Real Estate Disputes In India - Legal Gaps And Challenges

Author: LawSphereX

Category: Property & Real Estate

Published: 2026-08-23T20:50:22.606364+00:00

Updated: 2026-08-26T17:09:55.415+00:00

REAL ESTATE DISPUTES IN INDIA: LEGAL GAPS AND

CHALLENGES

Neha Jagatap, LLM (Intellectual Property and Trade Law), School of Law, Christ (deemed to be University) Bengaluru Introduction According to Indian economist Amartya Sen, “The capability of individuals to achieve well-being depends significantly on the infrastructure available to them. ” Sen highlights that infrastructure is foundational to a nation’s growth, human development, and overall prosperity. The real estate sector’s role in India is to support development and overall prosperity. In India, the real estate sector’s role in supporting development is substantial, which makes effective regulation essential. The Indian constitution permits both central and state governments to legislate on real estate under the concurrent list, where the central act typically serves as a model for state legislation.

The structure aims to create unified standards while allowing for regional flexibility. 1 In 2008, a legislative framework for real estate regulation was initially prepared but faced delays due to various challenges. It was ultimately introduced in 2014. After extensive consultations with stakeholders, the Real Estate (Regulation and Development) Act (RERA) was passed in 2016. RERA is designed to reshape India's real estate landscape, addressing critical issues such as project delays, poor construction quality, and contract breaches. By involving all parties in a transparent decision-making process, RERA aims to ensure accountability across the sector. 2 Before RERA, the real estate sector in India faced numerous irregularities. Buyers frequently encountered malpractice from builders, who exploited legal loopholes, diverted funds, and lacked accountability.

Even after completing payments, homebuyers often faced project delays as developers inserted one-sided clauses into agreements, imposed hidden fees, and manipulated terms like “super built-up areas” to overstate usable space. Real estate agents, 1 Sen's Capability Approach as a framework to the practice of development, (April 2010) Development in Practice

20(2):173-187 DOI:10.1080/09614520903564181

2 Arun K Misra, Nagendra Goel, Legislation for the Real Estate Sector, Economic & Political Weekly EPW June 21, 2014 vol xlix no 25

unregulated at the time, also contributed to defrauding buyers. Meanwhile, developers encountered complex, lengthy approval processes, further escalating project costs and delays. The Real Estate (Regulation and Development) Act (RERA) was a necessary reform to address these serious issues in India’s real estate sector. Before RERA, the industry was plagued with problems such as project delays, misuse of funds, lack of transparency, and widespread consumer dissatisfaction, necessitating the introduction of RERA to improve oversight and protect buyers. Robust regulatory frameworks are essential in sectors like real estate to protect consumers, maintain fair practices, and ensure sector stability.

Expert opinions, such as Sen’s views on infrastructure’s role in development, emphasize that sectors foundational to growth, like real estate, need stringent regulatory measures to align with broader societal goals. While RERA is comprehensive in its provisions, its effectiveness is somewhat limited by inconsistent implementation, with some states lagging in enforcing its mandates. Some criticisms focus on the uneven enforcement of RERA across states, posing challenges to uniform compliance. Although RERA has established a robust framework, achieving its full potential depends on consistent nationwide application. The research underscores the pivotal role of arbitration in resolving disputes within the real estate sector, per the provisions of the RERA Act 2016.

It delves into the legal challenges and loopholes encountered with arbitration in real estate disputes and how these provisions govern the real estate sector in India. Arbitration, as a crucial tool in resolving remarkably civil or commercial conflicts, generally applies to disputes arising from contracts or other issues. As an optional alternative to different laws, this method provides reassurance of its effectiveness and does not remove or replace existing laws. Real Estate Sector: An Overview Real estate, in its traditional sense, brings to mind tangible assets such as land and buildings, which are fundamental to housing and infrastructural development. The etymology of “real estate” sheds light on its significance. The term “real” originates from the Latin word “res,” meaning “things” or “matters,” indicating something concrete or substantial.

