A Study on the Survival of Real Estate projects from the adverse effects of COVID 19: Srinidhi Vasan

A Study on the Survival of Real Estate projects from the adverse effects of COVID 19 with special reference to RERA Force Majeure Circular

Author: Srinidhi Vasan

General Manager – Operations (RERA CONSULTANTS LLP)

                                                                                      ISSN: 2582-3655

ABSTRACT: The Indian Real Estate sector is a thriving globally recognized sector amongst all the big sectors established in the economy. This sector attracts in the major amount of Foreign Direct Investment (FDI) into the system. With the RERA Act, the Indian Real Estate is more sophisticated and emerging with the government safeguarding the investors through the Indian Law. This article provides the details of the extensions and relaxations that are passed under the Real Estate (Regulation and Development) Act, 2016 (RERA) throughout the country due to the lockdown raised in India. The latest circular issued by RERA is a relaxation provided to the promoters, builders, and customers of the Real Estate sector due to the impact of economic instability caused by the outbreak of COVID 19. The government authorities helped in alleviating all the adverse effects which have scaled up a halt on all the construction developments taking place in India, therefore, in relation to the same force majeure has been conferred by the governmental authorities in context to various sections of the RERA Act. The methodology utilized for this research is secondary data. Secondary data from various sources like research reports, government websites, and news articles have been referred to.

KEYWORDS: Project Relaxations, Economic Instability, Force Majeure


Amongst all the investment opportunities in the world, India is known for its new and successful opportunities for investment in the real estate sector. This sector is majorly presented as a long term investment sector or for an expansion of buildings for any business enterprise. Real estate can be divided into four parts – Housing, Commercial, Retail and Hospitality. The study showcases that sector attracts various FDIs from NRIs settled in various parts of the world. In consideration to the same, amongst all the states in India, Real estate investment decisions are highly expected to be in Bengaluru followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun. These real estate constructions are bounded by a well-farmed act of the Indian Government.

The Real Estate Regulatory Authority (RERA) Act, 2016 is set up by the Parliament of India for developers and customers in order for the Indian real estate sector to be overviewed according to the laws framed by the central and state government. It was also created for defending real estate customers from fraud-proof investments and to settle any grievances faced by them on the same. This Act was made mandatory in India for all developers – commercial or residential where projects were established beyond the point of 500 square meters of land or eight apartments.

In the view of the sudden outbreak of the deadly virus named COVID 19 which has been declared as a pandemic by the World Health Organisation is fatal amongst various countries has brought in an economic instability with India too as due to this virus the central government had taken an enormous step of locking down the entire country from 19 March 2020 to diminish the escalation of the same. However, this major decision has unintentionally affected the undergoing and newly registered projects upon their completion periods. Therefore, RERA and other materialized authorities amongst different states have handled this situation by incorporating certain extensions, relaxations, and compliances which can be most appropriate for the developers to finish their ongoing projects. This article deals with ascertaining the benefits through the relaxations provided by the state governments which is helpful for all the developers and the impact to be created through the same on the real estate sector.


In the real estate sector, many articles have been published about the surge of the economy due to this sector. However, the impact of lockdown imposed by the government to reduce the effect of the pandemic within the country has brought in the relaxations on certain projects in the real estate sector. Among the new article which has been published, Dhaval Vussonji &Associates (May 2020), “India: Force Majeure and the Impact of Covid-19 on RERA Registered Projects” have showcased the impact of the relaxations given in 5 states and how the same is implemented in the various agreements and contracts of sale. RERA Consultants LLP (May 2020) “FORCE MAJEURE CLAUSE: RELEVANCE AND APPLICABILITY IN THE WAKE OF COVID – 19 AND SHUTDOWN – IMPACT ON REAL ESTATE SECTOR” provides certain brief information about the details of the lockdown in the wake of the spread of COVID 19 and the impact of the same on legalized aspects of relaxations.


This article determines to ease the process to analyze and understand the RERA circulars published by the governmental authority to reduce the effect of the lockdown in India due to the spread of COVID 19. The circulars included relaxations to help promoters and developers to complete their commercial, residential, retail, or hospitality projects within the new given timelines and the process to attain the relaxations on their projects.


  1. It is beneficial to businesses that are in the field of real estate.
  2. The relaxations help businesses curb their minor expenses.
  3. The relaxations provided help the ongoing and upcoming real estate projects further development.
  4. Applicability of the provisions can be done online over their respective websites.
  5. The number of losses borne can be recovered through inflation.
  6. Strategies for completion of projects can be made smoothly with the extension of the project completion deadline.
  7. Helps in boosting up the real estate sector.


  • The provisions are to a specific group of projects and customers which are not generalized to the public at large.
  • Delay on the return of investment invested in real estate projects.
  • Beneficiaries of the relaxations are restricted only to ongoing projects.
  • Applicability can be determined only if the force majeure clause is mentioned previously in the contract of development.
  • The extensions are applicable only to those projects where the extension applications are previously applied and considered by the law.
  • The investors who have invested their capital in buildings will have their capital blocked with being able to use them during emergencies.
  • The allottee(s), due to the extension will be able to receive the handover of the building at a delayed period of time.

The data presented in this article is based on secondary data. The references and analogies are taken from various RERA state government websites, research reports, and news articles by certain reputed organizations such as Business World, Economic Times (ET), New Indian Express, Moneycontrol, Taxguru, Mondaq, etc. These sources of information have guided to attain full knowledge of the facts and figures of all the changes in relaxations and extensions provided to construct the frame of research for this article.


