RERA Act (2016) Violations by Real Estate Agents

RERA Apr 26, 2021

About the RERA Act (2016)

The Real Estate (Regulation and Development) Act (the ‘Central Act’) was enacted in 2016 by the Central government to establish a single regulatory framework to govern real estate in India. It governs the registration of promoters as well as brokers or real estate agents. Apart from the Central Act, there is no other legislation governing brokers’ activities.

How does the Central Act regulate agents’ activities?

  • According to the Central Act, it is mandatory for brokers/agents to register themselves with the relevant State Real Estate Regulatory Authority (RERA). [1]
  • No broker can make a real estate sale without registering himself as an agent first.
  • No broker can facilitate a property transaction of a real estate project which has not been registered with the State’s Real Estate Regulatory Authority.
  • No broker can make false or misleading claims about the services he offers or the property whose transaction he is facilitating.

Since the Central Act further empowered State governments to enact their own RERA regulations, the process to register as a real estate broker is regulated by the respective State RERA Acts.

Penalty imposed in case of RERA violation by the real estate agent

Sections 62, 65 and 66 of the Central Act enumerate the penalties to be imposed upon a real estate agent in case he violates any of the Act’s provisions. These penalties include:

  • If the developer does not register his project with the State Real Estate Regulatory Authority (RERA), he can be made to pay a fine of Rs. 10000 everyday until he stops defaulting. This penalty can cumulatively amount to 5 percent of the estimated cost of the project.
  • If he fails to comply with any order issued by the State RERA, he is liable to pay a certain penalty everyday which can amount to 5 percent of the total cost of his project.
  • If he fails to comply with any order issued by the State RERA Tribunal, he can be made to pay a fine which can amount to up to 10 percent of the estimated cost of the real estate project or be imprisoned for a term upto one year.

Under Section 10 of the Central Act, the State RERA can also revoke the registration of an agent for a specific time period if it is satisfied that he has given false information while registering himself as an agent or for any of the reasons mentioned above. However, it must give the agent the opportunity of being heard before passing such a directive.

(You can find a detailed review of the implementation of RERA in different States in our white paper titled ‘Key Features and Implementation of the Real Estate (Regulation and DevelopmentAct, 2016)

Photo by Mohnish Landge on Unsplash.

[1]  The Central Act mandates the issuance of Real Estate Regulation regulations and the establishment of Real Estate Regulation Authorities (RERAs) in each state and Union Territory within one year of its enactment.


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