D Srinivas Reddy, secretary, TG-RERA talks to TOI about the continuous monitoring of fraudulent activities by the real estate regulator, and penal action being initiated against builders who are resorting to pre-launch & One-Time Payment (OTP) schemes.
D. Srinivas Reddy, Secretary of Telangana Real Estate Regulatory Authority (TG-RERA) Do you agree that unlawful practices like pre-launch/OTP have become rampant?
The Real Estate (Regulation and Development) Act, 2016 applies uniformly to all whether an established developer or a new entrant. Section 3 of the RE(R&D) Act makes no distinction between large and small players; the prohibition on pre-launch or pre-registration marketing is absolute and applies equally across the board. The authority does not classify violations based on the size, brand value, or market standing of the promoter.
However, we have received several complaints pertaining to pre-launch offers and marketing of projects prior to obtaining mandatory registration under Section 3 of the Real Estate (Regulation and Development) Act, 2016. It is important to clarify that irrespective of whether the scheme is described as an ‘OTP offer,’ ‘exclusive preview’, or ‘prelaunch’, the legal test remains the same if the project was advertised, marketed, or sold without prior registration, it constitutes a violation of Section 3. Wherever contravention has been established, penalties have been imposed under Section 59 of the RE(R&D) Act, which provides for monetary penalties linked to the estimated cost of the project. TG RERA adopts a strict and structured enforcement approach in cases where promoters violate the mandatory provisions of the Real Estate (Regulation and Development) Act, 2016. If the violation is established, Section 59 of the Act empowers the authority to impose a penalty which may extend up to 10% of the estimated cost of the real estate project. Upon receipt of such information, if any project is found prima facie to be in violation of Section 3, the authority promptly issues showcause notices to the concerned promoters and initiates proceedings in accordance with law.
Homebuyers are therefore strongly advised to verify the RERA registration status of the project on the official TG RERA portal before making any financial commitment. The authority has consistently maintained that pre-registration sales activity strikes at the very foundation of the regulatory framework and therefore invites strict enforcement action. To ensure systematic monitoring of advertisements, the authority has signed an MoU with the Advertising Standards Council of India (ASCI).
In recent years, we have noticed attempts by certain promoters to test the market before registration by offering “pre-launch,” “soft launch,” or “expression of interest” schemes. That said, we would not describe the practice as rampant. However, the nomenclature does not change the legal character of the act. As clarified in our public caution notice, any form of solicitation for an unregistered project is per se illegal. The authority has taken consistent enforcement action, including show-cause notices and penalties, which has significantly curbed open violations. Is it true that even established developers are resorting to this? It would not be correct to single out only new or inexperienced developers. In certain instances, pre-launch activities have been attempted by promoters irrespective of their market stature. However, this authority has consistently adopted a uniform enforcement approach. Pre-launch activity is a violation, whether undertaken by a major industry player or a smaller developer. Hyderabad: Politics, Probe Demands, Paper Leak, Road Tragedy & Market Mayhem How many complaints around OTP schemes have you received in the last six months? Insofar as specific ‘OTP schemes’ are concerned, we have not received a large volume of complaints exclusively labelled under that terminology. In such cases, the authority has acted firmly and without hesitation. What is the punishment for such offences as per RERA guidelines ? Where the authority finds that a promoter has engaged in such activities prior to registration, immediate show-cause notices are issued, and proceedings are initiated in accordance with law. The linking of penalty to project cost ensures that the consequence remains proportionate and economically significant, irrespective of the scale of the development. What steps are TG RERA authorities taking to curb this menace? Under this arrangement, ASCI undertakes scrutiny of real estate advertisements across digital platforms and shares instances of suspected violations with the Authority for examination and appropriate action. This collaboration has significantly strengthened regulatory oversight over indirect and dispersed forms of marketing. Further, the authority does not remain dependent solely upon formal complaints from homebuyers. Wherever credible material is brought to its notice including digital promotions, online campaigns, WhatsApp circulations, or other forms of solicitation, the authority exercises its powers to take suo motu cognisance and initiate action. Regular ‘RERA Alerts’, public advisories, and caution notices are issued to sensitise homebuyers about the mandatory requirement of prior registration and the risks associated with pre-launch schemes.
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