RERA in Tamil Nadu: What Every Home Buyer Should Know

Last Updated on 3 weeks by ChennaiRealties

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to address widespread concerns about delays, lack of transparency, and unfair practices in the real estate sector. RERA Tamil Nadu came into operation after the Rules fot it were framed in 2017. The core objective of RERA is to establish a well-regulated framework that protects the interests of home buyers and brings professionalism to the industry.

RERA applies to both residential and commercial real estate projects. It mandates the registration of real estate projects and agents, sets obligations for developers, and provides mechanisms for resolving disputes efficiently.

Each State and Union Territory is required to:

• Establish a Real Estate Regulatory Authority (RERA) to monitor compliance and address grievances.
• Set up a Real Estate Appellate Tribunal (REAT) to handle appeals against the authority’s orders.

These regulatory bodies play a central role in implementing the Act at the state level by issuing circulars, hearing complaints, and enforcing penalties when needed.

Key Features and Provisions of RERA

1. Mandatory Project Registration

All real estate projects where the land area exceeds 500 square meters or the number of apartments exceeds eight must be registered with the respective State RERA before any advertisement, marketing, booking, or sale can begin. This includes new projects as well as ongoing projects that were not completed when the Act came into force.

Developers must submit details of the project including layout plans, legal title deed, approvals from competent authorities, financial statements, and expected timeframes. Registration ensures that the developer is accountable to the public and to the regulatory body.

In Tamil Nadu, the TNRERA Rules, 2017 provide additional specifications such as submission of model agreements, stage-wise timelines, and the format for public disclosures.

2. RERA Registration Number and Advertisement Norms

Upon registration, a project receives a unique RERA registration number. This number must be quoted in all project-related advertisements, websites, and promotional materials.

Exemption: Projects involving renovation, repair, or redevelopment that do not involve marketing, selling, or new allotment of apartments, plots, or buildings are exempt from registration under RERA.

3. Transparency through Disclosure

The Act mandates developers to upload and regularly update important information on the RERA portal. This includes:

• Promoter details
• Legal status and ownership of the land
• Approved plans and specifications
• Project status and stage-wise completion
• Financial disclosures

Such transparency reduces the risk of fraud and misinformation, enabling homebuyers to make informed decisions.

In Tamil Nadu, the RERA portal allows buyers to access promoter credentials, track project status, and check for any pending complaints or orders.

4. Definition of Carpet Area

RERA provides a standardised definition of carpet area, which is the actual usable floor area of an apartment. As per Section 2(k):

This prevents developers from misleading buyers with inflated super built-up areas.

5. Escrow Account for Financial Discipline

To safeguard homebuyers’ funds, RERA mandates that at least 70% of the amount collected from buyers must be deposited in a separate escrow account maintained with a scheduled bank. These funds can only be used for that particular project’s construction and land cost.

Withdrawal from the account is allowed only in proportion to the percentage of project completion and must be certified by an engineer, an architect, and a chartered accountant. The account is subject to audit within six months after each financial year.

This prevents the diversion of funds to other projects and ensures financial discipline among developers.

6. Adherence to Project Timelines

Developers must declare the project completion timeline at the time of registration. If the developer fails to deliver the project on time, the buyer is entitled to claim a full refund with interest, or choose to stay with the project and receive monthly interest for the delay.

Delays and cost escalations have long been the bane of real estate, and this provision brings long-overdue accountability.

In Tamil Nadu, TNRERA closely monitors compliance, and developers have been penalised for failing to meet delivery deadlines.

7. Grievance Redressal: Regulatory Authority and Tribunal

In Tamil Nadu, the TNRERA and the Tamil Nadu Real Estate Appellate Tribunal are fully functional. TNRERA has disposed of thousands of complaints efficiently and publishes regular updates on its proceedings.

Role and Regulation of Real Estate Agents

RERA also covers the conduct of real estate agents and intermediaries involved in facilitating transactions. Agents must:

• Register with the RERA authority
• Display their registration number in all dealings
• Maintain records of transactions
• Not mislead buyers or conceal project information

Only registered agents can engage in sales in RERA-registered projects. This brings professionalism and legal accountability to the brokerage segment.

TNRERA maintains a searchable list of registered agents in Tamil Nadu, including those based in Chennai and Coimbatore.