The Force Majeure Clause is a clause that comes only to existence when there has been a non-performance in the duties of a contract due to any unforeseen circumstances. Due to the same, the performance of the contract is not possible to be completed by the parties to the contract. This happens due to the main reason that this clause is put into force in acts which are classified as an act of god which are natural disasters such as earthquake, storms, etc, or an act of people such as terrorism, wars, etc, or act of government such as lockdowns, transport restrictions, etc. Due to this clause, the real estate sector based authorities have put up certain relaxations and extensions which are helpful to people in completing various real estate projects within new set up deadlines. These relaxations are applicable to users based on certain criteria that need to be fulfilled by developers/promoters/customers. For example, people who have got an extension to complete the construction project by the next 6 months need the criteria fulfilled of whether their original deadline for completion of the project should fall after the lockdown had been initiated. Such criteria and relaxations have been put by various states via circulars from 13 May 2020.


The real estate sector has been impacted negatively on a large scale due to the national lockdown which has started from 11 March 2020 and shall continue to have an adverse impact due to the economic fall in almost all the sectors across the country. Since the entire country has been on a standstill for a period of more than 2 months, the employees working in the field of real estate have not been paid appropriately neither there was any income earned by the businesses to pay the same. This has resulted in the depletion of workers and employees in construction sites and developers’ initiatives. Currently, developers are trying to pool in cash into the economy but re-starting their businesses at a low cost with a minimal number of employees. This could continue being the same until the economy revives to its original existence. In comparison to the same, promoters and developers who have invested into existing projects or ongoing projects are stuck up as they are either yet to sell the properties or it is sold but the sale agreement amount is not settled with them as the project is yet to be completed and is delayed due to the lockdown. New projects on the verge of being into existence are planned and contracted yet cannot be allotted as due to this situation general public has to tend to change their investment plans which are more liquid in nature and cannot liquid the fixed investment on short notice. Due to the same, investors are not very intuitive and assertive to plan on investing in long term fixed assets but in fact, would like to remove the same from current investment to be on the safer side. Hence, a lot of developers who have put up contracts or have ongoing projects are facing huge difficulties in the completion of their contracts. Yet, the relaxations issued now have given real estate businesses little breathing space to gather and save capital and work on completion of developing projects so that the businesses could start profiting from their projects again.

Customers Perspective: The customers have got their share of relieves by the extensions provided by RERA as it gives an opening to them to arrange for funds to further invest in due time in the current projects and bring in less burden of liquidity of funds in regard to the current scenario of inflation and economic downfall. They can take in new loans once the economy stabilizes for new investments based on the new deadlines and registrations of projects on government websites. The number of investments done by customers shall be to secure future investment opportunities which can help customers to gain fixed investments in a longer scenario.

Promoters Perspective: The relaxations provided by the government authorities are implemental to those agents whereby the customers who are looking for further investments post economy stabilization as the same is highly apt to give the right deadlines of completion and provides a higher rate of investments in the Indian real estate sector. The promoters can now gain the opportunity to increase their new development by not only completing the ongoing projects with the new deadlines and bring in new allottees for the projects which can boost the economy within a short span of time. The investments which come in can also be treated as complete save investments are the same shall be accessed by banking institutions and regulatory authority being from domestic or international in nature.


Based on the facts and figures provided by governmental based websites and institutions showcase a positive outlook on the results of future investments in the real estate sector. These results can be found once the relaxations and extensions dispensed by the state governments are successfully carried throughout the entire Indian economy on the large. The RERA Authority has brought in the extensions of deadlines for completion of provisions of the current and upcoming real estate development to ensure that no money flow results in a loss to all the users of such an investment. The major effect of the spread of the deadly virus COVID 19 had resulted in force halt of projects across the country to end the chain of expansion of the virus within the country. This however has not only to help the human legacy to be continued but made sure to temporarily contain all human activities to efficiently work and bring in development to the economy and their users. To ensure that such an effect does not cause an irreplaceable problem within the economy, RERA has brought in the need of an hour to help our businesses and its customers in its own sector. Businessmen and Customers can now plan and execute their final investment opportunities on ongoing projects with a thought of emergency funding and can help in to make sure that their real estate investments are not going to be washed away. Promoters of various projects too are now willing to plan and execute their ongoing and upcoming projects to ensure there is no red seen in their financial statements. Further to be seen that any current contracts on the verge of completion with set deadlines yet not have provisions to apply the relaxations can seek legal advice and discuss the same with the customers to ensure that the projects are not underdone. However, to all future predictions, time is clarified whether the said provisions provided by the state governments are going to be a fruitful or a costly one to its implementers.


  1. India Brand Equity Foundation, April 2020; “INDIAN REAL ESTATE INDUSTRY REPORT
  2. Manisha Paranjape,  Snehali Karkera, Dhaval Vussonji & Associates, May 2020; “INDIA: FORCE MAJEURE AND THE IMPACT OF COVID-19 ON RERA REGISTERED PROJECTS”
  4. Dr Niranjan Hiranandani, National President for NAREDCO, May 2020; “FORCE MAJEURE’ UNDER RERA- A STEP TO COMBAT COVID DISRUPTION
  6. Real Estate Regulatory Authority, Karnataka, May 2020; “K-RERA/ Secy/ 04/ 2019-20 – CIRCULAR
  7. Real Estate Regulatory Authority, Kerala, May 2020; “K-RERA/ TS/ 102/ 2020 – ORDER
  8. Real Estate Regulatory Authority, Andhra Pradesh, May 2020; “OFFICE ORDER: A/E-1/2020
  9. Real Estate Regulatory Authority, Tamil Nadu, May 2020; “CIRCULAR
  10. Real Estate Regulatory Authority, Gujarat, May 2020; “EXTENSION OF REGISTRATION OF REAL ESTATE PROJECT DUE TO ‘FORCE MAJEURE

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