RERA in India: Homebuyer Rights and Builder Obligations
Before the Real Estate (Regulation and Development) Act, 2016 came into force, homebuyers in India had limited recourse against delayed possession, diverted funds, or construction that didn't match what was promised at booking. RERA changed this by creating a statutory framework that regulates how projects are registered, marketed, and executed — giving buyers enforceable rights rather than terms dictated entirely by the builder's sale agreement.
What is RERA
RERA applies to real estate projects above a specified size — generally those exceeding 500 square metres or eight units — requiring builders to register the project with the state's Real Estate Regulatory Authority before advertising, marketing, booking, selling, or accepting any payment for units within it. Projects below this threshold, along with certain other categories, may fall outside mandatory registration, which is worth confirming before assuming RERA protections automatically apply to a given purchase.
Mandatory Project Registration
A builder cannot legally market or accept bookings for a covered project without RERA registration, and registration itself requires disclosing the project layout, sanctioned plans, land title status, and a firm timeline for completion. This information becomes publicly accessible on the relevant state RERA portal, giving buyers a way to verify a project's legitimacy and status independently of whatever the builder's sales team represents.
The 70% Escrow Requirement
One of RERA's more significant structural changes requires builders to deposit at least 70% of the funds collected from buyers into a separate escrow account, to be used only for construction and land costs of that specific project. This directly addresses the historical practice of builders diverting funds from one project to another, which was a major contributor to stalled developments before RERA came into effect.
Right to Timely Possession
RERA obligates builders to hand over possession by the date declared at registration, and where possession is delayed, buyers are entitled to a refund with interest or, if they choose to remain invested in the project, to interest for every month of delay until possession is actually handed over. This shifts the financial consequence of delay from the buyer, who previously carried it alone, onto the builder.
Right to Accurate Project Information
Buyers are entitled to rely on the sanctioned plans, project specifications, and amenities as declared at the time of registration, and a builder cannot make structural alterations to a unit or common areas without the consent of at least two-thirds of the affected buyers. This closes a gap that previously let builders modify plans mid-construction with limited buyer input.
Right to Carpet Area–Based Pricing
RERA mandates that sale consideration be calculated based on carpet area — the actual usable floor space within a unit — rather than the more inflated super built-up area that was commonly used to price units before the Act. This gives buyers a clearer, more comparable basis for evaluating price across different projects.
Right to Compensation for Structural Defects
Where a structural defect surfaces within five years of possession, the builder is required to rectify it without additional charge, and where the builder fails to do so within a reasonable time, the buyer is entitled to compensation. This extends builder accountability well beyond the point of handover, rather than treating possession as the end of the builder's responsibility.
Grievance Redressal Under RERA
|
Forum |
Role |
|---|---|
|
State RERA Authority |
Registers projects, handles buyer complaints, and can impose penalties on non-compliant builders |
|
RERA Appellate Tribunal |
Hears appeals against orders passed by the State Authority |
|
Adjudicating Officer |
Determines compensation claims specifically |
Complaints can generally be filed directly on the relevant state RERA portal, and the process is designed to be faster and less procedurally heavy than pursuing a civil suit for the same grievance — a meaningful advantage for individual buyers who would otherwise face a builder with considerably greater resources in ordinary litigation.
Penalties for Non-Compliant Builders
Builders who fail to register a covered project, or who violate RERA's provisions after registration, face penalties that can include a percentage of project cost, along with the possibility of imprisonment in cases involving repeated or serious non-compliance. Registration can also be revoked for continued violation, which affects the builder's ability to market or sell remaining units in the project.
What RERA Does Not Cover
RERA does not regulate resale transactions between individual buyers, nor does it typically cover projects that received all approvals before the Act came into force in a given state, unless the builder has voluntarily registered them. Buyers purchasing resale property, or units in an older project, need to rely on standard title and contractual due diligence rather than assuming RERA protections extend automatically.
Practical Steps for Homebuyers
Checking a project's RERA registration number and verifying it directly on the state RERA portal before booking confirms the project is legitimately covered. Reviewing the registered project timeline against what the builder's sales team represents catches discrepancies early, and retaining all payment receipts and correspondence with the builder builds the documentation a RERA complaint would eventually rely on if a dispute arises.
Frequently Asked Questions
Does RERA apply to every residential project in India? No, it generally applies to projects above 500 square metres or eight units; smaller projects may fall outside mandatory registration.
What happens if a builder delays possession beyond the RERA-registered date? Buyers are entitled to a refund with interest, or to receive monthly interest on their investment until possession is actually delivered, at the buyer's choice.
Can a builder change the sanctioned plan after buyers have booked units? Not without the consent of at least two-thirds of the affected buyers for any structural alteration.
Is filing a RERA complaint faster than a regular civil suit? Generally yes — RERA's grievance mechanism is designed to be quicker and less procedurally demanding than pursuing the same dispute through ordinary civil litigation.
This content is for general informational purposes and does not constitute legal advice. For a RERA-related matter specific to your property purchase, consult a qualified real estate lawyer.
