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8 RERA Rules Real Estate Investors Should Know

8 RERA Rules Real Estate Investors Should Know

RERA that is the abbreviation for Real Estate (Regulation and Development) Act, aims at protecting the home buyers and boosting the real estate investments. The Act was effective on and from 1 May 2016. Check the 8 Rera rules below.

Rules Investors should know laid by RERA:


  1. Registering Project

All the commercial and residential real estate projects where the area of land is over 500 square meters or equal to 8 Apartments must register with the RERA norms for launching a project. It can provide greater transparency in terms of execution and project marketing. Besides, the developers and builders are required to publish details including layouts, sanctioned plans, location of the project, carpet area, area of the garage, to name a few.

  1. Quarterly updates related to the progress of the construction process

It has now become mandatory for the builders and developers to upload the details of the project including the number and types of units that are sold out. Besides, it must be government approved or registered under the list of approval pending list and completion schedule. All these factors must be met up every 3 months. If there are cases of litigation going on related to the property, developers and builders must show the documents of the proceedings In this way you can check online the progress of the project.

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  1. Escrow Account

According to RERA, norms it has now become mandatory for the developer to transfer 70% of the money received to the escrow account. This condition ensures that the builder does not have to spend additional money on other projects since they are withdrawing the money directly from the account. This happens only after getting approved by the engineers and chartered accountants. This is done in order to ensure that the money will be used only for the project purpose.

  1. Standardization of the Sale agreement

Earlier, the sale agreement used to be in a format that the home buyers would be penalized on default. But, at the same time, the promoters wouldn’t have been attracted to any sort of penalty. But, according to the all-new RERA norms, there is a standard model for the sale agreement ensuring that the promoters and homebuyers can stay protected against penalties. The services agreement specifies particular details including the construction of buildings and Apartments along with their specifications, internal development, external works, etc.


  1. Paying a maximum 10% of the cost as advance payment

The recent decisions taken by RERA is the promoter cannot accept a sum accounting more than 10% of the entire cost of the project or the plot in the form of an advance payment. Moreover, for that, there should be a written agreement with the person who is paying the amount.

  1. Defect liability period of five years

According to RERA Rules, in case of the structural defects or poor quality of the construction activities, it will be totally the responsibility of the developer for rectifying the defects. The defects must be corrected for a period of 5 years. So, in case of the defects found in the quality of the construction of property the developer or the Builder will be liable for the issues and has to compensate for the same.

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  1. Rules pertaining to Carpet Area

The property area is calculated by taking different parameters like carpet area, super built-up area, and built-up area. When it comes to buying a property, it leads to a lot of disconnection between the purpose of the payment of the home buyer and the purpose the money is being used for.

So, it has become mandatory according to RERA for developers to disclose the size of the apartment completely based on the carpet area. Besides, it should also include usable spaces like toilets and a kitchen.

  1. Representation of the titles

It has become mandatory for the promoters to disclose the clear title over the project or the property. In case of any defect regarding the title of the property, the buyer can ask for compensation and there is no limit to the amount.

Moreover, the developers cannot provide any kind of false information to the buyers. In case of advance payment via prospectus or advertisement, the buyer can completely ask for a refund of the money.

There are some other rules that developers must follow before starting with the business deals.

Final word

RERA had vanquished the concept of pre-launches, which has resulted in significant liquidity constraints especially on behalf of the community of developers.

With the introduction of the RERA Act, the penalty clause over delayed projects had a great impact on the sentiment of buyers for both ongoing and new projects. Moreover, the retail investors, who are the major takers of under-construction projects will now have access to comprehensive information about the developer, as well as can track record along with financial stability. For the office space occupiers, RERA Rules will provide clarity in terms of building layout plans, available services as well as statutory approvals.

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