RERA Rules for Apartment What Buyer Must Know

1. Meaning and Legal Purpose of RERA

The Real Estate Regulatory Authority (RERA) was established under the Real Estate (Regulation and Development) Act, 2016 to regulate the real estate sector in India.
Before RERA, apartment buyers faced:

• Delayed possession
• Misleading advertisements
• Arbitrary changes in layout
• Diversion of funds
• Weak legal remedies

RERA legally binds builders, agents, and promoters and gives apartment buyers statutory rights, enforceable through a dedicated authority.

2. Which Apartment Projects Must Follow RERA

An apartment project must be registered under RERA if:

• Total land area is more than 500 sq. meters, OR
• The total number of apartments is more than 8, including all phases

Projects Exempt from RERA:

• Projects with completion certificate before RERA enforcement
• Small projects below the above limits

Selling apartments in a non-registered project (when registration is mandatory) is illegal.

3. RERA Registration: What Builders Must Disclose

At the time of registration, builders must submit verified and legally approved information, including:
Project Details:

• Approved layout plans
• Floor plans and carpet area of each apartment
• Number of buildings and floors
• Amenities and common areas

Legal & Financial Details:

• Ownership title of land
• Details of encumbrances (loans, litigation)
• Government approvals
• Project bank account details

Timeline:

• Phase-wise construction schedule
• Date of possession

Once uploaded, this information cannot be altered freely, protecting buyers from false promises.

4. Carpet Area Rule: Why It Is Critical for Buyers

RERA mandates that apartments can only be sold on carpet area.
Carpet Area Means:

• Net usable floor area inside the apartment
• Excludes:

1. External walls
2. Balconies
3. Terraces
4. Lift lobbies
5. Staircases
6. Clubhouses

Why This Rule Protects Buyers:

• Prevents inflated prices
• Ensures buyers pay only for usable space
• Makes price comparison fair across projects

If the actual carpet area is less than promised, buyers are entitled to a refund with interest.

5. Advance Payment & Agreement for Sale

10% Advance Rule:

• Builders cannot collect more than 10% of the apartment cost without a registered agreement

Agreement for Sale Must Include:

• Total cost of apartment
• Carpet area
• Payment schedule
• Possession date
• Interest rate for delay (builder & buyer)
• Defect liability clause
• Cancellation conditions

This agreement is legally enforceable under RERA and overrides unfair builder-drafted terms.

6. Escrow Account Rule (70% Fund Protection)

Builders must deposit 70% of buyer collections into a separate bank account.
Purpose:

• Prevent misuse of funds
• Ensure buyer money is used only for that project

Withdrawal Conditions:

• Linked to construction progress
• Certified by:

1. Engineer
2. Architect
3. Chartered Accountant

This is one of the strongest financial protections under RERA.

7. Possession & Delay Compensation Rules

Builders must hand over possession strictly by the declared date.
If the Builder Delays:
Buyers can choose:

• Continue with the project

1. Claim monthly interest for delay

• Withdraw from the project

1. Get full refund
2. Refund must include interest and compensation

The interest rate is usually linked to the State Bank of India lending rate + margin, as notified by the state RERA.

8. Restrictions on Changes in Apartment Plans

Builders cannot unilaterally change:

• Apartment size
• Layout
• Floor plan
• Specifications
• Amenities

Major Changes:

• Require written consent of two-thirds of allottees

Minor Changes:

• Allowed only if technically necessary
• Must be disclosed to buyers

This prevents post-booking surprises.

9. Five-Year Defect Liability Period

For 5 years from possession, the builder is responsible for:

• Structural defects
• Poor workmanship
• Faulty construction
• Plumbing, electrical, or waterproofing issues

Builder’s Obligation:

• Fix defects within 30 days
• No cost to buyer
• Failure leads to compensation

This applies even after the sale deed is executed.

10. Rights of Apartment Buyers Under RERA

Apartment buyers have the right to:

• Access all project information
• Know construction progress
• Receive possession on time
• Claim compensation for delays
• Obtain refund with interest
• Inspect approvals and certificates
• File complaints without civil courts

These rights cannot be waived by agreement clauses.

11. Duties of Apartment Buyers

Buyers must:

• Pay installments on time
• Pay interest for delayed payments
• Take possession after occupancy certificate
• Register sale agreement
• Participate in association of allottees
• Follow terms of agreement

RERA balances buyer rights with responsibilities.

12. RERA Rules for Real Estate Agents

Agents must:

• Register with RERA
• Sell only RERA-registered projects
• Provide correct information
• Maintain transaction records

Agents can be fined or banned for misrepresentation.

13. Complaint & Dispute Resolution Process

• Complaints can be filed online
• No need for civil court
• Faster resolution
• Orders are legally binding
• Appeals lie before RERA Appellate Tribunal

Conclusion 

RERA transforms apartment buying by:

• Making builders legally accountable
• Protecting buyer money
• Ensuring fair pricing
• Guaranteeing possession timelines
• Providing strong legal remedies

FAQs

Can RERA override builder-buyer agreements?
Yes. RERA provisions override unfair contract clauses.

Is RERA applicable after possession?
Yes. Especially for defects, delay compensation, and refunds.

Can builders charge for common areas?
Charges must be disclosed but apartment pricing is based only on carpet area.

What if the builder becomes insolvent?
Buyer funds in escrow accounts remain protected.

Is RERA applicable to luxury apartments?
Yes. There is no exemption based on price or category.