REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 • CHAPTER III

Section 12 of RERA: Obligations of Promoter Regarding Advertisements and Prospectus

Section 12 of the Real Estate (Regulation and Development) Act, 2016 protects persons who invest in a real estate project in reliance on misleading promotional information. A promoter may be required to compensate the affected person or, where that person withdraws, refund the entire investment with prescribed interest and compensation.

Section 12: Obligations of promoter regarding veracity of the advertisement or prospectus

Under Section 12, where a person pays an advance or deposit relying on information in a notice, advertisement or prospectus, or on a model apartment, plot or building, and suffers loss or damage because of an incorrect or false statement, the promoter must compensate that person in accordance with the Act.

The proviso additionally protects a person affected by such a statement who wishes to withdraw from the proposed project: the promoter must return the entire investment, together with interest at the prescribed rate and compensation as provided under the Act.

Key distinction: A person who continues with the project may claim compensation for proven loss or damage caused by the false statement. An affected person who elects to withdraw has the statutory remedy of return of the entire investment with prescribed interest and compensation.

Meaning of advertisement, promoter and allottee

Advertisement - Section 2(b)

An advertisement includes any document or publicity through any medium, including a notice or circular, that informs persons about a real estate project, offers a plot, building or apartment for sale, or invites purchases, advances or deposits. Promotional material is therefore not confined to printed brochures; digital communications may also fall within this broad definition.

Promoter - Section 2(zk)

A promoter broadly includes a person who constructs or causes the construction of apartments or buildings for sale, develops land into a project for sale, or falls within the other categories specified by Section 2(zk). Responsibility depends on the statutory definition and the role played in the project.

Allottee - Section 2(d)

An allottee generally means a person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the promoter, including a subsequent acquirer, but excluding a person to whom it is given on rent. Importantly, Section 12 itself uses the broader expression any person making an advance or deposit in reliance on the specified representations.

When does liability arise under Section 12?

The relevant facts ordinarily include the representation made in promotional material or a model unit, the advance or deposit paid in reliance upon it, the incorrect or false statement, and the resulting loss or damage. Relevant evidence may include the original brochure, advertisement, website screenshots, payment receipts, booking form, correspondence, model-unit specifications and project registration disclosures.

Compensation without withdrawal

Where the person retains the investment but sustains loss or damage because of the incorrect or false statement, Section 12 provides for compensation in the manner prescribed by the Act. The nature and amount of compensation require determination on the evidence and applicable legal standards.

Withdrawal, refund and interest

Where the affected person chooses to withdraw because of the false or incorrect representation, the proviso provides for return of the entire investment along with interest at the rate prescribed under the applicable rules and compensation. There is no single universal numerical interest rate in Section 12; the relevant Central, State or Union Territory rules must be checked.

How to seek relief under RERA

Under Section 31, an aggrieved person may file a complaint with the Real Estate Regulatory Authority or the adjudicating officer, as applicable, for a violation of the Act. Section 71 provides for appointment of adjudicating officers to adjudge compensation under Section 12, among other specified provisions. The appropriate forum and procedure depend on the relief claimed and the applicable rules and judicial interpretation.

  1. Preserve the promotional representation and evidence of payment and reliance.
  2. Identify the inaccurate claim and the loss or damage, and decide whether withdrawal and refund are sought.
  3. Check the project registration and the applicable State or Union Territory RERA rules, complaint forms, fees and interest provisions.
  4. Submit the claim through the competent RERA forum with supporting records and the specific relief requested.

Section 11(2) requires the promoter's advertisement or prospectus to prominently mention the Authority website and project registration number. Section 13 restricts collection of more than ten per cent of the cost without first entering into and registering a written agreement for sale. Section 14 concerns adherence to sanctioned plans and specifications. Section 18 separately addresses return of amounts and compensation in specified circumstances, including failure to complete or give possession in accordance with the agreement.

Official legislation and guidance

The applicable RERA rules, prescribed interest rate and complaint procedure can vary by State or Union Territory. Check the relevant Authority's current rules and notifications before filing.