The term “estate” has roots in the Old French word “estate,” meaning “status” or “standing. ” Historically, “real estate” symbolized royal land grants, denoting ownership that was both tangible and legally recognized. Today, real estate generally refers to property, including land and any permanent structures attached. It can be divided into public and private ownership based on legal possession and use rights.

The real estate sector is integral to economic growth and pivotal in infrastructure, housing, and commercial development. Recognizing this, the Indian government enacted the Real Estate (Regulation and Development) Act (RERA) in 2016, marking a significant regulatory shift in the sector. This Act was introduced to address long-standing issues such as lack of transparency, widespread delays in property possession, fraud, and the absence of accountability mechanisms, which had left consumers vulnerable and developers unchecked. The RERA is fundamentally transforming India’s real estate sector by enforcing comprehensive regulations that safeguard consumers, enhance transparency, and ensure that all stakeholders, including developers and agents, are held accountable for their actions. 3 To support this, RERA imposes on real estate projects and stakeholders.

For instance, RERA mandates that all real estate projects be registered with the respective state regulatory authorities before being advertised or sold. This measure ensures that only approved, legitimate projects enter the market, protecting buyers from fraudulent or unauthorized development. Additionally, RERA requires developers to deposit 70% of the funds collected from buyers into an escrow account allocated explicitly for the project’s construction. This provision prevents fund diversion, ensuring the collected money is used exclusively for the intended project. Moreover, real estate agents must also register with the authority, adding another layer of accountability to the sales process.

The need for regulatory oversight in the real estate sector arises from the inherent complexities involved in property transactions, as well as the high financial stakes that are typically associated with buying or selling real estate. This complexity, combined with the significant amounts of money involved, has historically rendered the industry vulnerable to various forms of fraud and abuse, resulting in detrimental consequences for consumers and investors alike. To address these challenges, the introduction of regulatory frameworks such as the Real Estate Regulatory Authority (RERA) plays a crucial role. By establishing clear guidelines and comprehensive requirements for all stakeholders involved in real estate transactions, RERA lays down a structured framework that fosters fair practices.

This creates a more trustworthy environment for buyers and sellers, ultimately promoting transparency and stability within the industry. With these regulations in place, the sector can better safeguard the interests of consumers while also encouraging ethical behavior among developers and agents, thereby contributing to a healthier real estate market overall. This regulatory structure protects

3 Belair owner’s Association v. DLF, Case no. 19/2010, 12 August 2011.

consumers and strengthens trust in the industry, encouraging legitimate investment and development. Before RERA’s introduction, the real estate market in India was plagued by numerous issues. Consumers often faced exploitation due to the lack of oversight, as developers and agents took advantage of legal loopholes to delay projects, misappropriate funds, and manipulate agreements to favor developers. Homebuyers who had paid the total price were frequently left waiting to possess their property. At the same time, developers diverted collected funds to other ventures, forcing buyers to bear the burden of loans without receiving the promised homes. Contract terms were often one-sided, imposing extra charges on buyers without developers assuming responsibility for project delays.

Furthermore, terms like “super built-up area” were used ambiguously to inflate property values by calculating unusable space. Real estate agents, who were largely unregulated and contributed to this exploitation, made false claims about amenities or features. 4 Despite its far-reaching provisions, RERA does not apply retroactively, which limits its scope for those who invested in real estate projects before 2016. Consequently, buyers involved in disputes over pre-RERA projects may not fully benefit from the Act’s protections. They may continue to face lengthy legal battles in traditional forums, such as consumer or civil courts, which often have extensive backlogs. Some critics argue that RERA’s effectiveness is undermined by uneven enforcement across states, as each state implements the Act independently.

