Authorities & RERA
RERA Penalties: What a Builder Actually Risks
Knowing what the other side actually risks changes how you negotiate with them. Most buyers have no idea.
The short answer
Not registering a project: a penalty of up to 10% of the project cost.
Continuing to defy the Authority: imprisonment for up to 3 years, or a further penalty of up to 10%, or both.
These are real, they are in the Act, and builders know them far better than buyers do. Which is precisely why you should too.
Penalties on the promoter
| Contravention | Penalty | Section |
|---|---|---|
| Not registering the project | Up to 10% of the estimated project cost | 59(1) |
| Continuing to violate after that | Imprisonment up to 3 years, or a further penalty up to 10% of project cost, or both | 59(2) |
| Providing false information at registration | Up to 5% of the estimated project cost | 60 |
| Contravening any other provision of the Act | Up to 5% of the estimated project cost | 61 |
| Failing to comply with an order of the AUTHORITY | A penalty for every day of default, which may cumulatively extend to 5% of the project cost | 63 |
| Failing to comply with an order of the TRIBUNAL | Imprisonment up to 3 years, or a fine for every day of default extending to 10% of project cost, or both | 64 |
Note the escalation. Ignore the Authority and it costs money, every day. Ignore the Appellate Tribunal and it can cost liberty. That escalation is deliberate — and it is the reason a RERA order is worth more than a strongly-worded letter.
Penalties on the agent
- Operating unregistered — ₹10,000 for every day the breach continues, up to 5% of the cost of the units dealt in (Section 62).
- Contravening any other provision — ₹10,000 per day, up to 5% (Section 65).
- Failing to comply with a Tribunal order — imprisonment up to 1 year, or a fine up to 10%, or both (Section 66).
And the penalties on YOU
An allottee who fails to comply with an order of the Authority can be penalised — up to 5% of the cost of the apartment (Section 67).
And failing to comply with a Tribunal order can attract imprisonment up to 1 year, or a fine, or both (Section 68).
This is worth knowing. RERA is not a one-way instrument that exists only to punish builders. It is a regulator, and it regulates both sides.
Which is one more reason not to unilaterally stop paying your instalments because you are unhappy. File the complaint. Ask for a direction. Do not simply act.
How the money actually gets recovered
This is the mechanism that gives RERA orders their bite.
If a promoter does not pay a penalty, interest or compensation ordered by the Authority or the Tribunal, it is recoverable as an arrear of land revenue.
Which means the District Collector — who has powers to attach and sell property — rather than a civil court and a decade of execution proceedings.
Before 2017, a buyer with a judgment against a builder had a piece of paper. Now they have a route to the Collector. That is a genuinely different thing.
Why knowing this is leverage
Most buyers negotiate with a builder from a position of complete ignorance about what the builder is actually exposed to. The builder does not have that problem.
| Situation | What you can say |
|---|---|
| The project isn't registered | “Section 3. Penalty up to 10% of project cost.” Then leave. |
| They want 25% before the agreement | “Section 13 caps that at 10%. Let's do the agreement first.” |
| Possession is a year late and they're offering nothing | “Section 18. Interest for every month, or a refund with interest. My choice.” |
| They've changed the plan without asking | “Section 14 requires two-thirds of allottees to consent. Was that obtained?” |
| There's a structural defect, three years in | “Section 14(3). Five years. Rectified free, within 30 days.” |
| The broker has no RERA number | “Section 9. ₹10,000 a day.” Then deal with someone else. |
You do not need to be aggressive. You need to be specific. A builder who realises you have actually read the Act behaves differently from one who assumes you haven't — and most assume you haven't, because most buyers haven't.
The penalties in the Act are severe. Enforcement varies enormously by state, and prosecutions are rare.
What is far more common — and far more useful to you — is that a builder facing a credible, well-documented RERA complaint from an organised group of buyers settles.
That is what the penalties are actually for, from your point of view. Not to send anybody to prison, but to make settling cheaper than fighting. Knowing the numbers is what puts them on the table.
The Real Estate (Regulation and Development) Act, 2016 is a central law. But it is administered by a separate authority in each state, each with its own portal, its own rules, its own forms, and its own fee schedule.
Which means: the principles below apply everywhere. The procedure does not.
Always check YOUR state's RERA portal for the current rules, forms and fees. Search for it by name — MahaRERA, K-RERA, TS-RERA, TNRERA, UP RERA, HARERA — rather than following a link a builder or a broker sends you.
Frequently asked questions
What is the penalty for not registering a project under RERA?
Up to 10% of the estimated project cost, under Section 59(1). And if the promoter continues to violate after that, imprisonment for up to three years, or a further penalty of up to 10%, or both.
Can a builder go to jail under RERA?
Yes, in principle. Continuing to violate the registration requirement after a penalty attracts imprisonment of up to three years (Section 59(2)). So does failing to comply with an order of the Appellate Tribunal (Section 64). Prosecutions are rare in practice — but the exposure is real, and builders know it.
Are there penalties on buyers under RERA?
Yes. An allottee who fails to comply with an order of the Authority can be penalised up to 5% of the cost of their apartment, and failing to comply with a Tribunal order can attract imprisonment of up to a year. RERA is a regulator, not a one-way instrument — which is one more reason not to unilaterally stop paying instalments because you are unhappy.
How are RERA penalties recovered?
Under Section 40, as arrears of land revenue — which means the District Collector, who can attach and sell property, rather than a civil court and a decade of execution proceedings. Before 2017 a buyer with a judgment against a builder had a piece of paper. Now they have a route to the Collector.
Do RERA penalties actually get enforced?
Enforcement varies enormously by state and prosecutions are rare. What is far more common — and far more useful to you — is that a builder facing a credible, well-documented complaint from an organised group of buyers settles. That is what the penalties are actually for, from your point of view: to make settling cheaper than fighting.