There are several lesser-known violations by builders that could trigger regulatory action against builders. These violations can vary in nature and severity. Here are some examples of such violations with possible consequences:
1. Misrepresentation of project status
- Reason: Providing misleading or incorrect information about the completion status of a project or failing to update the status on the RERA portal as per Section 11(2) and 14 of the Act.
- Example: Claiming a project is 70% complete when it is only 40% complete.
Section 11(2) The advertisement or prospectus issued or published by the promoter is required to mention prominently, the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto.
2. Non-compliance with approved plans
- Reason: Deviation from sanctioned building plans without obtaining prior approval from the regulatory authority, violating Section 14 of the Act.
- Examples: Building additional floors or drastically altering the layout without proper authorization.
Section 14 mandates that any changes in the plans or layout require the prior consent of the allottees)
3. Failure to give possession in time
- Reason: As per Section 18 of the Act, not giving possession of the property within the promised time limit.
- Example: Promising possession by March 2024 but delaying beyond June 2024 without valid reasons.
Section 18 of the RERA act dictates the rules in case a promoter fails to keep his end of the agreement, he is liable to return the allottees money and compensate them.
4. Inadequate Project Registration Renewal
- Reason: Not renewing the project registration before the expiry of the validity period or not updating the project details as required under Section 5 of the Act.
- Examples: Allowing project registration to lapse or failing to update changes to project specifications.
5. Failure to disclose land title
- Reason: Not giving clear details about the title of the land on which the project is being developed is in violation of Section 11(2) of the Act.
- Examples: Non-disclosure of pending land-related disputes or debts.
6. Reduced quality of construction
- Reason: Using substandard materials or construction practices that do not meet the quality standards promised as per Section 14 of the Act.
- Examples: Using inferior quality cement or not adhering construction methods as per norms and prescribed building standards.
7. Improper maintenance of escrow account
- Reason: Not maintaining or using the escrow account required for project funds, violating Section 4(2)(l)(d) of the Act.
- Example: Using funds from an escrow account for purposes other than building the project.
Section 4(2)(l)(D) provides that the promoter shall maintain a ‘separate account’ for every project undertaken by him wherein seventy percent of the money received from the allottees shall be deposited for the purposes of construction and land cost.
8. Lack of transparency in financial transactions
- Reason: Not providing clear and transparent financial transactions or failing to maintain proper records, violating Section 12 of the Act.
- Example: Not disclosing details of project expenditure and revenue generation.
Section 12 the promoter is responsible for the veracity of all information contained in the advertisement and the prospectus. In case of any loss sustained by any person due to false information contained therein, the promoter is liable to make good the loss sustained due to the same.
9. Breach of terms of builder-buyer agreement
- Reason: As per Section 11(2) of the Act, non-compliance with the terms of the builder-buyer agreement or making changes without mutual consent.
- Example: Changing features or specifications in the agreement without notifying buyers or obtaining consent.
10. Improper handing over of possession
- Reason: Not providing possession in the manner or condition agreed in the sale agreement, violating Section 19 of the Act.
- Examples: Handing over property without essential services or in a non-livable condition.
Section 19(4) of RERA Act, 2016 outlines the rights of an allottee (a person to whom a property is allotted) in the event that a promoter (the developer or builder) fails to fulfil their obligations under a real estate sale agreement.
These violations explain the various ways that builders may lack regulatory standards, leading to potential fines and other legal consequences under RERA.
Few recent examples where RERA has imposed fines/penalties on builders for violations. Recently RERA in Haryana has penalised the builder for Mis leading advisement in the manner.
Here are the details:
- Project Details: Green Oaks is an affordable plotted colony in Sector 70-A, Gurugram, developed under the Deen Dayal Jan Awas Yojna Affordable Plotted Housing Policy 2016. Fine Amount: Rs 50 lakh. Reason: The advertisement published in an English daily on March 2, 2024, did not describe the project details properly, violating Section 11(2) and 13(1) of the Real Estate (Regulation and Development) Act 2016. Violations: The advertisement showed facilities like a squash court, state-of-the-art club house, covered pool, and spa, which are not part of the project. The promoter also failed to update the registration details according to the revised layout plan.
- The Haryana Real Estate Regulatory Authority (RERA) has imposed a fine of Rs 5 crore on Vatika Limited for not registering their project on time. – Rs 6 lakh fine imposed: Vatika Limited has also been fined Rs 6 lakh for violating the builder-buyer agreement provisions. Reason for fine: Vatika Limited failed to register their project, Vatika India Next 2, within the required three months of the notification of the Act in 2017. Additional penalties: Vatika Limited has been directed to pay interest for every month of delay from the due date of possession till now at the prescribed rate.
