What happens if the builder does not follow the RERA order?
The Real Estate Regulation and Development Act, 2016, also known as RERA, was introduced in India to safeguard homebuyers and instill discipline in the real estate sector. Once the decision is made the builder is under obligation to follow the decision made by the authority or the tribunal established under RERA. There are also several strict provisions introduced to ensure discipline by enforcing punishment on builders who do not follow the regulations.
Below are the major consequences a builder may face for not complying with a RERA order.
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Monetary penalties and daily fines
If a promoter fails to comply with directions issued by the RERA authority, they can be penalised with fines that continue for every day the default persists. These penalties may cumulatively reach up to 5% of the estimated project cost, creating strong financial pressure to follow the order. Such fines are designed not only to punish non-compliance but also to ensure timely relief and compensation for affected homebuyers.
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Imprisonment or higher financial punishment
When a builder still refuses to comply, especially with orders of the Real Estate Appellate Tribunal, the consequences become more serious. The law allows imprisonment for up to three years, a fine up to 10% of the project cost, or both depending on the nature of violation under the Act. This strict provision highlights that ignoring RERA is treated as a legal offence rather than merely a contractual dispute.
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Recovery of money as arrears and attachment of assets
If the builder does not pay compensation, interest, or penalties ordered by RERA, authorities can recover the amount as arrears of land revenue through government machinery. In enforcement proceedings, authorities may also attach bank accounts, seize properties, or auction assets to recover dues and compensate buyers. This ensures that favourable RERA orders are practically enforceable.
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Execution proceedings and recovery certificates
Homebuyers are not helpless if the builder ignores the order. They can file for execution of the RERA decision, after which a recovery certificate may be issued against the defaulting builder and enforced by the district administration. This legal mechanism converts the RERA order into an enforceable government recovery process.
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Additional enforcement actions
Authorities may require disclosure of assets, initiate seizure proceedings, escalate the case to civil courts or order civil imprisonment for continued refusal to pay compensation. In extreme situations, authorities may also restrict the builder from launching new projects or take further regulatory action.
Failure to abide by a RERA order constitutes a critical legal offense in India. Builders who fail to comply with RERA face increasing legal consequences ranging from daily monetary penalties and recovery of due payments to confiscation of assets, imprisonment, and restrictions on business activities. These stringent rules under RERA serve the very purpose of the regulation.
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