Introduction

            The global real estate industry is influenced by market emotions, which serve as indicators of investor expectations within the sector. The expansion of the real estate industry generates positive momentum in the market, hence catalyzing national economic growth. The heightened emphasis on infrastructure needs underscores the Indian government’s strong commitment to providing a secure environment for investors in the real estate sector.

A multitude of laws regulates the real estate sector in India to ensure the robust protection of buyers’ rights while safeguarding developers’ interests and maintaining equitable competition in the market.[1] Consequently, the Indian real estate landscape has witnessed numerous legal reforms and a diverse array of regulations; however, concerns regarding professionalism within the industry persist, accompanied by an ongoing aspiration for the standardization of real estate transactions.

The Government of India has consistently faced the challenge of prioritizing the preservation of confidential company strategies vs fostering a transparent market. Ultimately, with the enactment of the Real Estate (Regulatory and Development) Act 2016 (hereafter referred to as RERA), the Government of India prioritized a transparent economic environment over private information. It is essential to examine the impact of the evolving legal framework, particularly with the announcement of the significant ‘Pradhan Mantri Awas Yojana’ (hence referred to as PMAY) aimed at achieving Housing for All.

Legal Framework for Real Estate Sector in India

The Indian real estate sector has undergone numerous revolutionary initiatives during the past two decades, sustaining its significant contribution to the nation’s economy. In the initial period of independence, the advancement of real estate in India was disjointed due to its chaotic and unstructured characteristics. Despite the legal framework governing real estate transactions originating in 1882, the sector has undergone numerous legal reforms to preserve its relevance in India, particularly in effectively addressing and accommodating dynamic factors such as demographics, credit availability, investor expectations, and rising purchasing power. The crucial importance of legal reforms in enhancing the real estate market necessitates a thorough examination of the legal framework regulating Indian real estate. Consequently, the legislative framework regulating the Indian real estate industry is often divided into two categories: Central Laws and State Laws, with a specific focus on Maharashtra State outlined below:

The Indian Contract Act 1872

The contract between parties is essential in real estate transactions. It is the primary document that delineates the rights and obligations of the gatherings. Consequently, the Act encompasses the fundamental aspects of contract creation, as well as the initiation and cessation of contractual obligations. It assesses the validity of the contract between two parties while elucidating the fundamental components of a valid contract, including capacity to contract, offer, acceptance, consideration, intention to contract, and legal enforceability.[2] Furthermore, it addresses the penalties associated with the non-fulfillment of contractual obligations or non-performance of contractual activities by the parties involved.[3]

The Indian Evidence Act 1872

In the context of real estate transactions or immovable property, the Indian Evidence Act of 1872 stipulates that the burden of proof regarding ownership disputes lies with the party asserting that the opposing party has misrepresented ownership, thereby influencing their decision to engage in the contractual transaction. Furthermore, it states that uncertified or inadequately certified documents are inadequate and invalid for use as collateral security.

The Transfer of Property Act 1882

            The conveyance of property between two entities is governed by the Transfer of Property Act of 1882. Nevertheless, it excludes the transfer of property pursuant to legal operations such as intestate succession, forfeiture, testamentary proceedings, and insolvency, and is restricted to property transfers executed by mutual consent of the parties involved.[4] The Act additionally stipulates the conditions and limitations applicable to the parties during a real estate transaction, as well as the competency requirements and disqualifications of the parties.[5] It elucidates the various categories of properties, including their characteristics such as transferable and non-transferable, moveable and immovable, among others. It also offers many modes for property transfer, including Mortgage, Sale, Lease, Gift, Exchange, etc.[6]

The Registration Act 1908

The Transfer of Property Act 1882 requires the registration of written documents related to all property transfer deeds between parties; failure to do so renders the property conveyance to the buyer illegal. Moreover, in a court of law, an unregistered property transfer paperwork does not constitute valid evidence.[7] The Registration Act of 1908 delineates the procedures for registering transfer deeds between parties.[8] It outlines the methods of document registration to promote information symmetry concerning the rights and obligations associated with the underlying property. The registration of a document affirms its inviolability and legal legitimacy regarding the transfer, hence mitigating the potential for fraudulent operations. It additionally outlines the method for registering several categories of property-related papers. Ultimately, it proposed sanctions for violations of the established procedures that guarantee an efficient and effective administrative system, as well as a common protocol to eliminate ambiguity in real estate transactions.[9]

The Special Relief Act 1963

The Specific Relief Act delineates the rights and obligations of individuals engaged in real estate transactions, particularly with the initiation of legal action against the party to the registered transfer deed. The legislation addresses an individual’s civil right when compelled to relinquish the relevant immovable property as per the registered transfer deed.[10] It stipulates that an individual dispossessed of property outside the bounds of legal procedure is entitled to initiate a legal suit within six months from the date of dispossession.[11] Furthermore, it delineates the court’s authority to issue injunctions and award damages in instances of non-compliance of the contractual obligations undertaken by the parties whereby the underlying asset is real estate.[12]

The Public Premises (Eviction of Unauthorised Occupants) Act 1971

The Public Premises (Eviction of Unauthorized Occupants) Act 1971 is legislation designed to safeguard government resources designated for the general public. The Act addresses the objectives concerning the eviction of illegal individuals in possession of public property or premises. It also addresses the eviction of an individual permitted to utilize the resources for a temporary occupation for a designated duration.[13] Likewise, it addresses unauthorized construction or unapproved structures on public land, granting the authority to dismantle such projects.[14] Ultimately, it empowers the estate office to seal unauthorized constructions on public premises.

