Functions and Duties of Promoter (Sections 11–18) under RERA

The Real Estate (Regulation and Development) Act, 2016 (commonly referred to as RERA) is a landmark legislation that aims to bring transparency, accountability, and efficiency to the real estate sector in India. Among the key stakeholders, the role of the promoter is critical. The Act imposes several functions and duties on promoters to ensure that the interests of homebuyers are protected.

Sections 11 to 18 of the RERA Act specifically lay down the legal obligations and responsibilities of promoters from the stage of project registration to handing over possession and title, including compensations in cases of default. This article explores these sections in detail to provide a comprehensive understanding of the promoter’s duties under RERA.

Section 11: Functions and Duties of Promoter

Creating and Maintaining a Project Webpage

Upon receiving login credentials from the Real Estate Regulatory Authority (the Authority), the promoter must create a project webpage on the official RERA website. This webpage is not just a formality but a tool to ensure public transparency.

The promoter is required to enter and update regularly (quarterly) detailed information regarding the project, including:

• Registration details granted by the Authority.
• Number and types of apartments or plots booked.
• Number of garages booked.
• Status of approvals taken and pending.
• Project completion status.
• Any other information or documents as may be specified by regulations.

Disclosure in Advertisements and Prospectus

The promoter must prominently mention the RERA website address and the project’s registration number in all advertisements or prospectuses. This allows potential buyers to verify project details directly on the Authority’s portal.

Information at Booking and Allotment Stage

At the time of booking and issuance of the allotment letter, the promoter is responsible for providing the allottee with:

• Sanctioned plans, layout plans, and specifications approved by competent authorities. These should be displayed at the site or any other specified place.
• A stage-wise time schedule for project completion, including provisions for civic infrastructure like water, sanitation, and electricity.

General Responsibilities of Promoter

The promoter is accountable for all obligations under the Act, rules, regulations, and agreements until:

• Conveyance of the apartments, plots, or buildings to allottees.
• Transfer of common areas to the association of allottees or competent authority.

Even after conveyance, the promoter remains liable for structural defects or other defects for a period of five years from possession, as prescribed under Section 14(3).

Certificates and Maintenance

• The promoter must obtain completion and occupancy certificates as applicable and provide these to allottees or their association.
• If the project is on leasehold land, the promoter must obtain and hand over the lease certificate confirming payment of all dues.
• Essential services like water, sanitation, and electricity must be provided and maintained until the maintenance responsibility is transferred to the allottees’ association.

Formation of Allottees’ Association

The promoter must enable the formation of an association, society, or co-operative society of the allottees, or a federation thereof, as per applicable laws. Where no local laws exist, this association must be formed within three months from when the majority of allottees have booked their units.

Conveyance and Outgoings

• The promoter is obligated to execute a registered conveyance deed transferring ownership and undivided proportionate interest in common areas to the allottees or association.
• The promoter must pay all outgoings (such as municipal taxes, maintenance charges, mortgage payments) collected from allottees until physical possession is handed over. Failure to do so results in continuing liability even post-transfer.
• After executing the sale agreement, the promoter cannot mortgage or create any charge on the booked units.

Cancellation of Allotment

The promoter can cancel an allotment only according to the terms of the sale agreement. If cancellation is unilateral, unjust, or contrary to agreement terms, the allottee can approach the Authority for relief.

Section 12: Obligations Regarding Advertisement Veracity

Any person who makes an advance or deposit based on false or misleading information in advertisements, prospectuses, or model units and suffers loss is entitled to compensation from the promoter. Further, if the person chooses to withdraw from the project due to such false information, the promoter must refund the entire amount with interest at the prescribed rate.

This section aims to deter promoters from making false claims and misrepresentations to prospective buyers.

Section 13: No Advance Without Agreement for Sale

Limit on Advance Payment

The promoter is prohibited from accepting more than 10% of the unit cost as an advance or application fee without first entering into a written agreement for sale with the buyer.

