Who is a “Promoter” under MahaRERA? Responsibilities & Liabilities Explained

Who is a “Promoter” under MahaRERA? Responsibilities & Liabilities Explained (By CA Lalit Pawar)

The Real Estate (Regulation and Development) Act, 2016 (RERA), and consequently, MahaRERA in Maharashtra, place significant obligations on “Promoters.” However, the term “Promoter” isn’t always clearly understood. It’s crucial for anyone involved in the real estate sector – homebuyers, investors, and developers alike – to have a firm grasp of who qualifies as a “Promoter” and what responsibilities and liabilities they bear under the law.

As a Chartered Accountant and RERA consultant practicing in Maharashtra, I, CA Lalit Pawar, often guide clients through the intricacies of this definition. Let’s clarify the concept of a “Promoter” under MahaRERA and explore their duties and potential legal ramifications.

🤔 Defining “Promoter” Under MahaRERA: A Comprehensive Overview

MahaRERA adopts the definition of “Promoter” as outlined in Section 2(zk) of the RERA Act, 2016. This definition is broad and encompasses a wide range of individuals and entities involved in the development and sale of real estate projects. A Promoter, according to RERA, can be:

• The Builder or Developer: The individual or organization directly involved in constructing the real estate project.
• The Landowner (if Selling): If the landowner develops the land and sells the units themselves, they are considered the promoter.
• A Person Who Converts an Existing Building: Someone who converts an existing building into apartments or develops it for sale.
• Any Authority Selling Plots or Buildings: Public bodies selling plots or buildings also fall under this definition.
• Assignees and Successors: If the project is taken over by another entity, that entity also assumes the responsibilities of a “Promoter.”

In simpler terms, a “Promoter” is any individual or entity that initiates and oversees the development and sale of a real estate project. They are the primary point of contact for homebuyers and bear the ultimate responsibility for ensuring the project’s success.

🔑 Key Responsibilities of a Promoter Under MahaRERA:

MahaRERA imposes a wide range of responsibilities on promoters to protect the interests of homebuyers and ensure transparency and accountability in the real estate sector. Some of the most important responsibilities include:

1. Project Registration: A promoter is obligated to register their real estate project with MahaRERA before advertising, marketing, or selling any units. This registration process involves providing detailed information about the project, including the approved plan, financial details, and construction timeline.
2. Accurate Disclosure of Information: Promoters must accurately disclose all relevant information about the project to potential homebuyers. This includes details about the project’s specifications, amenities, approvals, and any potential risks or challenges.
3. Adherence to Approved Plans: Promoters are required to construct the project in accordance with the approved plans and specifications. Any deviations from the approved plan must be disclosed to homebuyers and approved by the RERA authority.
4. Timely Completion and Delivery: Promoters are responsible for completing the project and delivering possession of the units to homebuyers within the agreed-upon timeline. Delays in possession can result in penalties and legal action.
5. Deposit of Funds in Escrow Account: Promoters are required to deposit 70% of the funds collected from buyers in a separate escrow account. This ensures that the funds are used exclusively for the construction and development of the specific project, preventing diversion and misuse.
6. Transfer of Title: Promoters are responsible for transferring the title of the property to the homebuyers or the association of allottees (society) within the prescribed time frame.
7. Rectification of Defects: Promoters are liable to rectify any structural defects or other defects in the project that are brought to their attention within a specified period after possession.
8. Compliance with RERA Regulations: Promoters must comply with all the provisions of the RERA Act and the rules and regulations framed thereunder. This includes adhering to ethical business practices and maintaining transparency in all dealings with homebuyers.
9. Updating Information: Promoters are obligated to update website or give quarterly updates

⚖️ Potential Liabilities of a Promoter Under MahaRERA:

Failure to fulfill the responsibilities outlined above can expose promoters to significant liabilities under MahaRERA. These liabilities can include:

• Financial Penalties: MahaRERA can impose substantial financial penalties on promoters for non-compliance with RERA regulations.
• Compensation to Homebuyers: Promoters may be required to compensate homebuyers for losses suffered due to project delays, defects in construction, or other violations of RERA regulations.
• Imprisonment: In cases of serious violations, promoters may face imprisonment.
• Revocation of Registration: MahaRERA has the power to revoke the registration of a project if the promoter is found to be in repeated violation of RERA regulations. This can effectively halt the project and prevent the promoter from selling any further units.
• Damage to Reputation: Non-compliance with RERA can severely damage the promoter’s reputation, making it difficult to attract future investors and homebuyers.
• Legal Action: Homebuyers can file legal complaints against promoters for violations of RERA regulations, leading to further legal action and financial losses.

Conclusion: Understanding Your Rights and Obligations

Whether you are a homebuyer or a promoter, it’s essential to understand the definition, responsibilities, and liabilities associated with the term “Promoter” under MahaRERA. For homebuyers, this knowledge empowers you to protect your rights and make informed decisions. For promoters, it underscores the importance of adhering to RERA regulations and maintaining ethical business practices. By fostering a clear understanding of these concepts, we can collectively contribute to a more transparent, accountable, and sustainable real estate sector in Maharashtra.For More information, please refer original order @ MahaRERA Website:

Blog by CA Lalit Pawar

Who is a “Promoter” under MahaRERA? Responsibilities & Liabilities Explained (By CA Lalit Pawar)

Disclaimer: This blog provides general information about the definition, responsibilities, and liabilities of a “Promoter” under MahaRERA. For specific legal advice and guidance related to your situation, please consult with a RERA expert or refer to the official MahaRERA website (maharera.mahaonline.gov.in).

Note: As per ICAI guidelines, please remember that this content is for informational purposes only and does not constitute professional advice. Consult a qualified professional for specific guidance related to your situation.