The Competition Act 2002

The Competition Act 2002 addresses the promotion of equitable competition within the real estate sector and curtails the exploitation of dominant market positions by leading entities.[15] It does not establish a compensatory mechanism for stakeholders in the real estate industry; however, it offers a framework that scrutinizes the agreements among various participants based on their impact on the general public and the market overall. While it lacks provisions for particular performance or preventive measures, it establishes standards that prohibit market monopolies and implement an effective compensation process, so mitigating the abuse of dominant positions.[16]

The Land Acquisition Act 2013

            The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 addresses the acquisition of land or properties owned by private entities by the State or Central Government for the enhancement of public utilities and infrastructural development.[17] It delineates the authority of the State and Central Government to acquire such land ensuring an effective remedial compensation and resettlement strategy. It similarly delineates the regional administrative authorities responsible for establishing the optimal scheme to meet the parties’ demands.[18] Furthermore, it outlines the mechanism for rehabilitating the affected parties while ensuring a systematic and organized dispute resolution process, adhering to the principles of transparency and accountability.

The Insolvency and Bankruptcy Code 2016

            The Insolvency and Bankruptcy Code 2016 (hereafter referred to as IBC) is a law reform designed to facilitate an efficient and effective process for resolving financial failures and liquidation for both individuals and corporations. The code aims to prioritize the revitalization of the enterprise in the broader public interest over liquidation. The recent revision to the statute expands the definition of financial debt to include the claims of allottees in real estate projects.[19] Consequently, this allows home buyers to be recognized as a crucial component in the resolution process, assuming the role of financial creditors. The home buyer, classified as a financial creditor, is empowered to commence bankruptcy procedures against their respective builder or developer.[20] This offers an extra avenue for home buyers to safeguard their interests in the real estate transaction. The IBC serves as a significant milestone for safeguarding house buyers due to its expedited settlement process.

The Goods and Service Tax Act 2017

            The Integrated Goods and Services Tax 2017 (hereafter referred to as GST) is a tax reform that transformed the functioning of the Indian market. The Act is in its preliminary stage of implementation but has already demonstrated potential to become a significant milestone in a developing economy such as India. It streamlines the tax framework in India by consolidating all indirect taxes through the implementation of a one nation, one tax system.[21] The real estate sector is significantly enhanced by rising investments attributable to tax reductions, indicating a substantial shift from twelve percent in the previous methodology was reduced to five percent in the new GST framework.[22] Numerous industry leaders have expressed the view that the implementation of GST in the real estate sector will enhance the growth of the residential real estate market in the forthcoming years. Nevertheless, builders and developers may decide to utilize the previous tax scheme for ongoing or under-construction residential developments.

The Consumer Protection Act 2019

            The Consumer Protection Act 2019 is a significant achievement in enhancing social welfare and participation for the advancement of the Indian economy. This consumer-centric legislation delineates consumer rights while highlighting the importance of consumer awareness and effective grievance redressal mechanisms. It ensures that consumers are informed about the quantity, price, quality, and other pertinent aspects of products or services.[23]  Likewise, it establishes an expedited dispute resolution system alongside a compensation mechanism that aids in mitigating unfair commercial practices.

            Housing construction or residential property is classified as a service under the Consumer Protection Act 2019.[24] However, the remedies available through established forums are restricted to monetary compensation, serving as a curative measure without any preventive provisions for the safeguarding of home buyers.

The Model Tenancy Act 2021

The Model Tenancy Act 2019 establishes a standardized legal framework to address issues pertaining to rental housing, aiming to alleviate challenges posed by current State legislation regarding tenancy and rental properties. It encompasses both commercial and residential properties, as well as rental properties.

            The principal aim of the draft Model Tenancy Act is to alleviate the apprehensions of both landlords and tenants by delineating the rights and obligations of each party. Additionally, it seeks to benefit both tenants and landlords by providing an expedited dispute resolution mechanism through the establishment of a dedicated adjudicating authority endowed with the powers of a designated rent court. It aims to foster a harmonious atmosphere within the rental real estate sector, thereby enhancing the sector’s potential while safeguarding the interests of all parties involved.

[1] Rajkumar Adukia, Real Estate Law, Practice and Procedure, 3rd Edition. 2013, pages. 2-15.

[2] Section 10 of the Indian Contract Act of 1872.

[3] Sections 73, 74, and 75 of the Indian Contract Act of 1872.

[4] Section 110 of the Indian Evidence Act of 1872.

[5] Sections 61, 63, 65, 67, and 68 of the Indian Evidence Act of 1872.

[6] Sections 58, 107, 118, and 122 of the Transfer of Property Act of 1882.

[7] Section 3 of the Transfer of Property Act, 1882.

[8] Section 17 of the Registration Act of 1908.

[9] Sections 81 and 82 of the Registration Act of 1908.

[10] Section 4 of the Specific Relief Act of 1963.

[11] Section 6 of the Specific Relief Act of 1963.

[12] Sections 38, 39, and 40 of the Specific Relief Act of 1963.

[13] Section 3A of the Public Premises (Eviction of Unauthorised Occupants) Act of 1971.

[14] Section 5B of the Public Premises (Eviction of Unauthorised Occupants) Act of 1971.

[15] Section 4 of the Competition Act of 2002.

[16] Section 53N of the Competition Act of 2002.

[17] Section 2 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013.

[18] Section 23 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013.

[19] Section 5(8) of the Insolvency and Bankruptcy Code of 2016.

[20] Section 7 of the Insolvency and Bankruptcy Code of 2016.

[21] Section 5 of the Integrated Goods and Services Tax Act of 2017.

[22] GST Rates Booklet, http://gstcouncil.gov.in/sites/default/files/NOTIFICATION%20PDF/services-booklet-03July2017.pdf, (Accessed on March 20, 2025).

[23] Section 2(9)(ii) of the Consumer Protection Act of 2019.

[24] Section 2(42) of the Consumer Protection Act of 2019.