RERA Explained: What It Protects and What It Does Not

It does not control prices. It does not cover projects completed before the Act. And there is no single national regulator, so the details differ by state.

Which projects must register under RERA?

Section 3 sets the rule and the exceptions. A builder need not register in two cases. First, where the land is 500 square metres or less. Second, where there are eight flats or fewer, counting all phases.

Read that carefully. The two tests are joined by “or”. A state may also lower either one. So 500 square metres is a national ceiling. It is not a promise of exemption in your state.

Two more projects are outside the Act:

• A project that got its completion certificate before the Act began.
• Pure renovation, repair or redevelopment, with no marketing, advertising, selling or new allotment.

Ongoing projects are in. Builders without a completion certificate had three months to register. Plots are in too. The Act’s own definition of a project covers turning land into plots.

Each phase counts as a project on its own. Each must be registered on its own.

What are your rights under RERA?

How does the 70% escrow rule work?

Section 4(2)(l)(D) is the key clause. The builder must put 70% of what buyers pay into a separate account at a scheduled bank. That money may cover only two things: the cost of building, and the cost of the land.

Withdrawals are not free. They must match the share of the work done. Three people must certify them: an engineer, an architect and a chartered accountant in practice. The accounts must be audited within six months of each year end.

This clause targets the oldest trick in Indian real estate. Money paid on one project used to buy land for the next one.

What exactly is carpet area under RERA?

Section 2(k) defines it as the net usable floor area of an apartment. It excludes the area under external walls, service shafts, an exclusive balcony or verandah, and an exclusive open terrace. It includes the area covered by internal partition walls.

That single definition ended the super built-up area game for registered projects. Compare offers on carpet area and only on carpet area. A price per square foot on any other basis is not comparable.

What can you claim if possession is delayed?

Section 18 gives you a choice, on demand. If you want out, the promoter must return the amount you paid with interest, plus compensation. If you want to stay, the promoter must pay you interest for every month of delay until possession is handed over.

The Act does not fix that interest rate. It says “at such rate as may be prescribed”, and the prescription is in state rules. So the same delay pays differently in different states. Check your state authority’s rules before estimating anything.

Section 12 covers a different harm. If you relied on a false statement in an advertisement, prospectus or model apartment, you can claim compensation. If you withdraw, you get your entire investment back with interest.

Claims for defective title under Section 18(2) are not barred by limitation.

What RERA does not do

It does not regulate price. We read the Act in full and found no power for any authority to fix, cap or approve a sale price. RERA governs disclosure, registration, escrow and timelines. It leaves the price to the market.

It is not a central regulator either. Section 20(1) requires each appropriate government to establish its own Real Estate Regulatory Authority. States may share one, or set up more than one. That is why registration thresholds, delay interest rates and procedures vary.

And it does not reach backwards. A project with a completion certificate before the Act commenced is outside it. If you are buying a resale flat in an old building, RERA is not your remedy.

Nor does it price your loan. Compare lenders separately on home loans, check your eligibility, and look at housing schemes if you qualify.