The Real Estate Regulatory Authority (RERA) was founded in India to control the real estate industry and encourage openness. Homebuyers, real estate brokers, and promoters must all abide by the tight rules and criteria that have been established. Penalties and repercussions may apply if you don't follow these rules.
What Are The Penalties On Real Estate Agents Under RERA?
Promoter Penalties
RERA rules say promoters must follow guidelines for real estate projects. Penalties under RERA apply if they don’t comply. Examples of penalties include:
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Non-Registration of Project:
Promoters must register their projects with RERA before advertising, selling, or booking any units. If they don’t, they could face penalties such as fines or imprisonment. Timely registration is crucial for promoters to avoid legal consequences.
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Incorrect Application for RERA Registration:
Promoters must give correct and complete details for RERA Registration. If they give wrong or confusing information, they may get punished with fines or lose project registration. Promoters should verify all data given in their RERA application to avoid penalties.
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Non-Compliance with Orders of Authority:
RERA can make rules for real estate projects. If someone doesn’t follow the rules, like finishing the project late, they can get punished. The punishments include fines, canceling the project, and going to jail.
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Non-Compliance with Orders of Appellate Tribunal:
Promoters must follow orders from the Appellate Tribunal, which is a higher authority for resolving real estate disputes. Not complying with their orders can lead to penalties like fines, project registration cancellation, and imprisonment.
Real-Estate Penalties
Real estate agents, who play a crucial role in facilitating real estate transactions, are also subject to penalties under RERA for non-compliance with regulations. Some of the real estate penalties under RERA include:
Non-Registration:
Real estate agents must register their businesses with RERA before doing any real estate work. If they don’t, they can be fined, lose their registration, and have their license suspended or revoked.
Non-Compliance with Orders of Authority:
Real estate agents are required to comply with the orders issued by the Authority, which may include directives related to advertising, marketing, or transactional practices. Failure to comply with the orders of the Authority can result in penalties, including fines, cancellation of registration, and suspension or revocation of the real estate agent’s license.
Non-Compliance with Orders of Appellate Tribunal:
Similar to promoters, real estate agents are also required to comply with the orders of the Appellate Tribunal. Failure to comply with the orders of the Appellate Tribunal can result in penalties, including fines, cancellation of registration, and suspension or revocation of the real estate agent’s license.
Homebuyer Penalties:
Homebuyers, who are consumers of real estate projects, are also subject to penalties under RERA for non-compliance with regulations. Some of the homebuyer penalties under RERA include:
Non-Compliance with Orders of Authority:
Homebuyers are required to comply with the orders issued by the Authority, which may include directives related to payment schedules, possession timelines, or other contractual obligations. Failure to comply with the orders of the Authority can result in penalties, including fines, cancellation of allotment, and forfeiture of the amount paid to the real estate agent or promoter.
Non-Compliance with Orders of Appellate Tribunal:
Homebuyers are also required to comply with the orders of the Appellate Tribunal. Failure to comply with the orders of the Appellate Tribunal can result in penalties, including fines, cancellation of allotment, and forfeiture of the amount
What is the Real Estate Regulatory Authority(RERA)?
The Real Estate Regulatory Authority (RERA) was introduced by the Indian Government in March 2016 through the Real Estate Regulatory Bill. The Act came into effect on May 1, 2016, with some sections notified, and the remaining clauses were implemented on May 1, 2017.
The main objective of the Act is to bring about reforms in the real estate sector. It establishes the Real Estate Regulatory Authority (RERA), which is responsible for regulating and promoting the real estate industry. RERA’s focus is to ensure the efficient and transparent sale of plots, apartments, buildings, or real estate projects.
One of RERA’s key aims is to safeguard the interests of consumers in the real estate sector. The Authority provides an adjudicating mechanism for quick dispute resolution and sets up an Appellate Tribunal to hear appeals arising from RERA’s decisions.
RERA acts as a regulatory agency with a primary focus on protecting consumers’ interests. It addresses the rising number of complaints against builders and developers, particularly related to delayed possession of homes, construction deficiencies, and unscrupulous practices after the agreement is signed.
