Section 4 & 5 RERA: Agent Responsibilities & Prohibited Conduct Explained

Real Estate Regulatory Authority (RERA) legislation forms the backbone of professional accountability in India's real estate sector. Sections 4 and 5 of the RERA Act, 2016, are particularly critical for agents because they define what you must do and—equally important—what you absolutely cannot do. Understanding these sections isn't just about compliance; it's about protecting your registration, your reputation, and your earning potential.

Whether you're preparing for the MahaRERA exam or you're already certified, these two sections will shape nearly every transaction you handle. Let's break them down into actionable knowledge.

What Section 4 of RERA Actually Requires of You

Section 4 of the RERA Act establishes the foundational responsibilities that real estate agents must fulfill. This section is your operational mandate—it tells you what professional conduct looks like in practice.

Primary Responsibilities Under Section 4

As a registered real estate agent, Section 4 requires you to:

• Act honestly and with integrity in all your dealings with buyers, sellers, and other stakeholders. This is not aspirational language—it's a legal requirement. Any deviation exposes you to disciplinary action.
• Disclose all material facts relevant to the property or transaction. Material facts include encumbrances, litigation, structural defects, municipal violations, and any other information that would reasonably influence a buyer's or seller's decision.
• Maintain professional competence by keeping yourself updated on RERA regulations, local laws, and market standards. This justifies your fee and protects clients.
• Avoid conflicts of interest or disclose them transparently. If you represent both buyer and seller, or if you have a financial interest beyond your agreed commission, disclosure is mandatory.
• Safeguard client information and confidentiality unless legally required to disclose it. Client data is not your asset to share.
• Cooperate with regulatory authorities including MahaRERA, during investigations or inquiries. Obstruction or non-cooperation is itself a violation.

The Disclosure Obligation in Detail

Disclosure under Section 4 deserves special attention because it's where many agents slip up. You must inform your client of:

• Title defects or encumbrances affecting the property
• Pending litigation or disputes involving the property
• Any mortgage, lien, or charge on the property
• Building code violations or structural issues
• Environmental hazards or pollution-related concerns
• History of natural disasters affecting the location
• Any representations made by the developer or previous owners
• Your commission structure and all charges involved

The law doesn't allow you to claim ignorance. If you should have known about an issue, you're liable. This means due diligence before signing any agreement is non-negotiable.

Understanding Section 5: Prohibited Conduct

Section 5 is the enforcement mechanism. It lists specific actions that will result in disciplinary proceedings and potential cancellation of your registration. These aren't gray areas—they are absolute prohibitions.

Specific Prohibitions Under Section 5

Section 5 explicitly forbids real estate agents from:

• Making false or misleading statements or representations about any property, its location, amenities, title, value, or prospects. This includes exaggeration. If the property is 500 meters from the railway station, saying it's 200 meters is a violation.
• Inducing or attempting to induce any person to enter into an agreement through deception, fraud, or misrepresentation.
• Undertaking work without proper registration as a real estate agent. You cannot act as an agent without being on the MahaRERA registry.
• Advertising without proper disclosures. Any advertisement for a property must include the RERA registration number of the project (if applicable), estimated possession date, carpet area, and other approved specifications.
• Engaging in unfair trade practices such as creating artificial scarcity, pressure tactics, false urgency, or bait-and-switch strategies.
• Accepting payment outside escrow accounts when handling client funds. You cannot hold buyer money in your personal account.
• Violating confidentiality or misusing client information for personal benefit or competitive advantage.
• Refusing cooperation with MahaRERA or providing false information during inquiry or investigation.
• Making unsupported claims about future appreciation, rental returns, or profitability of real estate. You cannot promise investment outcomes.
• Engaging in dual representation without disclosure. Representing both buyer and seller requires explicit written consent from both parties.

The Advertising Trap

Many agents violate Section 5 without realizing it through improper advertising. Common mistakes include:

• Posting property photos without accurate dimensions or current conditions
• Claiming amenities that don't exist or are still under construction
• Omitting crucial information like carpet area, built-up area, or super built-up area differences
• Using phrases like "guaranteed returns," "sure appreciation," or "investor favorite" without substantiation
• Not displaying the project's RERA registration number prominently in ads
• Using misleading location maps or manipulated distance representations

Practical Implications for Your Daily Work

Understanding these sections theoretically is one thing; applying them in real transactions is another. Here's how they translate to everyday practice:

When Listing a Property

Before you list any property, you must personally verify the claims being made. Walk through the property. Check the registered deed. If the seller claims the property is registered under PMAY or has specific certifications, verify them. Document everything you find and disclose all findings to potential buyers. Your signature on the listing is your certification that the information is accurate.

When Showing a Property to Buyers

Be scrupulously honest about property conditions and neighborhood facts. If a property has poor natural light, acknowledge it. If the neighborhood has noise from a nearby highway, disclose it. Your credibility—once lost—is impossible to recover. Buyers who discover undisclosed issues will file complaints with MahaRERA, and you'll face penalties, registration suspension, or cancellation.

When Drafting Agreements

Ensure all material facts are documented in writing. If you've disclosed something verbally, it's legally worthless. Get it in the agreement or in a separate disclosure document signed by both parties. This protects you when disputes arise later.

When Handling Money

Never accept earnest money deposits, advance payments, or any client funds in your personal bank account. Use the designated escrow account as per RERA regulations. Maintain transparent records of all transactions. If funds go missing or are misappropriated, you're personally liable—and your registration is cancelled.

Consequences of Violating Sections 4 & 5

The regulatory authority doesn't view these violations lightly. Penalties escalate based on the severity and frequency of the breach:

• First violation: Written warning and fine up to ₹5 lakhs
• Second violation within five years: Fine up to ₹10 lakhs and possible suspension
• Third violation: Cancellation of registration; you're barred from practicing

Beyond financial penalties, violations damage your professional reputation. Cancellation means you lose your livelihood. Your name gets published in public registries as a violator. Future clients will find this information. Even if you reapply years later, your history follows you.

How to Ensure Compliance

Compliance isn't a burden if you approach it systematically. Build these practices into your workflow:

1. Create a disclosure checklist for every property. Use it consistently so nothing gets overlooked.
2. Document everything in writing. Verbal conversations aren't evidence. Written records are your shield.
3. Get client consent in writing. For any dual representation, conflict of interest, or unusual arrangement, obtain signed consent.
4. Verify all claims independently. Don't take sellers' words at face value. Check records yourself.
5. Stay updated on MahaRERA guidelines. The authority regularly updates rules. Subscribe to official notifications.
6. Train your team on these sections. If you manage other agents, ensure they understand Sections 4 and 5. You're liable for their violations too.
7. Maintain a file for each transaction. Keep all communications, disclosures, agreements, and verification documents for at least five years.

Key Takeaway

Sections 4 and 5 of RERA define the line between professional practice and regulatory violation. Section 4 is your operational roadmap—it tells you what ethical, competent agents do. Section 5 is the guardrail—it tells you what you cannot do under any circumstance. Neither section is ambiguous. Both are enforceable. Your success as a registered real estate agent depends on internalizing these requirements and making them the foundation of every transaction.