This variation in enforcement can result in inconsistent application of RERA’s provisions, creating challenges for buyers in states where implementation is less stringent. 5 RERA’s dispute resolution mechanism, detailed in chapter V and VII, represents a significant improvement over the previous process. Before RERA, consumer forums such as the Consumer Disputes Redressal Forum (NCDRC) and civil courts primarily handled real estate disputes, which led to streamlined dispute resolution with its structured approach. Each state-level Ral Estate Regulatory Authority has a presiding officer to oversee initial conflicts. At the same time, an Appellate Tribunal handles appeals on decisions made by the regulatory authority or adjudicating officer. This structured dispute resolution model is intended to expedite redressal for buyers, ensuring quicker responses than traditional forums.

4 'The Real Estate (Regulation And Development) Act, 2016|Legislative Department | Ministry Of Law And Justice | Goi' (Legislative. gov. in, 2022) 5 Mrinal Pandey & Parimal Kashyap, Real Estate (Regulation and Development Act, 2016: Cementing the Gaps of an Unstable Foundation, 4 INDIAN J. L. & PUB. POL'y 91 (2017)

Redressal Mechanism under RERA 2016 The Real Estate (Regulation and Development) Act of 2016 (RERA) was established to create an efficient platform for swiftly resolving disputes within the real estate sector. By focusing on consumer rights, the Act addresses long-standing inefficiencies in dispute resolution that, before RERA, often led to prolonged legal battles and financial stress for homebuyers. While intended to protect buyers’ interests, consumer forums frequently encountered delays due to procedural complexities and the volume of cases in India’s judicial system. This delay in redressal allowed developers to employ tactics to outlast buyers, pressuring them into unfair settlements or inducing frustration sufficient to cause them to abandon their claims altogether.

Without a centralized real estate regulatory framework, buyers had to navigate through lengthy and costly legal procedures at district, state, and national levels, often involving multiple appeals and court appearances. Large real estate developers had the resources to complicate these processes further by hiring expert legal advisors who drafted onesided contracts. These contracts often included arbitration clauses that discouraged buyers from seeking redress in civil or consumer courts, limiting their litigation ability. In this context, predictive dispute resolution techniques could provide insights into potential outcomes and reduce time and financial costs; however, the lack of a standardized regulatory body made such techniques challenging to implement widely. 6 Chapters V and VII of the RERA Act lay the foundation for a structured dispute resolution system.

These chapters mandate the establishment of Real Estate Regulatory Authorities. Additionally, real estate appellate tribunals hear appeals from parties dissatisfied with the RERA authority’s decisions. This twotiered process handles initial complaints and subsequent appeals, ensuring that cases are resolved efficiently within the real estate domain without resorting to traditional courts. 7 Centralized dispute resolution mechanisms reduce the dependency on traditional courts, which are often burdened with cases from various domains, leading to extensive backlogs. RERA provides a streamlined process that bypasses the general court system by establishing a dedicated regulatory authority and tribunal specifically for real estate matters. This centralized approach alleviates the load on civil courts.

It ensures that real estate disputes are resolved by professionals familiar with the sector’s unique challenges, contributing to more relevant and

6 Miss. Samruddhi S. Divekar, A Review on Dispute Resolution under the Real Estate (Regulation and

Development) Act, 2016, (Aug 2021) International Research Journal of Engineering and Technology, Volume: 08 Issue: 08 p. 2113

7 Section 20 (1) of the REA act 2016.

sector-informed judgments. Reports on the Indian Judiciary frequently cite the extensive backlogs of civil courts. According to data, it can take several years for real estate cases to resolve in civil court, creating a significant burden for homebuyers, many of whom are already financially strained by the delay in project completion. 8 The addition of RERA’s dedicated authorities and tribunals provides an alternative pathway specifically intended to avoid these delays, expediting the resolution process by focusing on real estate grievances exclusively. This specialization enables faster processing and addresses issues that may remain unresolved in the traditional system. However, despite the improvements RERA offers, delays can still occur within this new framework due to procedural challenges and varying levels of implementation across states.