Contents of the Agreement

The agreement for sale must be registered and include:

• Details of project development, including building construction and internal/external works.
• Payment schedule specifying dates and modes of payment.
• Date of possession.
• Interest rates payable by promoter to allottee (in case of delay) and by allottee to promoter (in case of default).

This ensures the buyer is protected from excessive upfront payments and unclear contractual terms.

Section 14: Adherence to Sanctioned Plans and Project Specifications

Strict Compliance

The promoter is legally bound to develop and complete the project in strict conformity with the sanctioned plans, layout plans, and specifications approved by the competent authorities.

No Major Changes Without Consent

Once plans and specifications have been disclosed to the allottee:

• The promoter cannot make additions or alterations to the approved plans or specifications without the prior written consent of the allottee for that unit or two-thirds of allottees for common areas or building-wide changes.
• Minor, non-structural changes may be made after approval by an authorised architect or engineer, provided allottees are informed.

Defect Liability and Rectification

If the allottee reports any structural defects or defects in workmanship, quality, or services within five years from the date of possession, the promoter must:

• Rectify such defects free of cost within 30 days.
• Failing which, the allottee is entitled to compensation as per the Act.

This section ensures quality control and long-term accountability from the promoter.

Section 15: Transfer of Real Estate Project to Third Party

Restrictions on Transfer

The promoter cannot transfer or assign their majority rights and liabilities to a third party without:

• Written consent of two-thirds of the allottees (excluding the promoter).
• Prior written approval of the Regulatory Authority.

Such transfer does not affect the allotment or sale already made.

Obligations of New Promoter

The new promoter must independently comply with all pending obligations of the original promoter under the Act and sale agreements. No extension of completion timelines is permitted due to transfer.

This protects allottees from disruptions caused by changes in project ownership.

Section 16: Obligations Regarding Insurance

Mandatory Insurance

The promoter is required to obtain and pay premiums for insurances as notified by the government, including but not limited to:

• Title insurance covering land and buildings.
• Construction insurance covering the project during development.

Transfer of Insurance Benefits

The insurance benefits and relevant documents must be transferred to the allottee or the allottees’ association upon signing of the sale agreement or upon formation of the association.

Insurance acts as a safeguard against title disputes and construction risks.

Section 17: Transfer of Title and Possession

Execution of Conveyance Deed

The promoter must execute a registered conveyance deed in favour of each allottee within three months of obtaining the occupancy or completion certificate, transferring:

• Ownership of the apartment, plot, or building.
• Undivided proportionate share in common areas to the allottees or their association.

Physical Possession and Documentation

The promoter must hand over physical possession and all related title documents to the allottee and the association or competent authority within the prescribed timelines.

This formalises the transfer of ownership and control over common areas.

Section 18: Return of Amount and Compensation

Failure to Deliver Possession

If the promoter:

• Fails to deliver possession as per the agreement; or
• Business is discontinued due to registration suspension or other reasons,

Then on demand, the promoter must return the entire amount received with prescribed interest and compensate the allottee as per the Act.

If the allottee chooses not to withdraw, the promoter must pay interest for each month of delay.

Compensation for Defective Title

If loss occurs due to defective title of the land on which the project is developed, the promoter must compensate the allottee, and such claims are not barred by limitation.

Compensation for Other Breaches

The promoter is liable to compensate the allottee for any other failure to discharge obligations under RERA or the sale agreement.

Conclusion

Sections 11 to 18 of the RERA Act comprehensively set out the duties and responsibilities of promoters to ensure transparency, protect buyer interests, and enforce accountability in the real estate sector. By mandating disclosures, adherence to sanctioned plans, timely possession, proper title transfer, and compensation for defaults, these provisions build trust between buyers and promoters.

For buyers, knowledge of these duties empowers them to assert their rights and seek redress where necessary. For promoters, strict compliance is not only a legal obligation but essential for sustaining credibility and success in today’s competitive market. Ultimately, the effective enforcement of these provisions strengthens the real estate ecosystem in India, fostering growth on the pillars of fairness and transparency.