The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, was introduced to bring transparency, accountability, and discipline in the real estate sector. While it has empowered homebuyers, it has also placed a strong responsibility on builders, agents, and developers to comply with its provisions.
However, many still underestimate the serious penalties that can arise from non-compliance under RERA. Whether it’s a delay in project registration or providing false information, every violation invites a well-defined punishment under the Act.
In this guide, let’s understand the penalties prescribed under RERA for promoters, real estate agents, and allottees and what you can do to stay compliant.
Why Does RERA Impose Penalties for Non-Compliance?
RERA was enacted to eliminate the long-standing issues of project delays, misleading advertisements, and poor accountability in the real estate market. To ensure strict adherence, the Act includes financial penalties and even imprisonment for major violations.
These penalties act as both a deterrent and a corrective mechanism—ensuring that every participant in a real estate project functions responsibly and transparently.
What Are the Penalties for Builders or Promoters Under RERA?
Builders or promoters are at the heart of real estate transactions. Since they handle project development and marketing, their actions directly affect homebuyers. As such, RERA holds them to the highest standards.
Failure to Register the Project (Section 59)
If a promoter fails to register a real estate project with the RERA authority:
- The promoter is liable to pay a penalty up to 10% of the estimated project cost.
- If the promoter continues to violate after notice, he can face imprisonment up to 3 years or an additional fine of 10% of the project cost, or both.
Example: A developer launching an apartment project without registration or advertising before registration can face severe action from the authority.
False Information or Misleading Advertisements (Section 60)
When a promoter provides false information or misrepresents facts in the registration application:
The penalty can go up to 5% of the estimated cost of the real estate project.
This applies to false claims about project completion dates, approvals, or amenities.
Violation of Project Plans or Terms (Section 61)
If a registered promoter violates the terms of approval, marketing commitments, or other provisions of the Act:
He may be fined up to 5% of the estimated cost of the project.
This provision ensures that builders cannot alter project layouts or specifications arbitrarily.
Failure to Comply with Authority Orders (Section 63)
If a promoter does not comply with any direction or order of the RERA Authority:
The promoter may have to pay a daily penalty, which can extend up to 5% of the estimated cost of the project.
Non-Compliance with Appellate Tribunal Orders (Section 64)
If the promoter fails to comply with the Appellate Tribunal’s directions:
- The penalty may include imprisonment up to 3 years, or
- Fine up to 10% of the project cost, or both.
In short, promoters face the harshest consequences for ignoring legal obligations or misleading buyers.
What Are the Penalties for Real Estate Agents Under RERA?
Real estate agents are the link between buyers and builders. Their conduct significantly influences the market’s credibility. RERA makes registration mandatory for all agents dealing in RERA-registered projects.
Operating Without Registration (Section 62)
If a real estate agent facilitates a sale or purchase without obtaining registration under RERA:
- The penalty can be ₹10,000 per day during the period of default,
- Or up to 5% of the cost of the property, whichever is higher.
This ensures only verified professionals can operate in the real estate sector.
Non-Compliance with Authority Orders (Section 65)
If an agent fails to comply with RERA’s directions or rules:
The penalty can extend up to 5% of the cost of the property involved in the transaction.
Violation of Appellate Tribunal Orders (Section 66)
In case of continued non-compliance with Appellate Tribunal’s orders:
- The agent can face imprisonment up to 1 year,
- Or a fine up to 10% of the project cost, or both.
RERA aims to promote ethical conduct among real estate agents by holding them legally accountable.
What Are the Penalties for Homebuyers (Allottees) Under RERA?
While RERA primarily safeguards the interests of homebuyers, it also ensures they fulfil their contractual obligations.
Non-Compliance with RERA Orders (Section 67)
If an allottee fails to comply with any order or direction of the RERA Authority:
- He or she may be charged a daily penalty up to 5% of the cost of the apartment or plot, as decided by the authority.
Violation of Appellate Tribunal Orders (Section 68)
If an allottee does not follow the orders of the Appellate Tribunal:
- The penalty can include imprisonment up to 1 year,
- Or a fine up to 10% of the cost of the apartment or plot, or both.
This ensures fairness across all stakeholders—developers, agents, and buyers alike.
What Is the Role of RERA Authorities in Enforcing Penalties?
Every state has its own Real Estate Regulatory Authority responsible for enforcing RERA provisions. These authorities can:
- Investigate complaints from buyers, agents, or developers.
- Conduct hearings and issue directions or penalties.
- Suspend registrations or blacklist promoters for repeated violations.
- Refer cases to the Appellate Tribunal if necessary.
RERA authorities play a proactive role in maintaining accountability and discipline in the real estate market.
How Are Penalties Calculated Under RERA?
RERA’s penalty structure is based on the estimated cost of the project or property involved. This ensures that large-scale violations attract proportionate fines.
Factors considered include:
- Project sise and cost
- Nature of the violation
- Duration of non-compliance
- Financial loss or hardship caused to homebuyers
For instance, a ₹100-crore project that fails to register could face a fine up to ₹10 crores.
Can RERA Offences Be Compounded?
Yes. Section 70 of the RERA Act allows certain offences to be compounded, meaning they can be settled by paying a fine instead of undergoing imprisonment.
However, the compounding amount is usually substantial, often reaching the maximum limit of the monetary penalty prescribed under the Act. The decision lies with the competent court, depending on the gravity of the offence.
This provision helps resolve cases quickly while ensuring accountability.
How Can Builders and Agents Avoid RERA Penalties?
The best way to avoid RERA penalties is to ensure complete compliance from the beginning. Some key preventive steps include:
- Register every project and agent before marketing or selling.
- Provide accurate project details including land status, approvals, and timelines.
- Deposit 70% of project funds in a separate bank account as mandated by RERA.
- Avoid false advertisements or commitments to buyers.
- Respond promptly to notices or directions from the RERA Authority.
- Maintain transparency in pricing, construction updates, and possession timelines.
By following these practices, developers and agents can build trust and operate confidently within the legal framework.
What Happens After a RERA Penalty Is Imposed?
Once RERA imposes a penalty, the promoter or agent must comply within the specified period. Continued non-compliance can lead to:
- Blacklisting of the project or promoter
- Suspension or revocation of registration
- Seizure of funds from the designated bank account
- Civil or criminal proceedings before the Appellate Tribunal
RERA authorities take enforcement seriously to ensure the Act’s credibility is maintained.
Why Is Compliance Under RERA So Important?
Compliance is not merely a legal formality—it’s a commitment to transparency and buyer protection. The Act has changed the way real estate operates in India by introducing:
- Standardised regulations across states
- Better project monitoring
- Timely completion and possession
- Accountability through registered professionals
Non-compliance not only attracts penalties but also damages a builder’s reputation, investor confidence, and long-term sustainability.
Stay Compliant and Build Trust with Every Project
Understanding RERA’s penalties is essential for everyone involved in real estate—from first-time developers to experienced agents. When you comply with the law, you don’t just avoid penalties; you earn credibility and buyer confidence, the two most valuable assets in the real estate business.
If you wish to explore this topic in detail and gain practical knowledge on compliance, documentation, and dispute resolution, you can check out the Real Estate Laws Course on LawMento.
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