Some states, for example, have been slower in establishing fully functional RERA authorities or tribunals, which can impact the speed and effectiveness of dispute resolution. Additionally, procedural issues, such as the complexity of some instances or the requirement for multiple approvals, can also contribute to delays, undermining RERA’s efficiency in some situations. Criticizing RERA’s dispute resolution mechanism is the existence of dual forums--- namely, the real estate regulatory authority and the adjudicating officer. While this dual structure provides consumers with additional options, it can lead to inefficiencies and increase dispute resolution costs. For instance, buyers may need to file complaints in both forums if their grievances involve multiple issues, such as seeking both regulatory enforcement and financial compensation.

This requirement can increase the costs of dispute resolution. For instance, buyers may need to file complaints in both forums if their grievances involve multiple issues, such as seeking both regulatory enforcement and financial compensation. This requirement can increase legal costs and add complexity to the process. 9Additionally, the dualforum setup raises the potential for conflict judgments, especially if cases are interpreted differently by the RERA and the Adjudicating Officer. Such conflicts can complicate the legal landscape and deter some buyers from pursuing their claims, detracting from RERA’s intended goal of providing a straightforward redressal pathway. While RERA’s dispute resolution mechanism marks a significant improvement over previous legal frameworks, its dual-forum structure and state-level variations in enforcement present challenges that need to be addressed.

For RERA to fully achieve its goal of providing an efficient, accessible platform for real estate

8 Section 43 of the Act.

9 Mahima Shah, Real Estate (Regulation and Development) Act, 2016: A Critical Analysis, 5 SUPREMO

AMICUS 117 (2018). https://heinonline-org-christuniversity.knimbus.com/HOL/License

dispute resolution, it must streamline procedures and minimize overlaps between forums. Uniform implementation across states and clear guidelines on forum jurisdiction can further enhance RERA’s effectiveness, ensuring that the platform remains a viable and efficient alternative to the traditional court system. Legal Gaps in Real Estate Dispute Resolution Consumers filing legal complaints are primarily driven by dissatisfaction, a need for justice, and a demand for accountability. The Real Estate Act (REA) aims to address these motivations by providing specialized forums for quick and effective dispute resolution in real estate. Still, the dual-forum structure under the Real Estate Regulatory Authority (RERA) and Adjudicating Officer (AO) is problematic and inefficient.

The Real Estate Act (REA) created the Real Estate Regulatory Authority (RERA) and introduced an Adjudicating Officer (AO) to ensure effective redressal mechanisms for real estate complaints. RERA enforces timelines, requiring the Appellate Tribunal to resolve appeals within 60 days, aiming to expedite redressal compared to consumer forums. It also plays a broader role, including regulation, monitoring, and promoting the real estate sector. The AO assesses compensation under Sections 12, 14, 18, and 19. 10 While the two-forum system was designed to enhance the efficiency of consumer redressal mechanisms, it has inadvertently introduced several practical inefficiencies that can undermine its intended benefits.

The requirement for consumers to file separate complaints for violations of regulations with the Real Estate Regulatory Authority (RERA) and seek compensation through the Appellate Authority (AO) can lead to increased legal costs and a heightened risk of inconsistent judgments between these two forums. For instance, if a buyer fails to file a complaint with RERA, the builder may successfully evade liability under Section

61 of the relevant legislation. This loophole could severely weaken regulatory oversight and

protection for consumers. Moreover, there is also the potential for buyers to lose out on compensation altogether if they neglect to file a claim with the AO. This dual-filing requirement not only places an additional burden on consumers in terms of time and resources but also complicates what should be a straightforward process for seeking justice.

