Real estate obligations and liabilities for promoters and developers under RERA

To protect the interests of consumers, the law imposes various obligations and liabilities on the promoters and developers to ensure fairness and transparency in case of dealings with genuine buyers.“Promoter is the person who originates the idea for the formation of a company and gives the practical shape to that idea with the help of his own resources and with that of others”. A promoter can be an individual, a firm, an association of persons or even a company who develops construction site and sell the property to the buyers. In this article, we are going to discuss a few points on obligations and liabilities for promoters and developers under RERA act.

The following are the obligation and liabilities of promoters and developers:

Website making:

Section 11(1) provides that a promoter or developer must create his own website and put all details of the proposed project for public view, including the accurate details of registration, quarterly booking update of flat, plot or garage, project status, other information and documents as specified by the regulations that are made by the authority.

Information to allottees:

In article 11(3) it is written that a promoter or developer must deliver the following documents at the time of booking a property and issuing the allotment letter to the genuine customers:

  • Approved plans of the project.
  • Project layout plans with specifications approved by the competent authority.
  • Time schedule of proposed project completion, including the provided civil infrastructures such as water system, sanitation and electricity.

Responsibility of promoters and developers:

  • Proposed real estate project to be registered with RERA.
  • Not to promote or sell without registering the project.
  • The promoter will provide specific documents at the time of bookings and issuing allotment letters.
  • It is their responsibility to get the occupancy certificate and provide it to the allottees individually or to the association of allottees.
  • To possess the lease certificate, specify the lease duration, paid and certify the dues and charges amount related to the leasehold land, and to provide the lease certificate to the buyer’s committee.
  • Refund the amount to the buyer in case of failure to deliver on time.
  • To give compensation to the buyers due to the defective title of the land.
  • The promoter or developer should not receive more than ten percent of the total cost of a flat, house or plot.


Article 13(2) provides that the contract shall be signed in the prescribed form for sale. This contract form will include details of project development and the date of payment for the apartment, as well as the project work, property transfer etc.

Case Analysis: “Lavasa Corporation Ltd. Hicon… vs Manju Narendra Joshi of Mumbai… on 7th August, 2018”

“The RERA, therefore, imposes an obligation upon the promoter not to book, sell or offer for sale or invite persons to purchase any plot, apartment or building, as the case may be, in any real estate project, without registering the real estate project with the Authority. It makes the registration of real estate project compulsory, in case where the area of land proposed to be developed exceed 500 sq.mtrs. or number of apartments proposed to be developed exceed 8, inclusive of all phases. It imposes an obligation upon the Real Estate Agent also not to facilitate sale or purchase of any plot, apartment or building, as the case may be, without registering himself with the Authority. The Act imposes liability upon the Promoter to pay such compensation to the Allottees in the manner, as provided under RERA, in case if he fails to discharge any obligations imposed on him under RERA.”

“ Here in the case also, the consideration amount for the apartments agreed to be handed over to the Respondents is already obtained by the Appellant. As per the ‘Agreement’, the possession of the apartments was to be delivered within 24 months from that date; however, even after the lapse of 7 years, the Respondents have not received the possession; thereby indicating default on the part of the Appellant in fulfilling his obligations. If such ‘Allottees’, like the Respondents herein, cannot be Lavasa.doc kept out of the purview of the Act, which is clearly enacted with express intent to ensure that, they get the succor. At the cost of repetition, it has to be stated that, the mischief, to suppress which, the Act was enacted, was that there was no law regulating the real estate sector development work and obligations of ‘Promoters’ and ‘Allottees’. This need was felt by the ‘Parliament’, because, it was noticed that, all over the country, in large number of projects, the ‘Allottees’ did not get possession for years together and huge sums of money of the ‘Allottees’ was locked in such projects. Hence, if, in the similar situation and fact, the funds of the Respondents are locked in the development projects of the Appellant, they cannot be deprived from the benefit of this Act, merely on the count that the ‘Agreements’ executed by them with the Appellant are titled as ‘Agreement to Lease’ and not ‘Agreement of Sale’.”

The case discussed here says that the promoters or developers must register the real estate projects and themselves under the RERA to sale or purchase any plot or apartments to any person or an individual. The promoter or developer is made liable to pay compensation if they fail to discharge their obligations under RERA. It is also said in this case that the respondent did not get the possession of the apartment even after the lapse of 7 years which was committed to be delivered within 24 months. So, RERA says that victims of these cases cannot be deprived from any benefit and their amount cannot be locked by the builders or developers since it is hard-earned money.


In the field of real estate business, there are huge responsibilities and liabilities a promoter or a developer has. Besides the above point, safety and security is another important part of this article. A promoter must think about the future safety of the buyers.Therefore, a promoter or developer should provide safe and right quality real estate service to their potential customers.

Leave a Reply