RERA, 2016: functions and duties of the promoter, and rights and duties of allottees

1. Promoter and allottee

A promoter (section 2(zk)) is a person who constructs or causes to be constructed an independent building or a building of apartments, or converts a building into apartments, for sale; a person who develops land into a project for selling plots, with or without structures; a development authority or public body selling to allottees; an apex State-level co-operative housing finance society or a primary co-operative housing society building for its members; any person acting as builder, coloniser, contractor or developer, or as power-of-attorney holder of the land-owner; and any other person constructing for sale to the public. Where the person who builds and the person who sells are different, both are promoters and are jointly liable (Explanation). An allottee (section 2(d)) is the person to whom a plot, apartment or building has been allotted, sold or transferred by the promoter, including a subsequent buyer of the allotment, but not a tenant.

2. Duties of the promoter: sections 11 to 18

• Web page and quarterly updates (section 11(1)). On registration, the promoter creates the project web page with all details and updates quarterly the list of units and garages booked, the approvals taken and pending, and the status of the project. Under the Karnataka Rules the quarterly update is due within fifteen days of the end of each quarter, with photographs of construction.
• Advertisements (section 11(2)) must mention the Authority’s website and the registration number.
• Information at booking (section 11(3)): sanctioned and layout plans with specifications, and the stage-wise schedule of completion including water, sanitation and electricity.
• Responsibilities until conveyance (section 11(4)): all obligations under the Act and the agreement until conveyance of all units and common areas (defect liability continues after); obtaining the completion or occupancy certificate; the lease certificate for leasehold land; providing and maintaining essential services until the association takes over; enabling formation of the allottees’ association; executing conveyance; paying outgoings until transfer of physical possession; and not mortgaging a unit after executing an agreement for sale.
• Veracity of advertisement (section 12). A person who pays on the strength of a notice, advertisement, prospectus or model unit and suffers loss through a false statement in it is compensated; if he wishes to withdraw, he gets his entire investment back with interest and compensation.
• Ten per cent limit (section 13). No more than ten per cent of the cost may be taken as advance or application fee without first entering into a written and registered agreement for sale in the prescribed form, specifying the development, specifications, payment schedule, date of possession and rates of interest for default on either side.
• Sanctioned plans (section 14). The project must be developed according to the sanctioned plans, layout plans and specifications. After they are disclosed to an allottee, the promoter may not make additions or alterations to the allottee’s unit without his previous consent (minor changes for architectural or structural reasons, verified and intimated, excepted; any structural change is not “minor”), nor any other alteration to the building or common areas without the previous written consent of at least two-thirds of the allottees, each counted once.
• Defect liability (section 14(3)). Any structural defect or defect in workmanship, quality or services brought to notice within five years of handing over possession must be rectified free within thirty days, failing which the allottee is entitled to compensation.
• Transfer of project (section 15) only with the written consent of two-thirds of the allottees and the Authority’s approval; the new promoter takes all pending obligations without extension of time.
• Insurance (section 16) of title and construction, transferred to the allottees or their association.
• Transfer of title (section 17). A registered conveyance deed in favour of the allottee, with undivided share in common areas to the association, and physical possession, within the time under local law or, failing that, three months of the occupancy certificate.
• Refund and compensation (section 18). If the promoter fails to complete or give possession as per the agreement, or discontinues business, he must on demand refund the amount received with interest and compensation to an allottee who withdraws; an allottee who stays is paid interest for every month of delay until possession. He must compensate for loss due to defective title, and that claim is not barred by limitation. He must compensate for breach of any other obligation.

Under the Karnataka Rules, the rate of interest payable by the promoter to the allottee, or by the allottee to the promoter, is the State Bank of India’s highest marginal cost of lending rate plus two per cent.

3. Rights and duties of allottees: section 19

Rights:

• to obtain information about sanctioned plans, layout plans and specifications (section 19(1));
• to know the stage-wise schedule of completion, including water, sanitation and electricity (section 19(2));
• to claim possession of the unit, and through the association the common areas, as declared by the promoter (section 19(3));
• to claim refund with interest and compensation if the promoter fails to give possession as agreed or discontinues business (section 19(4)); and
• to have the documents and plans, including of common areas, after possession (section 19(5)).

Duties:

• to make payments as agreed, and pay his share of registration charges, municipal taxes, water and electricity charges, maintenance and ground rent (section 19(6));
• to pay interest at the prescribed rate on delayed payments, which may be reduced by agreement (section 19(7)–(8));
• to participate in forming the association (section 19(9));
• to take physical possession within two months of the occupancy certificate (section 19(10)); and
• to participate in registration of the conveyance deed (section 19(11)).

4. Who decides what

Complaints of violation go to the Authority or the adjudicating officer (section 31). Compensation under sections 12, 14, 18 and 19 is adjudged by the adjudicating officer (section 71). In Newtech Promoters, 2021 INSC 716, the Supreme Court held that where an allottee seeks refund of the amount with interest, or interest for delay, it is the Authority that decides; the adjudicating officer has exclusive power only to adjudge compensation with reference to the factors in section 72.

5. Problem: the layout plan changed

Rakesh, promoter of ABC firm, got a layout plan approved and developed the Samruddhi layout in Bengaluru. Abhay booked a site on the strength of the approved plan, paying an advance of ₹5 lakh. The promoter later made a major deviation from the layout plan. Abhay wants to rescind and get his money back. Decide. (August 2024)

Issue. Whether the deviation entitles Abhay to withdraw and recover his money, and before whom.

Law. Section 14(1) and (2) (development according to the sanctioned layout plan; no alteration without consent); section 12 (loss from incorrect statements, withdrawal with full refund, interest and compensation); section 18(3) (compensation for breach of other obligations); section 19(4) (refund with interest and compensation); section 13 (ten per cent limit); sections 31, 71 and 72; and Newtech Promoters.

Application. Abhay relied on the approved plan, which the promoter is bound to follow. A “major deviation” is not a minor alteration and was made without his consent (and, if it affects common areas, without two-thirds of the allottees’ consent), so section 14 is breached. That also makes the representation on which he paid incorrect, which brings in section 12 and its express right to withdraw with the “entire investment” and interest. If the ₹5 lakh exceeds ten per cent of the site price and no registered agreement was executed, section 13 is also breached. Abhay may file a complaint before the Karnataka Real Estate Regulatory Authority for refund with interest (SBI highest MCLR plus two per cent), and before the adjudicating officer for compensation for his loss. The Authority may also impose a penalty of up to five per cent of the project cost under section 61, and direct the promoter to restore the plan.

Conclusion. Abhay can rescind and recover the ₹5 lakh with interest from the date of payment, and compensation adjudged by the adjudicating officer. Civil courts are barred (section 79), so the forum is the Authority and adjudicating officer, with appeal to the Karnataka Real Estate Appellate Tribunal.

How this is examined

“Functions and duties of promoters” is set as an essay (August 2024; November 2021) and as a short note (June 2025; “Promoter”, January 2026 and April 2023). “Rights and duties of allottees” was a short note in June 2025. The plan-deviation problem above was set in the August 2024 100-mark paper.