10 Swapan Deep Arora, Anirban Chakraborty, and Vijay Pal Singh, Consumers’ Legal Claims: Motives,

Expectations and the Complaint Journey of Indian Consumers, 2023 International Management Institute, New Delhi, Article Reuse Guidelines

Ultimately, while the intention behind the two-forum system may be to empower consumers, its current structure can lead to confusion and inconsistency, preventing buyers from effectively safeguarding their rights and interests.. 11 RERA is established under Section 20 of the Act, with responsibilities outlined in Sections 36 to 39, handling broad compliance issues and ensuring adherence to real estate regulations. The AO, however, has a narrower mandate under different provisions of the Act, explicitly dealing with compensation-related grievances. The existence of two forums raises questions about the necessity of separate entities for distinct aspects of redressal when a unified approach could provide a more cohesive experience. The REA does permit, under the proviso to section 71, that buyers withdraw ongoing cases from consumer forums and refile with the AO for compensation.

However, this process does not account for the delays and added expenses caused by requiring consumers to withdraw and refile rather than directly transferring cases to the AO. Thus, even with legislative foresight, the Act’s structure complicates what was intended to be an expedited redressal mechanism. The effectiveness of this dual-forum approach is conditional on efficient procedural and operational coordination between RERA and the AO. Since buyers rely on timely, consistent decisions to protect their investments and legal rights, any delays or inconsistencies undermine the purpose of the REA and weaken consumer trust in the real estate redressal mechanism. 12 Some might argue that consolidating RERA and AO responsibilities into a single forum, such as the tribunal, could simplify procedures and avoid overlapping authorities.

However, removing ERA’s role in Favor of a Tribunal would contradict the REA’s initial purpose—to reduce litigation delays and ensure a rapid redressal system for real estate issues, which general consumer forums or tribunals may lack. Consequently, rather than merging, improving operational efficiency and streamlining processes between RERA and the AO would likely be a more practical approach. For the REA to achieve its primary goal of swift and fair redressal, enhancing the quality and transparency of RERA judgments and streamlining implementation processes are essential. Ensuring that RERA judgments are consistently enforceable requires addressing the current bottlenecks in both forums. Increasing the staffing of the regulatory authority, improving training, and automating can assist in case management and decisiontracking, creating an environment conducive to timely resolutions.

By strengthening RERA’s

11 Section 61 of the REA Act 2016

12 Unitech Ltd. vs. Union of India (2020) 1 SCC 550

and AO’s capabilities, the REA can meet its intended objectives, providing consumers with a fair, accessible, and effective redressal process that aligns with their demand for justice and accountability in the real estate sector. Judicial Interpretation The exclusive jurisdiction of the Real Estate Regulatory Authority (RERA) in adjudicating disputes within the real estate sector, particularly about delays caused by builders in handing over possession. The judgment reaffirmed the statutory right of homebuyers to seek redressal under RERA, reinforcing the regulatory authority’s role in resolving disputes promptly. This ruling is of particular significance as it strengthens the position of RERA as the primary forum for real estate grievances, streamlining the dispute resolution process and reducing the reliance on traditional judicial forums.

By emphasizing RERA’s authority, the Court addressed procedural delays and ensured that consumer protection remains central to the real estate dispute resolution framework. The decision highlights the importance of effective legal mechanisms for safeguarding homebuyers’ interests and contributes to the broader discourse on expediting justice within the real estate sector. 13 The Supreme Court of India, under the leadership of Justice Uday Umesh Lalit, along with Justices Ajay Rastogi and Aniruddha Bose, has articulated a significant ruling regarding the jurisdiction of the Real Estate (Regulation and Development) Act, commonly known as RERA. The Court determined that RERA possesses exclusive jurisdiction when it comes to disputes within the real estate sector.

This ruling is particularly important as it ensures that homebuyers are afforded the opportunity to seek timely and effective redressal for their grievances. In its judgment, the Court underscored the issue of delays in possession, stating that such delays are not merely procedural hiccups but fundamentally violate the rights of homebuyers. These delays can lead to considerable financial and emotional distress for individuals who have invested their hard-earned money into property. The Supreme Court's ruling reinforces RERA’s pivotal role in providing swift and effective remedies for homebuyers facing such challenges. By solidifying the framework for addressing real estate disputes, the Court aims to enhance consumer protection and restore faith in the real estate sector.

