include events such as war, flood, drought, fire, cyclone, earthquake, or any other calamity caused by nature affecting the regular development of the project.

In such cases, the promoter is required to make an application to the Authority for extension of registration, which may be granted at the discretion of the Authority upon being satisfied of the existence of force majeure conditions. Delays attributable to reasons other than force majeure are not automatically covered under Section 6 and may require separate regulatory consideration.

Failure to complete the project within the stipulated timeline, in the absence of a valid extension, attracts liability under Section 18. Where the allottee opts to withdraw from the project, the promoter is liable to refund the amount received along with interest. Alternatively, where the allottee does not withdraw, the promoter is liable to pay compensation for delay.

Transfer of Project to Another Promoter

Section 15 of RERA restricts the transfer or assignment of a registered project by the promoter. Such transfer can be effected only with the prior written consent of at least two-thirds of the allottees, excluding the promoter’s own units, and with the prior approval of the Authority.

Upon such transfer, the transferee promoter is required to assume all pending obligations, liabilities, and responsibilities of the original promoter under the Act, thereby ensuring continuity of obligations and protection of allottee interests.

Penalties for Non-Compliance

RERA prescribes a structured penalty framework for non-compliance. Section 60 provides that where a promoter furnishes false information or contravenes the provisions relating to registration, the promoter shall be liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project.

Section 61 provides for penalties in cases of contravention of other provisions of the Act, or the rules or regulations made thereunder, which may also extend up to five per cent of the estimated cost of the project.

Further, failure to comply with the orders or directions of the Authority or the Appellate Tribunal attracts additional consequences. Under Sections 63 and 64, such non-compliance may result in daily penalties and, in specified cases, imprisonment.

In addition to statutory penalties, the promoter may also be exposed to claims by allottees for refund, interest, or compensation under Section 18, thereby creating significant financial and legal exposure.

Conclusion

RERA establishes a regime of continuous regulatory oversight over real estate projects, extending well beyond the stage of registration. The obligations imposed on promoters encompass financial discipline, disclosure requirements, adherence to timelines, and accountability to allottees.

The statutory framework reflects a shift from pre-registration compliance to ongoing legal responsibility. For promoters, compliance with RERA is not a one-time procedural requirement but a sustained legal obligation, breach of which may result in significant civil and penal consequences.

-Ishita Y

Advocate

BangaloreLawyer