RERA Penalties and Non-Compliances
What Every Promoter and Agent Must Know
The Real Estate (Regulation and Development) Act, 2016 (RERA), was introduced to bring transparency, accountability, and efficiency to the real estate sector. Whether you’re a promoter, agent, or buyer, complying with RERA is not just a legal obligation—it’s a step towards ethical business practices and trust-building with consumers.
For promoters and real estate agents, non-compliance with RERA regulations can result in severe financial penalties, registration suspension, or even imprisonment. Therefore, understanding what counts as non-compliance—and how to avoid it—is crucial to stay legally secure and operational.
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Common Non-Compliances Under RERA
For Promoters:
- Launching Projects Without Registration: Starting sales or marketing before obtaining RERA registration.
- Providing False Information: Misrepresentation in application forms—about land title, approvals, timelines, etc.
- Failure to Update Project Details: Not uploading quarterly progress reports (construction status, sales, etc.).
- Using Funds Improperly: Diverting funds collected from one project to another or for non-project-related expenses.
- Not Forming RWA/AOA: Failing to hand over common areas or form the association of allottees within the due period.
- Delay in Completion or Handing Over Possession: Breach of timelines mentioned in the agreement for sale.
For Agents:
- Operating Without Registration: Acting as an intermediary for sales without valid RERA registration.
- Dealing with Unregistered Projects: Marketing or selling projects that are not RERA-registered.
- Misleading Customers: Providing false commitments or concealing key project details.
Penalties Under RERA
Non-registration of project |
False information at registration |
Violation of RERA orders |
Not updating project details |
Failure to register as an agent |
Dealing in unregistered projects |
Failure to comply with authority’s directions |
Delayed possession to buyer |
State-Level Differences – Focus on TNRERA
While the central RERA Act provides a uniform structure, each state has a RERA authority that frames specific rules. In Tamil Nadu, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) enforces the Act.
- Quarterly updates on project progress are strictly monitored.
- Physical hearings are conducted in Chennai; promoters must appear or be represented.
- Delayed compliance or absence in hearings can result in ex-parte orders with penalties.
For example, in 2023, several Chennai-based developers were penalized up to ₹2 lakh for failure to update project details for two consecutive quarters.
How to Avoid These Penalties
For Promoters:
- Register your project before advertising, marketing, or selling any unit.
- Ensure all information provided to RERA is accurate and supported by documents.
- Maintain and update project details quarterly on the RERA portal.
Form the Association of Allottees (RWA) and obtain Completion and Occupancy Certificates before handover
For Agents:
- Obtain and renew your RERA registration regularly.
- Avoid marketing or dealing with unregistered projects.
- Provide transparent information to buyers; keep a record of transactions and communications.
Conclusion
Non-compliance with RERA can have long-lasting legal and financial consequences for your business. As a promoter or agent, staying compliant is not just a regulatory requirement—it’s essential for credibility and consumer trust.
