Common RERA Violations by Builders and How to Deal with Them

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to bring transparency, accountability, and fairness to the real estate sector. Despite the strict provisions of RERA, many builders still engage in violations, causing distress to homebuyers. These violations range from project delays to misleading advertisements and financial mismanagement. In this blog, we will discuss the most common RERA violations by builders, legal remedies available to homebuyers, notable case laws, and recent developments in RERA enforcement.

RERA introduced several provisions to regulate the real estate industry, making property transactions more transparent and secure. Some of the most critical provisions include:

1. Non-Registration of Projects Under RERA

• Builders often fail to register projects with the respective State RERA Authority, even when the project size meets the required criteria (500 square meters or more than 8 apartments).
• Impact on Buyers: Without RERA registration, buyers cannot verify project details, increasing the risk of fraud.
• Case Law: Sanjeev Kumar v. Ajnara India Ltd. (2021) – The Uttar Pradesh RERA (UP-RERA) imposed penalties on the builder for selling unregistered units.

2. Project Delays and Failure to Meet Deadlines

• One of the most frequent violations is the delay in project completion beyond the promised deadline.
• Legal Provision: Under Section 18 of RERA, homebuyers can claim a refund with interest or compensation for the delay.
• Case Law: Bikram Chatterjee v. Union of India (Amrapali Case, 2019) – The Supreme Court directed NBCC to complete stalled Amrapali projects and revoked the builder’s RERA registration.

3. Misleading Advertisements and False Promises

• Builders often publish deceptive advertisements to lure buyers into purchasing properties based on false claims.
• Legal Provision: Under Section 12 of RERA, buyers can seek compensation for misleading information.
• Case Law: Jayantilal N. Mistry v. Lodha Group (2020) – Maharashtra RERA (MahaRERA) directed the builder to compensate buyers for misleading project completion timelines.

4. Changes in Project Plans Without Buyer Consent

• Builders sometimes modify layout plans, increase the number of units, or alter promised amenities without the approval of existing buyers.
• Legal Provision: Section 14 of RERA mandates that builders cannot make significant alterations without the consent of two-thirds of allottees.
• Case Law: Vishwas Choudhary v. Runwal Developers (2022) – MahaRERA penalized a developer for changing the floor plan without informing buyers.

5. Misuse of Funds and Financial Mismanagement

• RERA mandates that 70% of the project funds collected from buyers be deposited in an escrow account to prevent fund diversion.
• Builders violating this rule often use buyer funds for unrelated projects, leading to financial instability and construction delays.
• Case Law: Citizens Welfare Association v. Supertech Ltd. (2021) – The Supreme Court ordered the demolition of unauthorized Supertech twin towers, citing financial irregularities.

6. Poor Construction Quality and Structural Defects

• If a homebuyer finds defects in construction within five years of possession, the builder must fix them at no extra cost.
• Legal Provision: Section 14(3) of RERA ensures builders are held accountable for defects.
• Case Law: Nirmal Kumar v. DLF Homes (2021) – The Haryana RERA directed DLF to compensate buyers for poor-quality construction.

7. Non-Issuance of Occupancy Certificate and Possession Delays

• Some builders delay obtaining the Occupancy Certificate (OC), forcing buyers to take possession without proper approvals.
• Legal Provision: Builders must secure an OC before offering possession, as per Section 19 of RERA.
• Case Law: Homebuyers v. Unitech Ltd. (2022) – The National Consumer Disputes Redressal Commission (NCDRC) ruled in favor of buyers, penalizing the builder for failing to provide OCs on time.

1. Filing a Complaint with RERA

• Buyers can file a complaint with their respective State RERA Authority against the builder for any violation.
• Complaints can be filed online through the official RERA website of the state.

2. Seeking Compensation for Losses

• Under Section 18 of RERA, buyers can claim a full refund with interest if the builder fails to deliver the project on time.

3. Approaching the Real Estate Appellate Tribunal (REAT)

• If dissatisfied with the state RERA decision, buyers can appeal before the Real Estate Appellate Tribunal.

4. Taking Legal Action Through Consumer Forums

• Buyers can also file a case under the Consumer Protection Act, 2019 for compensation due to unfair trade practices.

5. Reporting Financial Fraud to Regulatory Authorities If a builder is found misusing funds, buyers can report the case to the Enforcement Directorate (ED) for financial fraud investigations.

1. Strict Actions Against Non-Compliant Builders

• Many state RERA authorities have started blacklisting builders and imposing heavy fines for repeated violations.
• Example: In 2023, UP-RERA canceled the registration of multiple projects due to non-compliance with RERA provisions.

2. Digitalization of RERA Services

• Several states have introduced online tracking systems for buyers to monitor project progress and complaints in real time.

3. Fast-Tracking of Homebuyer Complaints

• RERA tribunals are expediting cases to ensure quicker resolution of homebuyer grievances.

4. Focus on Affordable Housing Projects

• Recent RERA amendments in some states aim to regulate smaller housing projects, extending protections to more buyers.

Despite the introduction of RERA, many builders continue to engage in unfair practices, causing distress to homebuyers. However, the law provides strong mechanisms for addressing these violations, ensuring that homebuyers receive justice. By understanding their rights under RERA and taking proactive steps, buyers can safeguard their investments and hold builders accountable.

If you are planning to invest in a real estate project, always verify the builder’s RERA registration, check past project records, and be aware of your legal options in case of violations. With stronger enforcement and buyer awareness, RERA continues to transform the Indian real estate sector into a more transparent and accountable industry.