A token amount feels small. It is also the moment you start to lose leverage. Before you pay one for a new or under-construction home in India, run these five checks. Each one comes straight from the text of the Real Estate (Regulation and Development) Act, 2016. State rules and portals differ, so for anything state-specific we say to be verified.
1. Is the project registered, and does the advert say so?
Section 3(1) says a promoter cannot advertise, market, book, sell or offer for sale an apartment, plot or building in a real estate project without registering it with the state's Real Estate Regulatory Authority. Section 11(2) requires the promoter's advertisement or prospectus to mention the Authority's website address prominently and to include the registration number.
Do this: ask for the registration number, then look the project up yourself on the state authority's website and compare the name, promoter, address and completion date. Do not rely on a screenshot.
Know the exceptions. Section 3(2) exempts, for example, a project where the land is not more than 500 square metres or the number of apartments is not more than eight, and a project that had a completion certificate before the Act commenced. The appropriate government can lower those thresholds, so check the current state rule (to be verified).
2. Is the price based on carpet area?
Section 2(k) defines carpet area as the net usable floor area of an apartment. It excludes the area covered by external walls, services shafts, the exclusive balcony or verandah area and the exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. Section 4(2)(h) requires the registration to list the number, type and carpet area of the apartments for sale.
Do this: ask for the price per square foot of carpet area, and compare it with the carpet area written in the registered documents. A brochure's "saleable" or "super" area is not the measure the Act uses.
3. Is the money protected?
Under section 4(2)(l)(D), seventy per cent of the amounts realised from the allottees must be deposited in a separate account in a scheduled bank to cover the cost of construction and the land cost, and used only for that purpose. The promoter withdraws in proportion to the percentage of completion, certified by an engineer, an architect and a chartered accountant.
Do this: ask which bank holds the project's designated account and whether the project's periodic progress is updated on the authority's website (to be verified for your state).
4. Is there a registered agreement before you pay a large advance?
Section 13(1): a promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance payment or application fee without first entering into a written agreement for sale and registering it.
Do this: read the draft agreement before you pay beyond the token. Check the payment schedule, the possession date, the specifications and the carpet area.
5. What happens if something goes wrong?
Two sections matter. Under section 18, if the promoter fails to give possession by the date in the agreement, an allottee who wants to withdraw is entitled to a return of the amount with interest and compensation, and an allottee who stays is paid interest for every month of delay. Under section 14(3), if a structural or workmanship defect is brought to the promoter's notice within five years of handing over possession, the promoter must rectify it without further charge within thirty days.
Do this: make sure the agreement does not quietly waive these rights, and ask your lawyer to read the clauses on delay and defects.
What this is not
This post is general information, not legal advice. The Act sets the framework. State rules, forms and portals vary, and a lawyer who knows your state should read your documents. A free printable version of this checklist is in our RERA 5-Check tool and the 5 RERA checks guide.
