UP RERA warns developers of up to 5% project cost penalty for handing over incomplete flats to homebuyers
Following homebuyer complaints, UPRERA has ordered real estate developers to immediately stop handing over incomplete apartments, known as bare shell units
Acting on complaints by homebuyers, the Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has directed all developers to immediately stop handing over incomplete apartments or bare shell units to homebuyers and warned that this could attract penalties up to 5% of the real estate project’s total cost.
The order, issued on May 8, said that RERA clearly states that possession can only be offered after full completion of the apartment, all promised amenities are in place, and a registered sale or lease deed has been executed.
The directive, issued under Section 37 of the Rera Act, 2016, aims to protect new buyers from being forced to accept bare-shell flats, a practice that UP-Rera has deemed both illegal and a serious violation of the law, a report published in the Hindustan Times said.
Following complaints from homebuyers, the Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has directed all developers to immediately cease handing over incomplete apartments, often referred to as ‘canvas flats’ or bare shell units. The authority warned that violating this directive could result in penalties of up to 5% of the total cost of the real estate project.
What does the order say?
The order, issued on May 8, emphasizes that possession can only be offered once the apartment is fully completed, all promised amenities are in place, and a registered sale or lease deed has been executed, as mandated by RERA.
Issued under Section 37 of the RERA Act, 2016, the directive aims to safeguard new buyers from being pressured into accepting unfinished flats, a practice UP-Rera has declared both illegal and a significant violation of the law, according to a report by the Hindustan Times.
“The promoters found violating these rules can be fined up to 5% of the total project cost under Sections 38 and 61 of the Rera Act,” said Mahendra Verma, secretary, UPRera.
“It has come to the notice of the Regulatory Authority that some of the promoters, when executing the Agreement for Sale (BBA), are making the allottees to agree to the condition of accepting physical possession of canvas flats and are, in fact, handing over possession of canvas flats to such allottees. Any such act by the promoters is contrary to the provisions of the Act and the Rules and defeats the object of protection extended to the allottees through the RERA Act. Therefore, it has become necessary to issue appropriate directions with a view to ensure that the promoters strictly adhere to the provisions of the Act and the Rules in this behalf and the interest of the allottees are not compromised in any manner whatsoever,” the notice reads.
UP building bylaws state that developers must secure multiple no-objection certificates
Uttar Pradesh building bylaws state that a real estate developer must secure multiple no-objection certificates — including fire safety, dues clearance, and provisions for parks, lifts, pools, and other common services — before applying for an OC. Once all parameters are met, the Noida Authority inspects the site. Only after OC is granted can possession be legally handed over. Without an OC, giving possession is illegal, officials told the Hindustan Times.
The authority said physical possession of an apartment can only be transferred after the builder obtains a completion or occupancy certificate from the competent authority. Further, developers must execute a legally registered agreement before demanding more than 10% of the property cost, officials added.
The order defines “ready-to-move-in” units as those where all internal works — flooring, plumbing, electrical connections, fire safety, doors, windows, and other finishes — are complete and in accordance with what is promised in the brochure and sanctioned plan. According to Rule 1.8(3) of the UP Agreement for Sale Rules, 2018, the price quoted must include land cost, construction charges, development fees, and committed amenities — any deviation is considered default.
The UPRERA order said that all the promoters of the projects registered with the Authority shall execute the Agreement for Sale (BBA) with the allottees on the model format laid down under U.P. Real Estate (Regulation & Development) (Agreement for Sale/Lease) Rules, 2018 without altering any of the terms and conditions thereof, in any manner whatsoever. The promoters shall be responsible for obtaining the completion or occupancy certificate of the project, as the case may be, and ensure delivery of physical possession of ready-to-move-in apartments, complete with all specifications, amenities and facilities as provided under the sanctioned plan or/and prospectus and brochures.
“Violation of any of the provisions of the Rules 2018 shall be punishable under Section-38/61 of the Act 2016 with penalty which may extend up to 5 percent of the estimated cost of the project,” the order stated.
“The developers must deliver the apartments once they complete the facilities as per the promises made in the builder-buyer agreement, and also they must fulfil all legal formalities because it is related with safety too,” HT quoted Dinesh Gupta, secretary of the Confederation of the Real Estate Developers Association of India (Credai), as saying
Homebuyers have welcomed the UPRera’s directive but developers have raised concerns about increasing compliance demands, especially in projects where utility connections or final clearances cause delays.