Mandatory Information to Buyers

At the time of booking, the promoter is required to provide the allottee with the following information:

• Sanctioned plans and layout
• Specifications of the apartment
• Time schedule of project completion and provision of infrastructure
• Proforma of documents like allotment letter, agreement for sale, and conveyance deed
• Details of carpet area, exclusive balcony or terrace space

This provision ensures that the buyer is aware of every aspect of the property before committing to the purchase.

Builder Buyer Agreement (BBA)

As per Section 13(2) of the Act, a builder cannot accept more than 10% of the sale price as an advance without signing a Builder Buyer Agreement (BBA). This agreement must:

• Clearly mention the payment plan
• State the possession date and delay penalties
• Detail specifications, amenities, and infrastructure
• List cancellation and refund clauses

In Tamil Nadu, model formats of the sale agreement and construction agreement are provided as annexures in the RERA Rules. These templates serve as guiding tools to ensure fairness and standardisation.

Buyers are advised to read every clause of the agreement carefully. Many developers draft one-sided agreements, and legal consultation is recommended before signing.

Important Clauses in the BBA

1. Earnest Money Clause

Builders cannot collect more than 10% of the total cost as booking advance before the BBA is executed.

2. Indemnity Clause

The agreement should include a clause that protects buyers against legal risks, such as title disputes or litigation.

3. Registration Charges (Tamil Nadu)

The BBA must be registered under Tamil Nadu RERA. The charges include:

• 1% Stamp Duty
• 1% Registration Fee

These charges are later adjusted when the final sale deed is registered.

Supreme Court Rulings Relevant to RERA

The Supreme Court has reinforced RERA’s authority in several key judgments:

• In Newtech Promoters and Developers Pvt. Ltd. v. State of UP (2021), the Court held that RERA authorities have exclusive jurisdiction over real estate disputes, and buyers are not bound by arbitration clauses in builder agreements.
• In another case, the Court ruled that the builder is legally obligated to obtain a Completion Certificate (CC), even if buyers take possession before its issuance. Without a CC, occupation is deemed illegal, and municipal services can be denied.
• In yet another case, the Supreme Court has affirmed that filing consumer complaints against builders is not barred by the RERA Act, and remedies under the Consumer Protection Act are available in addition to those under RERA. This ensures that consumers can seek redressal for RERA violations through both RERA and consumer forums

These rulings strengthen the position of buyers and limit developers from misusing legal loopholes.

Concurrent Legal Remedies

Under Section 88 of RERA, the Act’s provisions are in addition to, and not in derogation of, other laws. This means that buyers can seek redress not only through RERA but also under:

• The Consumer Protection Act. Pl refer above paragraph for Supreme Court Order
• Civil courts, wherever applicable

TNRERA has clarified that remedies under the Consumer Protection Act and RERA are concurrent and complementary, offering more flexibility to aggrieved homebuyers.

Some Key Provisions:

Financial Penalties: TNRERA can impose daily fines for non-compliance, with penalties ranging from ₹10,000 per day for delay to ₹1 lakh for non-registration.

Compensation: The authority can order builders to compensate buyers for delays, defects, or non-fulfillment of contractual obligations, including refund with interest.

Cancellation of Registration: For repeated or serious violations, TNRERA can cancel a project’s registration, halting further sales or marketing.

RERA Tamil Nadu: Circulars and Landmark Decisions

Notable TN RERA Decisions Against Builders

1. In February 2021, TNRERA directed Sri Lakshmi Builders Pvt. Ltd. to refund amounts paid by 12 homebuyers for flats in the ‘Brindhavanam’ project at Kundrathur, along with compensation of ₹50,000 each, due to non-delivery of the flats. The authority noted the one-sided nature of the construction agreements and emphasized the builder’s obligations under the RERA Act. (The Hindu)

2. Penalty for Non-Registration of Project

In July 2024, Jain Housing was fined ₹5 lakh for failing to register the ‘Jains Pebble Brook’ project with TNRERA. The authority also directed the Chennai Metropolitan Development Authority (CMDA) and Chennai Corporation to assess the structural stability of the building, following complaints from a homebuyer about structural defects. (The New Indian Express)

3. Recovery Warrant for Non-Refund

In April 2021, TNRERA issued a recovery warrant against Vivendi Ventures Padapai Projects Pvt. Ltd. for failing to refund ₹15.17 lakh, along with interest and compensation, to a homebuyer for non-delivery of a row house in the ‘Villagio’ project at Padappai. The authority directed the District Collector to recover the dues as arrears of land revenue. (The Hindu)