Under the Act, promoters are required to disclose crucial information to consumers, such as the promoter’s details, project information, layout plans, land status, permissions, agreements, and the names of real estate agents, contractors, architects, and structural engineers.
Penalties for Promoters
Under the Real Estate Regulatory Authority (RERA) Act, the term “Promoter” includes various entities involved in real estate projects, such as developers, builders, colonizers, contractors, and landowners. The Act aims to hold any party having or acquiring rights to a real estate project accountable for fulfilling their commitments to homebuyers and ensuring timely delivery.
Promoters have several obligations under RERA, and failure to comply can lead to penalties. Here are some instances of non-compliance and their corresponding penalties:
- Non-Registration of the Project:
– Before advertising and marketing a real estate project, the promoter must register it.
– If a promoter fails to register the project under Section 59(1) of the Act, they may face a penalty of up to 10% of the project’s projected cost, as determined by the Relevant Authority.
– Continued non-registration despite the Authority’s order may result in imprisonment of up to three years or a fine of up to 10% of the project’s cost, or both.
- False RERA Registration Application:
– Promoters must apply for project registration to the Authority with specific details and required documents.
– Submitting false information in the registration application can lead to a penalty of up to 5% of the project’s projected cost, as determined by the Authority.
- Non-Compliance with Authority Orders:
– If a promoter fails to comply with or violates any of the Authority’s directives, other than those in Sections 3 and 4, they may face a penalty of up to 5% of the project’s projected cost under Section 61.
- Non-compliance with Appellate Tribunal Orders:
– Promoters failing to follow the Appellate Tribunal’s orders, rulings, or directives can be imprisoned for three years or fined for each day the default continues, cumulatively up to 10% of the project’s anticipated cost, or both.
These penalties are designed to ensure promoters adhere to the regulations and protect the interests of homebuyers in the real estate sector. RERA plays a significant role in promoting transparency and accountability in the industry.
Penalties for Fraudulent Real Estate Transactions
Real estate agents, who act on behalf of others in real estate transactions and receive compensation for their services, are required to register under RERA before participating in transactions involving RERA-registered projects.
The RERA Act imposes various obligations on real estate agents, and failure to comply with these obligations can lead to penalties.
Non-Registration of Project:
- Real estate agents are prohibited from engaging in transactions related to projects that are not registered under Section 3 of the Act.
- Registered agents must not facilitate the sale or purchase of unregistered real estate projects.
- They are required to maintain proper books of accounts, records, and documents as specified.
- Real estate agents must avoid engaging in unfair trade practices, such as false representation of services, portraying false approvals or affiliations, and advertising non-existent projects.
- Non-registration or non-compliance with provisions in Sections 9 and 10 may result in a penalty of Rs 10,000 per day of default, which can amount to up to 5% of the total cost of the real estate project.
Non-Compliance with Authority Orders:
Failure to comply with or violate any of the Authority’s instructions or directives may lead to a penalty of up to 5% of the projected cost of the real estate project under Section 65. This penalty can be imposed for each day of non-compliance.
Non-Compliance with Appellate Tribunal Orders:
Real estate agents failing to comply with or violating any orders, rulings, or directives of the Appellate Tribunal may face imprisonment for up to one year or a fine of up to 10% of the project’s anticipated cost, or both, as per Section 66 of the Act.
Penalties for Companies
If a company commits an offense under the Act, every individual responsible for conducting the company’s business and those in charge of its affairs, directly responsible for the act, will be held accountable and subjected to appropriate punishment.
However, if a person can demonstrate that they had no knowledge of the committed act or had taken necessary precautions to prevent it, they will not be penalized under Section 69(1) of the Act.
Who can be penalized under the Act?
Under the Act, several parties can be penalized for non-compliance with their duties, responsibilities, and functions:
- Promoter: The promoter, which includes developers, builders, colonizers, contractors, and landowners involved in real estate projects, has specific obligations under the Act. Failure to fulfill these obligations may result in penalties.
