What RERA protects, and what it does not

2.1.1 What is RERA?

RERA is the short name for the Real Estate (Regulation and Development) Act, 2016, which Parliament passed as Act No. 16 of 2016. People also say RERA when they mean the state authority that the Act sets up. In Karnataka, that authority is the Karnataka Real Estate Regulatory Authority (K-RERA), and its portal is rera.karnataka.gov.in. The Act came into force in parts. A notification dated 26 April 2016 started most sections from 1 May 2016. It kept back Sections 3 to 19, the registration and buyer-rights sections, and some others, such as Section 59, for a later date. The Act does three main things for a flat buyer. First, it makes most new projects register before the builder can advertise or sell. Second, it makes the builder disclose plans, dates, land papers and a project bank account at registration. Third, it gives the buyer rights, such as refund or delay interest, and a complaint route to the Authority. Karnataka adds detail through the Karnataka Real Estate (Regulation and Development) Rules, 2017.

Term	What it means
The Act	Real Estate (Regulation and Development) Act, 2016
K-RERA	Karnataka Real Estate Regulatory Authority, the state authority
Karnataka Rules	Karnataka Real Estate (Regulation and Development) Rules, 2017
Promoter	The Act’s word for the builder or developer
Allottee	The Act’s word for the buyer of a flat or plot

2.1.2 Which projects must register under RERA?

Section 3(1) of the Act covers projects in a planning area. There, no promoter can advertise, market, book, sell or offer for sale any plot, apartment or building before it registers the project with the Authority. If a project is outside a planning area but has local authority permission, the Authority can order the promoter to register. Section 3(2) gives three exemptions. The first exemption is a project with land of 500 square metres or less, or 8 apartments or fewer, inclusive of all phases. The second exemption is a project that got its completion certificate before the Act started. The third exemption is renovation, repair or re-development that involves no marketing, advertising, selling or new allotment. The Act lets the state government lower the 500 square metre and 8 apartment threshold. Sachi did not check whether Karnataka has done so. Under the Explanation to Section 3, each phase of a project is a separate project and needs its own registration.

So a brochure for “Phase 2” must show the registration number of Phase 2, not of Phase 1. Check that the number matches the tower and phase that you want to buy.

Section 59(1) sets a penalty for a promoter that does not register a project that must register. The penalty can reach 10 percent of the estimated project cost. If the promoter continues to break Section 3, Section 59(2) applies. The punishment is imprisonment of up to 3 years, a further fine of up to 10 percent of the estimated cost, or both.

2.1.3 What must a builder disclose under RERA?

Section 4(2) of the Act lists the documents that a promoter must file with the registration application. K-RERA shows many of them on the public project page. They include details of the promoter and of projects it launched in the past five years, with any delay and pending cases. They also include the approvals and commencement certificate, the sanctioned plan and layout plan, and the location with boundaries. The promoter must also file a proforma of the allotment letter, agreement for sale and conveyance deed. The filing must show the number, type and carpet area of the apartments. Section 2(k) defines carpet area as the net usable floor area of an apartment. It excludes the external walls, service shafts, exclusive balcony or verandah area and exclusive open terrace area. It includes the internal partition walls. Under Section 4(2)(l), the promoter also signs an affidavit about title, encumbrances, the completion date and the project bank account.

The 70 percent rule comes from Section 4(2)(l)(D). The promoter must deposit 70 percent of the amounts collected from allottees into a separate account in a scheduled bank. The money can cover only the land cost and the construction cost of that project. Withdrawals must be in proportion to the percentage of completion, and an engineer, an architect and a chartered accountant must certify each withdrawal.

Section 11(2) says that every advertisement or prospectus must show the website address of the Authority and the registration number of the project. Chapter 2.2 shows how to read the K-RERA project page tab by tab.

2.1.4 What rights does RERA give a flat buyer?

RERA gives the buyer a set of rights in the Act itself. Section 14(2) applies notwithstanding any contract or agreement, so the agreement for sale cannot override it. The table below lists the main ones with the section that creates each right. Section 13(1) limits the advance. The promoter cannot take more than 10 percent of the cost of the apartment as an advance or application fee. This limit applies until a written agreement for sale is signed and registered. Section 14(2) protects the plan. After the promoter shows you the sanctioned plans and specifications, it cannot change your own flat without your previous consent, except minor changes. It cannot change the building or the common areas without the previous written consent of at least two-thirds of the allottees. Section 18 deals with late possession. If the promoter does not give possession by the date in the agreement, you can withdraw and get your money back with interest and compensation. Or you can stay and get interest for every month of delay until possession.