4. Violation of Sale Agreement Norms

TNRERA observed that collecting deposits from homebuyers without entering into a sale agreement constitutes a violation of the RERA Act. In a case involving ‘The Goodwood Residence’ project by Cenotaph Developers LLP and Olympia Tech Park Chennai Pvt. Ltd., the authority directed the developers to refund ₹12.8 lakh, along with interest, to a complainant who had paid under a non-binding Expression of Interest. (Construction World)

5. Liability for Structural Defects Beyond Conveyance

The Tamil Nadu Real Estate Appellate Tribunal (TNREAT) ruled in September 2020 that builders are liable for structural defects even beyond the execution of the conveyance deed. The tribunal emphasized that the builder’s responsibility continues until all common areas and amenities are completed as per the agreement. (The Hindu)

6. Refund and Penalty for Unregistered Project

In June 2024, TNRERA directed SAM Foundation to refund the amount paid by a homebuyer for a flat in an unregistered project and imposed a penalty of ₹1 lakh for marketing and selling the unregistered project, violating the RERA Act. (Live Law)

These decisions underscore TNRERA’s proactive role in enforcing compliance and safeguarding homebuyers’ rights. Including this section will provide readers with concrete examples of regulatory actions and their implications.

Recent Clarifications

1. Revised Registration Fees (Circular No. TNRERA/2784/2024, dated 11 July 2024)

TNRERA announced a revision in registration fees applicable to various real estate projects and services. Effective from 15 July 2024, the circular outlines the new fee structure, impacting developers, real estate agents, and homebuyers involved in real estate transactions across Tamil Nadu. This move aims to streamline the registration process and ensure uniformity in fee structures.

2. Clarification on Carpet Area Definition

TNRERA identified discrepancies between the National Building Code (NBC) and the Tamil Nadu Combined Development Building Rules (TNCDBR) regarding the definition of ‘carpet area.’ While the NBC includes internal walls in the carpet area calculation, TNCDBR excludes them. To eliminate confusion and ensure uniformity, TNRERA has requested the state government to amend the TNCDBR to align with the NBC’s definition.

3. Mandatory Registration of Entire Townships

In a significant ruling, the Tamil Nadu Real Estate Appellate Tribunal (TNREAT) directed that entire townships must be registered as a single project under RERA. This decision prevents developers from circumventing RERA provisions by registering individual towers separately, ensuring comprehensive oversight and protection for homebuyers. -The Hindu

4. Inclusion of Regularised Layouts Under RERA

TNRERA has mandated that unauthorised layouts regularised under the state’s amnesty scheme fall under the purview of RERA. Layout promoters are required to register these layouts with TNRERA, providing buyers with a mechanism to address discrepancies and ensuring adherence to approved plans.

5. Action Against Non-Registered ‘Structurally Completed’ Projects

TNRERA has taken action against developers who claimed ‘structurally completed’ status to evade RERA registration but failed to hand over units within the stipulated timeframe. The authority emphasized that such projects cannot bypass RERA regulations and is actively monitoring and addressing complaints related to these cases. -The Times of India

These updates underscore TNRERA’s commitment to enhancing transparency, accountability, and consumer protection in Tamil Nadu’s real estate sector. Incorporating this section into your article will provide readers with valuable insights into the evolving regulatory landscape.

Criminal Prosecution:

In cases of fraud or willful misrepresentation, builders can face imprisonment for up to three years and/or substantial fines.

Significance: These powers ensure that builders are held accountable, projects are completed on time, and consumers have effective remedies for violations.

Conclusion

RERA is one of the most significant reforms in India’s real estate history. It has shifted the sector from being builder-centric to buyer-centric. By enforcing transparency, introducing legal safeguards, and holding developers accountable, it has begun to restore public trust.

Buyers must:

• Check if a project is RERA-registered
• Understand the obligations and rights mentioned in the BBA
• Retain all payment receipts and communication
• Use the RERA portal to monitor project progress

As a dynamic legislation, RERA is continuously evolving. State-level authorities release updates, FAQs, and guidelines periodically. Homebuyers and real estate stakeholders should stay informed and exercise their rights.

With RERA in place, homebuyers are no longer powerless. They now have a robust legal framework to protect their dreams — and their investments.