13 M/s Newtech Promoters and Developers Pvt. Ltd. v. State of UP (2021), Civil Appeal Nos. 6745-6749

The case reinforced RERA’s position as the primary forum for resolving real estate disputes, effectively addressing issues related to overlapping jurisdictions and the proliferation of complaints. It ensured that RERA's authority was used to simplify dispute resolution, minimize procedural complexities, and improve the efficiency of addressing real estate grievances. 14 In the Aftab Singh case (Case No. 701 of 2015), the issue of dual filing was addressed, focusing on whether a complaint could be filed in a consumer forum if the dispute falls under the purview of the 2016 Act (RERA). The case involved a developer who failed to deliver possession of a property within the agreed timeframe. The aggrieved party initially sought arbitration, followed by a complaint filed in the consumer forum.

The developer contested the forum’s jurisdiction, arguing that the matter was already pending with another authority. However, it was decided that the Consumer Protection Act offers an additional remedy and does not preclude the right to pursue claims under other existing laws. It was further held that the availability of an alternate remedy does not bar an individual from approaching a different authority. Referring to Section 71 of the 2016 Act15, it was affirmed that no one can be deprived of this right, and individuals can seek redressal under both the 2016 Act (RERA) and the consumer forum to resolve their disputes. 16 Through the judicial precedents, the insights on the dispute resolution by the rera play a significant role. Apart from the loopholes mentioned above, there is still a vast scope for the amendment.

The Act intends to increase transparency and accountability in the real estate sector. It provides various machinery to facilitate and regulate the transactions in commercial and residential projects and ensures timely project completion by the promoters. However, this would happen only if the state government implemented an efficient plan. 17 Conclusion One significant aspect of the paper is its examination of the "complaint journey," which illuminates the delays, inefficiencies, and emotional toll experienced by consumers. To underscore the necessity for reforms in consumer protection mechanisms, advocating for expediting the resolution process and bolstering consumer awareness. Delving into the

14 Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan, Civil Appeal No. 12238 of 2018

15 Section 71 of the REA act 2016

16 Aftab Singh & Ors. vs Emaar MGF Land Limited & Ors. (2017), Consumer Case No. 701 of 2015

17 Graeme Newell, Rajeev Kamineni, The Significance and Performance of Real Estate Markets in India, journal of real estate portfolio management, vol 13 No 2, 2007.

intricacies of buyers' and builders' rights in India furnishes valuable insights for policymakers and advocates. It underscores the imperative to enhance the legal framework to benefit Indian real estate. 18 Although RERA is primarily designed to enhance accountability and transparency for consumers, it also benefits builders by promoting increased transparency in the industry. The RERA framework is ideal if implemented as intended, but achieving its specific objectives has proven difficult due to non-compliance by some states and developers. The act provides various mechanisms to streamline transactions in both commercial and residential projects while ensuring that project promoters meet their deadlines and obligations efficiently.

To effectively protect buyers’ interests and ensure the swift resolution of disputes under the Real Estate Act, the unnecessary duplication of two forums—RERA and the adjudicating officer (AO) – should be eliminated. The AO should be incorporated into RERA, with all complaints directed solely to RERA. Additionally, the REA should be amended to remove the jurisdiction of other forums rather than leave the choice to the parties. This would enhance the objective of speedy dispute resolution and strengthen the real estate sector's regulation, monitoring, and promotion by centralizing enforcement and redressal under a single authority, RERA. Additionally, it would inspire greater trust among consumers and investors, fostering a more stable and transparent market environment.

18 Swapan Deep Arora, Anirban Chakraborty, and Vijay Pal Singh, Consumers’ Legal Claims: Motives,

Expectations and the Complaint Journey of Indian Consumers, 2023 International Management Institute, New Delhi, Article Reuse Guidelines

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