Last week, a Supreme Court bench led by Chief Justice Surya Kant expressed dismay over the functioning of the Real Estate Regulatory Authority (RERA), and went so far as to say that RERA might as well shut shop. Having come into being in May 2017 after the enactment of the Real Estate (Regulation and Development Act), 2016, RERA has not lived up to its billing.
The law was framed as a response to builders defalcating on buyers’ money by diverting the funds collected to other projects, not completing projects on time or deciding not to do so, and simply not returning the money collected. There was a rash of such scams, with Unitech, Jaypee and Amrapali being among the high profile ones, in the two decades or so till 2010. To be fair, the scale of defalcation may have fallen since the law, enacted by most States with some variations, came into force. It mandates registration of projects over 500 sq m, with a crucial requirement such as the builder depositing 70 per cent of the money received from buyers into an escrow account. Buyers are supposed to be paid penalty for delays in possession, or can claim his deposit within 45 days of default on this count. Project details such as carpet area and layout cannot be altered without consent. But project delays continue, and buyers are unable to get their money back easily even after securing a favourable order from the Real Estate Appellate Tribunal.
RERA orders should ideally be followed up by the police or municipality, for them to be effective. There is no coordination between RERA bodies in the State and these civic bodies — whether as a matter of design or accident, it is hard to say. Ideally, violations of building plans, municipal rules or defalcation should be enough for the regulator to cancel a builder’s licence, a power that it can exercise without looking over its shoulder. Yet, it fights shy of doing so, perhaps on account of the lobbies at work. In a digital scenario, it should be possible for the penalty to be deposited into the buyer’s account immediately on delay. But it is well known that builders manage to get their deadlines extended on the flimsiest of pretexts, without fear of repercussions. The appellate tribunals do not stick to their deadline of 60 days to settle complaints. So, the story of buyers’ funds being locked up for long periods persists, despite a law being in place.
For better enforcement of the RERA Act, inter-agency coordination should improve. Buyer-seller contracts should be standardised to rid it of unfair clauses that hurt gullible buyers. RERA bodies must publish regular reports on registrations and complaint redressals, including cancellation of licences. Their appointments, as the apex court has observed, need an overhaul to ensure that a clique does not run the show. Finally, real estate business is characterised by a huge asymmetry of power and information between buyer and seller. The law and its enforcement must empower the consumer.
Published on February 18, 2026