RERA was enacted to protect homebuyers from delayed and fraudulent real estate projects, requiring developers to register projects with a state Real Estate Regulatory Authority and deposit a fixed percentage of project funds in a dedicated account, ending the practice of diverting buyer money to unrelated projects.
Section 4 mandates that promoters deposit 70% of funds collected from buyers in a separate escrow account, usable only for construction of that specific project. Section 18 entitles buyers to full refund with interest, or compensation, if the promoter fails to deliver possession as per the agreed timeline.
Section 59 penalises promoters for non-registration of projects with a fine up to 10% of the project cost, and continued violation can lead to imprisonment up to 3 years. Real estate agents must also register under the Act, and both promoters and agents face penalties for providing false information to buyers.
State Real Estate Regulatory Authorities handle buyer complaints and disputes, offering a faster grievance redressal mechanism than traditional courts, with Real Estate Appellate Tribunals available for appeals.