RERA & REAL ESTATE: UNDERSTANDING PROPERTY LAWS IN INDIA
In India, property isn’t just about assets—it’s tied to our history, culture, and identity. From owning a house to inheriting land or intellectual property, knowing the laws that govern these rights is essential.
WHAT IS PROPERTY LAW?
Property law defines who can own, use, and transfer property—whether it’s land, buildings, or even movable items. It ensures that buying, selling, leasing, or inheriting property happens within a legal framework, keeping things fair and transparent. It also handles issues like land boundaries, disputes, and inheritance, ensuring smooth and lawful transactions.
HISTORY
India’s property laws have evolved over centuries. In ancient times, property was managed through religious texts and customs. Islamic rule brought new principles like waqf and inheritance laws under Sharia. British colonial rule introduced formal legal systems like the Zamindari system and the Permanent Settlement Act.
After independence, India reformed outdated systems. Landmark laws like the Zamindari Abolition Act gave ownership to cultivators and promoted fair land distribution—laying the groundwork for today’s property laws.
PROPERTY LAWS IN INDIA:
Transfer of Property Act, 1882: Governs the transfer of property through sale, mortgage, lease, gift, exchange, etc. It ensures legal clarity, validity, and protection for both transferor and transferee.
Partition Act, 1893: Provides a legal mechanism for co-owners to divide jointly held property, especially in family disputes. If physical division isn’t possible, the court can order a sale and distribution of proceeds.
Registration Act, 1908: Mandates the registration of certain documents (like sale deeds, gift deeds, lease deeds above 1 year) for legal validity. Ensures public notice of transactions and helps prevent fraud.
Indian Succession Act, 1925: Applies to wills and inheritance matters for Christians, Parsis, and others (except Hindus and Muslims, unless they opt in). It ensures orderly and fair distribution of a deceased person’s property.
Hindu Succession Act, 1956: Governs inheritance among Hindus, Buddhists, Jains, and Sikhs. The 2005 amendment gave daughters equal coparcenary rights in ancestral property and strengthened rights of widows and adopted children.
Muslim Personal Law (Shariat) Application Act, 1937: Ensures that Muslims in India are governed by Islamic law in matters of inheritance, marriage, divorce, waqf, etc. In inheritance, fixed shares are prescribed for heirs and will-making is limited to one-third of the estate.
RERA (Real Estate Regulation and Development Act), 2016: Aims to protect homebuyers by regulating real estate developers, mandating registration of projects, ensuring transparency in transactions, and promoting timely project completion.
WHAT IS RERA ACT?
RERA (Real Estate Regulatory Authority) was introduced in the year 2016. The purpose of the RERA Act, 2016, is to protect the homebuyer and increase the investments in the real estate industry. The law facilitates fast and effective dispute resolution.
The RERA Act makes it mandatory to register a project with RERA, for the launch of any residential or commercial real estate project where the land area is more than 500 square meters. Registering with RERA helps in creating transparency in the implementation of the projects launched.
HISTORY OF RERA
The Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced to regulate India’s unorganized real estate sector. Initiated after a 2009 housing conference, the draft bill was developed to ensure fair practices and protect buyers. It was passed by Parliament in March 2016 and came into effect on 1 May 2016, with full provisions enforced by 1 May 2017. The Act was enacted under the concurrent list entries 6 and 7 of the Constitution.
IMPORTANCE
RERA brought much-needed regulation to the previously unorganized real estate sector. It boosts buyer confidence by ensuring transparency, timely project delivery, and legal clarity between developers and buyers. The Act reduces risks for investors, builds trust, and establishes state authorities to monitor and manage real estate transactions. RERA protects consumer interests.
SALIENT FEATURES
• To regulate and promote the real estate sector.
• Mandates transparent and efficient sale of plots, apartments, and buildings.
• Protects buyers’ interests and curbs malpractices in the sector.
• Sets up fast-track dispute redressal systems and state-level Appellate Tribunals.
• Makes project registration compulsory before advertising or selling.
• Requires promoters to disclose project details, including layout and site plans, on RERA’s website.
• Prohibits transfer of project rights without two-thirds allottees’ consent and RERA approval.
• Mandates 70% of buyer funds to be kept in a separate account for project construction.
• Imposes strict penalties, including imprisonment, for non-compliance.
ADVANTAGES OF RERA FOR BUYERS:
Reduced Delay Risk – Builders must pay penalties for project delays.
No Overcharging – Buyers are charged only for the carpet area, not super built-up areas.
Transparency – Full project details must be disclosed on the RERA website.
Builder Liability – Builders must fix construction defects within 30 days of complaint.
Quick Dispute Redressal – Disputes resolved within 120 days by state tribunals.
Secure Investment – Advance payment is stopped, and funds must be used only for the project.
ADVANTAGES OF RERA FOR BUILDERS:
Financial Inflow – Improved credibility leads to better funding opportunities.
Market Competitiveness – Transparent practices increase buyer trust and boost sales.
Efficient Functioning – Standardized norms streamline industry operations.
Penalty Clause for Buyers – Buyers are penalized for delayed payments as well.
Mutual Transparency – Builds trust and long-term relationships with consumers
DISADVANTAGES OF RERA:
Non-applicability to Old Projects – RERA doesn’t cover projects initiated before its enactment.
Delayed Approvals – Mandatory registration may lead to long approval wait times.
Corruption and Bureaucracy – Internal politics and bribery can affect the approval process.
Exclusion of Small Projects – Projects under 500 sq. m or fewer than 8 units are exempt, enabling overcharging.
Delayed New Launches – Builders can’t start or sell new projects until existing ones are completed.
Slow Clearance Process – It can take up to two years to get approvals, slowing industry growth.
No Rental Regulation – RERA does not address rental housing issues.
Cash Flow Limits – Locking 70% of buyer funds in an escrow account limits liquidity.
Strict Penalties – Heavy fines (up to 5% of project cost) can financially burden promoters.
IMPACT OF THE RERA ON THE INDUSTRY
The implementation of the Real Estate (Regulation and Development) Act, 2016 brought significant disruption to the real estate industry, initially causing financial distress to builders due to stricter compliance and transparency requirements. It influenced home prices and loan interest rates. RERA has led to increased transparency and credibility across many states, for benefiting consumers. While technological upgrades are needed to manage data more efficiently, the long-term outlook remains positive, with RERA expected to foster a more regulated, trustworthy, and buyer-friendly real estate market.
ECONOMIC IMPACT OF RERA ON THE INDUSTRY
The Real Estate (Regulation and Development) Act, 2016, when enforced soon after demonetization and alongside the rollout of GST, significantly impacted the Indian economy, particularly the real estate sector. Small developers faced delays and project abandonment due to mandatory registration, leading to job losses and limited new investments. Increased builder liability and limited pricing flexibility that slowed market activity. Buyers with reduced income and liquidity, became hesitant to invest, resulting in a slow and imbalanced market. Overall, the sector experienced a slowdown in growth and development during the early implementation phase of RERA.
CONCLUSION
Property laws in India are deeply rooted in history and continue to evolve. Whether you’re buying a house, inheriting land, or dealing with tenancy, understanding these laws is key to safeguarding your rights.
The Real Estate (Regulation and Development) Act, 2016 marks a significant advancement in promoting transparency, accountability, and efficient dispute resolution in the real estate sector. By curbing malpractices, it benefits both buyers and developers. The Act also raises awareness among all stakeholders, setting a foundation for further reforms like land record modernization and GST integration. Overall, RERA covers the way for sustainable growth and a more consumer-friendly real estate environment in India.