- Allottee: Allottees, who are individuals who have been allocated or purchased a property in a real estate project, also have certain responsibilities under the Act. Failure to comply with these responsibilities may lead to penalties.
- Real Estate Agent: Real estate agents, who act on behalf of others in real estate transactions, are obligated to register under RERA and adhere to various requirements. Non-compliance with these obligations can result in penalties.
Each party mentioned above is required to perform their duties and comply with the regulations set forth by the Act. Failure to do so may lead to penalties being imposed upon them. The Act aims to ensure transparency, accountability, and protection of consumers in the real estate sector, and penalties serve as a means to enforce compliance with its provisions.
Penalties under RERA across different states
Different states in India have their own implementation of the Real Estate Regulatory Authority (RERA) with varying rules and penalties for developers. Here are some of the penalties imposed by different states:
- Gujarat: Developers registering ongoing projects after 1st October will face fines equivalent to the registration fees for projects registered between 1st and 31st October. After this date, double the registration fees will be charged as a penalty.
- Himachal Pradesh: Buyers are advised to purchase plots or apartments only from registered developers. Developers and agents are required to get themselves registered on the website.
- Karnataka: Violators may face penalties of Rs. 10,000 per day or up to 10 percent of the project cost or 3 years of imprisonment for non-compliance with deadlines.
- Kerala: The Kerala RERA (KRERA) has been revoked due to concerns about safeguarding homebuyers’ interests.
- Maharashtra: Penalties have been doubled for builders who registered between September 1 and September 30 or later. The penalty is either double the registration fees or Rs 2 lakh, whichever is higher. Applications for ongoing project registrations will be decided on a case-to-case basis by the authority.
- Rajasthan: The penalty for delay in the registration process was initially 2 percent of the project cost or 10 times the registration fee, whichever was higher. Now, the fines have been raised to 10 percent.
- Telangana: Developers, brokers, and infrastructure companies are obligated to register under RERA. They are prohibited from advertising or selling any products without RERA registration.
- Goa: Builders have been given a three-month extension to register ongoing projects under RERA, with the deadline extended to December 31, 2017.
- Uttar Pradesh: Penalties for registration after August 15, 2017, vary depending on the time of registration, ranging from 1% to 10% of the project cost.
- West Bengal: Developers failing to comply with the West Bengal Housing Industry Regulation rules may face penalties up to 10% of the project cost or imprisonment up to 3 years, or both.
The Act aims to improve the real estate sector and instill confidence among developers, agents, and buyers. It enforces adherence to delivery schedules and uphold commitments, leading to increased transparency and improved customer support in the real estate industry.
Conclusion
To protect everyone involved in real estate transactions, such as promoters, brokers, and buyers, RERA has strict rules. Breaking these rules can result in fines, cancellation of project registration, license suspension or revocation, and jail time. Contact our Vakilsearch experts to learn more and get answers to your questions.
FAQs
to the Allottee, the Promoter agrees to pay the Allottee, who does not intend to withdraw from the project, interest as specified in the Rule on all amounts paid by the Allottee, for each month of delay, until possession is handed over. ” image-7=”” headline-8=”h3″ question-8=”What is Rule 25 of RERA?” answer-8=”Rule 25 of RERA differs from state to state. For information regrading a specific state, get in touch without experts right away! ” image-8=”” headline-9=”h3″ question-9=”What is the penalty under section 59 of RERA Act?” answer-9=”For, non- registration of project/not obeying orders or directions in connection with the same, the penalty under Section 59 is 10% of estimated cost of real estate project/Imprisonment up to 3 years with an or without fine being 10% of the estimated cost of real estate project respectively. ” image-9=”” headline-10=”h3″ question-10=”What is Section 61 of the RERA Act?” answer-10=”This section deals with the penalty for every day of contravention of any order of the RERA which may cumulatively extend up to 5% of the estimated cost of real estate project ” image-10=”” count=”11″ html=”true” css_class=””]Also Read:
