RERA is a regulatory framework established by the Real Estate (Regulation and Development) Act, 2016 to protect homebuyers, promote transparency, and regulate the Indian real estate sector. Under Indian law, RERA mandates registration of all real estate projects and agents, establishes state-level regulatory authorities, and provides a fast-track dispute resolution mechanism for allottees under Sections 3-11 and Sections 12-18 of the Act.
Legal definition
The Real Estate (Regulation and Development) Act, 2016 defines its key terms under Section 2:
Section 2(d) — "allottee": A person to whom a plot, apartment, or building has been allotted, sold, or otherwise transferred by the promoter.
Section 2(zk) — "promoter": A person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees.
Section 2(zn) — "real estate project": The development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, for the purpose of selling all or some of the said apartments or plots or building.
Section 3 of the Act requires every promoter to register a real estate project with the relevant state RERA authority before advertising, marketing, booking, selling, or offering for sale any plot, apartment, or building. Section 18 establishes the homebuyer's right to seek a refund with interest if the promoter fails to deliver possession by the agreed date.
How courts have interpreted this term
M/s Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh [(2022) 1 SCC 714]
In this landmark 2021 judgment, the Supreme Court held that the homebuyer's right under Section 18 of RERA to seek a refund with interest for delayed possession is "absolute and unconditional." The Court ruled that this right cannot be diluted by contractual terms in the builder-buyer agreement, stay orders from other courts, or unforeseen events like force majeure. The bench also clarified that the regulatory authority under RERA has jurisdiction to direct refunds and is not limited to merely imposing penalties, resolving a long-standing jurisdictional ambiguity between the regulatory authority and the adjudicating officer under Section 71.
Imperia Structures Ltd. v. Anil Patni [(2020) 10 SCC 783]
The Supreme Court held that the provisions of RERA are retroactive in nature — they apply to ongoing projects that had not received completion certificates as on the date the Act came into force. The Court rejected the argument that RERA should only apply to projects commenced after the Act's notification, holding that the legislative intent was to protect existing allottees who were already suffering from project delays.
Pioneer Urban Land and Infrastructure Ltd. v. Union of India [(2019) 8 SCC 416]
The Supreme Court upheld the constitutional validity of the RERA provisions that treat allottees as financial creditors under the Insolvency and Bankruptcy Code, 2016 (as amended in 2018). The Court observed that homebuyers are among the most vulnerable stakeholders in a real estate project and deserve statutory protection, affirming the dual remedy available to allottees under both RERA and the IBC.
Why this matters
RERA fundamentally transformed the Indian real estate sector, which was previously largely unregulated. Before RERA, homebuyers had limited recourse when builders delayed projects, diverted funds, or deviated from sanctioned plans. The Act created a dedicated regulatory architecture with state-level RERA authorities and appellate tribunals, providing a faster and more accessible dispute resolution mechanism than civil courts.
For homebuyers, RERA's most impactful provisions include the mandatory requirement for builders to deposit 70% of project funds in a designated bank account (Section 4(2)(l)(D)), the prohibition on advertising or selling units in unregistered projects (Section 3), and the right to full refund with interest for delayed possession (Section 18). These provisions collectively address the three most common grievances in Indian real estate: fund diversion, misleading advertisements, and indefinite construction delays.
For real estate developers and practitioners, RERA compliance is now a prerequisite for every project involving the sale of plots, apartments, or buildings. Non-registration carries severe consequences, including penalties of up to 10% of the project's estimated cost (Section 59) and imprisonment of up to three years for continued non-compliance (Section 59(2)). Practitioners advising developers must ensure timely RERA registration, accurate disclosure of project timelines, and compliance with the quarterly progress reporting requirements mandated by each state authority.
A common misunderstanding is that RERA applies only to new projects launched after 2017. In fact, following the Imperia Structures ruling, RERA applies retroactively to all ongoing projects that had not received a completion certificate as on the date the Act was notified in the relevant state.
Related terms
Broader concepts:
Related documents:
Related procedures:
Frequently asked questions
Which real estate projects need to be registered under RERA?
Under Section 3 of the Real Estate (Regulation and Development) Act, 2016, every real estate project where the land area exceeds 500 square metres, or where more than eight apartments are proposed to be developed, must be registered with the state RERA authority before advertising or selling any unit. Projects that have received a completion certificate before the Act came into force are exempt.
Can a homebuyer get a full refund under RERA for delayed possession?
Yes. Under Section 18(1) of RERA, if the promoter fails to give possession by the date specified in the agreement for sale, the allottee has an unconditional right to withdraw from the project and claim a full refund with interest. The Supreme Court in Newtech Promoters (2021) held this right to be absolute and not subject to any contractual limitations imposed by the builder.
Does RERA apply to commercial real estate projects?
Yes. RERA applies to both residential and commercial real estate projects, provided they meet the threshold requirements under Section 3. The Act defines "real estate project" broadly to include the development of buildings consisting of apartments, plots, or buildings for the purpose of selling to other persons.
What is the penalty for selling flats in an unregistered RERA project?
Under Section 59 of RERA, a promoter who fails to register a project can face a penalty of up to 10% of the estimated cost of the project. If the promoter continues to violate the registration requirement despite being penalised, the penalty may extend to imprisonment for up to three years, or a fine of up to 10% of the estimated project cost, or both.
Can a homebuyer file a complaint under both RERA and the Consumer Protection Act?
Yes. The Supreme Court and various High Courts have held that RERA and the Consumer Protection Act provide parallel remedies. A homebuyer may approach either the RERA authority or the consumer forum, though filing identical claims before both simultaneously may raise issues of multiplicity of proceedings. Practitioners generally recommend RERA as the first forum due to its sector-specific expertise and faster timelines.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.