Right	Section	What it gives you
Cap on advance	13(1)	10 percent maximum before a registered agreement for sale
No plan change for your flat	14(2)(i)	Your previous consent; minor changes need an architect or engineer check and notice to you
No plan change for building or common areas	14(2)(ii)	Previous written consent of two-thirds of allottees
Defect repair	14(3)	Free repair within 30 days for defects reported within 5 years of possession
Late possession	18(1)	Refund with interest and compensation, or monthly interest until possession
Defective title	18(2)	Compensation for loss from defective title of the land
Information	19(1), 19(2)	Sanctioned plans, specifications and a stage-wise completion schedule

Rule 16 of the Karnataka Rules sets the interest rate for both sides. It is the State Bank of India highest marginal cost of lending rate plus two percent. The same rate applies when the promoter pays you for delay, and when you pay the promoter late. Sachi checked the 2017 text of Rule 16, not later amendments.

The rights also come with duties. Section 19(6) makes the allottee pay the amounts due in the manner and at the time that the agreement for sale states. Under Section 19(7), late payment by the buyer carries interest at the prescribed rate, which is the same Rule 16 rate. Section 19(10) says the allottee must take possession within two months of the occupancy certificate.

2.1.5 What does RERA not protect?

RERA makes the builder file and disclose, but K-RERA does not do your due diligence for you. The title declaration under Section 4(2)(l)(A) and (B) is the promoter’s own affidavit. K-RERA registration is not a legal opinion that the title is clear or that the land has no encumbrance. RERA does not set the price of a flat, and it does not inspect construction quality before you buy. RERA also does not fix the completion date for good. Section 6 lets the Authority extend registration for force majeure, which the Act defines as war, flood, drought, fire, cyclone, earthquake or another natural calamity. It also lets the Authority extend registration in reasonable circumstances without default by the promoter, for reasons in writing. That extension must not exceed one year in aggregate. Chapter 2.2 shows where K-RERA lists the extensions of a project. Finally, exempt projects under Section 3(2) have no RERA page, so the buyer gets none of the registration disclosures.

Question	Does RERA answer it?	What to do instead
Is the land title clear?	No, it holds the promoter’s affidavit only	A lawyer checks title deeds and the encumbrance certificate
Is the khata correct?	No	Check the khata with the local body (chapter 2.3)
Is the price fair?	No	Compare recent sale prices for the area
Will the flat be on time?	Shows the declared date and extensions	Read the extension orders and visit the site
Is the construction good?	No inspection before sale	Inspect the site; use the 5-year defect right after possession

A delay right under Section 18 helps only after the delay happens. It does not stop the delay. So use RERA data to choose the project before you pay, not only to complain later.

2.1.6 How do I file a RERA complaint in Karnataka?

Section 31 of the Act lets any aggrieved person file a complaint with the Authority or with the adjudicating officer. The complaint must be about a violation of the Act, the rules or the regulations. An association of allottees or a registered voluntary consumer association also counts as a person for this section. The two forums do different jobs. Under Section 71, the adjudicating officer decides compensation claims under Sections 12, 14, 18 and 19. The Authority decides the other violations. The Karnataka Rules give a separate form for each. Rule 29 says that a complaint to the Authority uses Form N. Rule 30 says that a compensation complaint to the adjudicating officer uses Form O. Each rule sets a fee of one thousand rupees, paid by demand draft. Sachi checked the 2017 text of the Rules, not later amendments. Check the current form, fee and filing method on rera.karnataka.gov.in before you file. Keep your agreement, receipts, demand letters and emails ready.

1. Collect the agreement for sale, payment receipts, demand letters and the builder’s emails.
2. Decide the forum. Use the adjudicating officer for compensation; use the Authority for other violations.
3. Check the current form, fee and filing method on rera.karnataka.gov.in.
4. File the complaint and keep the acknowledgement or receipt.

If you disagree with an order, Section 44 lets you appeal to the Real Estate Appellate Tribunal within sixty days of receiving the order. The Tribunal can accept a late appeal if you show sufficient cause.

Sachi reads K-RERA filings for Bangalore projects every quarter. If you want the registration, extension and complaint history of one project in one place, Ask Sachi.