What happens if the builder does not comply with the RERA order?
Joginder Singh Rohilla
Advocate at High Court of Madhya Pradesh, Indore | Civil & Criminal Lawyer In Indore
If a builder fails to comply with an order issued by the Real Estate Regulatory Authority (RERA), strict legal actions can be taken against them under the Real Estate (Regulation and Development) Act, 2016. The consequences include monetary penalties, imprisonment, attachment of assets, and escalation to higher legal authorities like the Real Estate Appellate Tribunal (REAT) and even the High Court.
1. Legal Consequences for Non-Compliance with RERA Orders
A. Monetary Penalties
- If the builder does not comply with the order issued by RERA, they may be penalized with a fine of up to 5% of the estimated project cost.
- This fine is imposed to ensure compliance and compensate for the inconvenience caused to homebuyers.
B. Further Action by Real Estate Appellate Tribunal (REAT)
- If the builder continues to ignore RERA’s order, the matter is escalated to the Real Estate Appellate Tribunal (REAT).
- The tribunal has the authority to:
- Increase the penalty amount.
- Order immediate compliance.
- Take steps for the recovery of compensation to homebuyers.
- If the builder still refuses to comply, more serious actions follow.
C. Imprisonment for Up to 3 Years
- Under Section 64 of the RERA Act, if a builder does not comply with an order issued by the Real Estate Appellate Tribunal (REAT), they may face:
- Imprisonment of up to 3 years or
- A fine of up to 10% of the project cost, or both.
- This is one of the strictest penalties under RERA to ensure compliance.
D. Attachment and Auction of Builder’s Assets
- If the builder refuses to pay the penalties or compensate homebuyers, RERA has the authority to:
- Attach the builder’s bank accounts and properties.
- Auction the attached assets to recover the penalty amount or refund money to homebuyers.
- Use the funds to complete the pending project (if applicable).
E. Blacklisting of the Builder
- RERA can blacklist the builder, meaning:
- They will not be allowed to launch new projects in the state.
- Their reputation and credibility in the market will be affected.
- Buyers will be warned not to invest in their projects.
F. Cancellation of Project Registration
- If the builder continuously disobeys RERA’s orders, the authority can cancel the project registration.
- Once the project is deregistered:
- The builder loses control over the project.
- RERA may appoint a third party or a government agency to complete the construction and hand over the property to buyers.
2. How RERA Ensures Compliance with Its Orders?
Step 1: Issuing Notices and Giving a Deadline
- When a builder fails to comply, RERA sends a legal notice giving them a final chance to comply within a specified deadline.
- If the builder still does not respond, stronger action is taken.
Step 2: Initiating Penalty Proceedings
- If the builder ignores the notice, RERA imposes monetary penalties as per the law.
Step 3: Escalation to the Real Estate Appellate Tribunal (REAT)
- If non-compliance continues, the case is forwarded to REAT, which can increase the penalties and order strict action.
Step 4: Imposing Criminal Liability and Asset Attachment
- If the builder still does not comply, they face criminal liability, including imprisonment, asset seizure, and project cancellation.
3. Can a Homebuyer Take Further Legal Action?
Yes, if RERA’s penalties and actions do not satisfy a homebuyer, they have the right to:
1. File a case in Consumer Court – to seek additional compensation for mental harassment and financial loss.
2. Approach the High Court – if the Appellate Tribunal’s decision is not satisfactory.
3. File a criminal complaint – if the builder is involved in fraud or misrepresentation.
4. FAQs on Non-Compliance with RERA Orders
Q1. What is the penalty for non-compliance with RERA orders?
The builder can be fined up to 5% of the project cost for disobeying RERA orders. If the matter reaches the Appellate Tribunal, the fine can go up to 10% of the project cost or 3 years of imprisonment.
Q2. Can RERA cancel the builder’s project if they do not comply?
Yes, if the builder repeatedly disobeys RERA’s orders, RERA can deregister the project and appoint a new authority to complete it.
Q3. Can homebuyers get a refund if the builder does not comply with RERA?
Yes, RERA can attach the builder’s assets and recover funds to compensate homebuyers.
Q4. Can the builder avoid punishment by appealing against RERA’s decision?
The builder has the right to appeal to REAT and further to the High Court, but they must comply with the Tribunal’s orders.
Q5. Can a builder go to jail for not following RERA’s orders?
Yes, under Section 64 of RERA, a builder can face up to 3 years of imprisonment if they do not comply with the Appellate Tribunal’s orders.
5. Conclusion
If a builder does not comply with RERA’s orders, they can face heavy penalties, imprisonment, asset seizure, and blacklisting. RERA has the power to ensure justice for homebuyers and make sure builders fulfill their promises. If a builder refuses to comply, homebuyers can also approach consumer courts, the High Court, or even initiate criminal proceedings for further legal action.
Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.
Adcocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)
Contact: 88271 22304