The Real Estate (Regulation and Development) Act, 2016 (RERA) is the most significant piece of consumer protection legislation in India's real estate sector. Before RERA, homebuyers were largely at the mercy of developers — agreements were one-sided, delays were routine, and recourse was limited to slow consumer forums or civil courts. RERA created a sector-specific regulatory and dispute resolution framework that, despite implementation challenges, has materially improved homebuyer rights.
What RERA Mandates for Developers
RERA requires all real estate projects with more than 8 apartments or plots above 500 sq metres to be registered with the state RERA authority before any advertisement or sale. Registration requires disclosure of complete project details — approved plans, commencement and completion certificates, project timelines, and financial details. Developers must maintain 70% of collected amounts in a separate escrow account exclusively for construction and land costs — a provision aimed at preventing fund diversion.
Any change to the sanctioned plan after registration requires two-thirds consent of the allottees (buyers). Structural defects reported within five years must be rectified at the developer's cost. These are mandatory provisions — no contract term can waive them.
Delay Compensation: The Core Right
If a developer fails to deliver possession by the date specified in the agreement, the homebuyer is entitled to either a full refund with interest (at the SBI MCLR + 2% rate, or as specified by the state RERA authority) or continued allotment with monthly interest payments until handover. Most state RERA authorities have specified the interest rate — typically 10.5% to 11% per annum — in their regulations.
Filing a complaint before the RERA authority is relatively simple: a complaint under Section 31 of RERA, accompanied by the booking application, the agreement for sale, payment receipts, and correspondence evidencing the delay. The authority must adjudicate within 60 days. Non-compliance with a RERA order is punishable with imprisonment up to 3 years and/or fine, giving RERA orders genuine enforcement teeth.
RERA vs Consumer Forum: Which Forum to Choose
Homebuyers have concurrent remedies — RERA authority and the National Consumer Disputes Redressal Commission (NCDRC) / State Commissions under the Consumer Protection Act, 2019. The Supreme Court has held that RERA and consumer fora have concurrent jurisdiction; filing in one does not bar filing in the other. In practice, RERA is often faster for purely monetary relief, while consumer fora can award compensation for mental agony and litigation costs that RERA authorities typically do not.
When the Developer Goes Insolvent: RERA vs IBC
The intersection of RERA and IBC is one of the most complex areas of real estate law today. When a real estate developer enters CIRP under IBC, the Section 14 moratorium stays all RERA proceedings. Homebuyers, classified as financial creditors under IBC after the 2018 amendment, participate in the CoC. However, their voting share is diluted by the sheer number of homebuyers, making it difficult for any individual homebuyer to influence CoC decisions.
The RERA authority cannot grant refunds or enforce orders during the moratorium period. Homebuyers can submit claims before the IRP and participate in the CoC — typically through a representative, as permitted by IBC regulations. In practice, homebuyers in developer insolvencies face the stark choice between an uncertain resolution plan (which may offer a portion of their investment) and liquidation (which typically offers even less).
Practical Tips for Homebuyers
Always verify RERA registration of the project before booking. Insist on a RERA-compliant agreement for sale — not a memorandum of understanding or application form with ambiguous terms. Keep all payment receipts and correspondence. If possession is delayed beyond the agreement date by more than 6 months, consult a real estate and RERA lawyer to assess your options. Do not accept a possession letter that waives your right to delay compensation without independent legal advice.
For RERA complaints, real estate dispute resolution, or advice on builder insolvency proceedings, contact DC Law Offices.