Consumer Connect: 'RERA Is For Home-Buyers,' Says Expert

Q. In recent days, a message about RERA has gone viral. It claims that for every violation by a builder, such as delay in possession, failure to provide promised amenities, or reduction in flat area, RERA imposes heavy penalties, but these do not go to homebuyers and instead go to RERA. Is this true? It also says that to get compensation, buyers must approach the Supreme Court, which is expensive and unaffordable. Is this accurate? What is your take on the claim that RERA is not meant for buyers? —Alok Hardikar, Vile Parle (East)

A. I have seen the video, and its contents reflect a complete misunderstanding of RERA. It is correct that the Act imposes heavy penalties on builders for violating its provisions. Section 59 states that if a builder advertises or sells a flat without registering the project with the state RERA authority, a penalty of up to 10% of the total project cost can be levied. Failure to pay can lead to imprisonment of up to three years. Sections 60 and 61 allow for a penalty of up to 5% of the project cost for other violations.

Under Section 63, continued non-compliance with RERA authority’s orders can attract daily penalties, up to 5% of the total project cost. Section 64 provides for imprisonment up to three years or fines (which may go up to 10% of the project cost), or both, if the builder defies orders of the Appellate Tribunal. These penalties are aimed at protecting homebuyers. As with any penalty, the payment goes to the authority – in this case, the RERA – not to individual buyers. However, under Section 76(2), all such penalty amounts must be credited to the respective state governments.

Thus, the claim that RERA profits from these penalties is baseless. RERA, like any other legal framework, uses penalties to ensure compliance. These are intentionally significant to deter violations and safeguard homebuyers. Importantly, RERA also includes strong provisions for direct buyer compensation. Section 12 entitles buyers to compensation for any loss caused by misleading advertisements. If a buyer chooses to exit the project due to such misrepresentation, the builder must refund the full amount with interest as prescribed.

Section 14(3) protects buyers against structural defects for five years from the date of receiving the Occupancy Certificate. Section 18 is perhaps the most significant. In case of possession delays, if a buyer opts out of the project, the builder must refund the amount paid, along with prescribed interest. If the buyer chooses to stay with the project, Section 18(1)(b) makes it obligatory for the builder to pay monthly interest from the date of delay until actual possession is handed over with the Occupancy Certificate.

Given these robust provisions for both penalties and buyer compensation, how can anyone reasonably claim that RERA does not protect homebuyers? It is true that in some states, including Maharashtra, the enforcement of RERA is lacking. But this is a failure in implementation, not in the Act itself.

(Advocate Shirish V Deshpande is chairman, Mumbai Grahak Panchayat. Queries can be sent to him on email: shirish50@yahoo.com)

Published on: Monday, June 30, 2025, 11:23 AM IST