Under Section 3 of the Real Estate (Regulation and Development) Act, 2016 (RERA), a builder must register a real estate project with the state RERA authority before advertising, marketing, booking, selling, or accepting any payment for it, unless the project falls under a narrow exemption (land under 500 square metres or eight or fewer apartments). Registration requires the builder to declare a realistic possession date, sell strictly on a standardized carpet-area basis, and deposit 70% of buyer payments into a separate project-specific escrow account.
Why registration is mandatory before a single flat is sold
RERA's core innovation was requiring a builder to register a project with the state Real Estate Regulatory
Authority before doing anything to sell it -- no advertising, marketing, booking, or accepting an advance
payment is permitted for an unregistered project (subject to the narrow small-project exemption in Section 3).
Registration forces the builder to publicly disclose the project's layout, government approvals, the
promoter's track record, and a realistic completion timeline, all searchable on the state RERA authority's
website -- giving a buyer, including one evaluating a purchase from abroad, a way to verify basic project
legitimacy before paying anything.
Selling on carpet area, and the 70% escrow account rule
Before RERA, builders commonly quoted and sold on “super built-up area” -- a figure inflated by a share of
common areas, staircases, and lobbies -- making genuine price comparison difficult. RERA requires sale
consideration to be calculated on carpet area, a standardized, precisely defined measurement of the actual
usable floor space within the walls of the unit. Separately, Section 4 requires a promoter to deposit at least
70% of the amounts collected from buyers for a project into a dedicated escrow account, to be used only for
the construction and land cost of that specific project -- a direct response to the pre-RERA practice of
builders diverting buyer payments from one project to fund a different one, which was a major cause of stalled
projects.
What happens if a builder sells without registering, or misrepresents the project
Selling, advertising, or accepting payment for an unregistered project attracts a penalty of up to 10% of
the project's estimated cost, and continued non-compliance can extend to imprisonment. A promoter who makes a
false or misleading advertisement or prospectus statement can be required to return the buyer's full amount
with interest, in addition to whatever other RERA remedy the buyer separately pursues under Section 18.
Common mistakes buyers make at the registration-checking stage:
- Booking a unit and paying a token amount before confirming the project is actually registered on the
state RERA authority's website.
- Not checking the RERA-registered possession date against the date verbally promised by the sales
team -- only the RERA-declared date carries statutory weight.
- Assuming a small, exempted project carries the same protections as a registered one -- it generally
does not.
How can I check if a real estate project in India is RERA-registered?
Every state's RERA authority maintains a public online registry searchable by project name, promoter, or
registration number -- confirm registration and the declared possession date there before making any
payment, regardless of what a sales brochure or agent claims.
Does RERA apply to resale (secondary market) property purchases?
Generally no -- RERA's registration and escrow requirements are aimed at promoters selling new/
under-construction projects; a purchase of an already-completed resale unit from a private seller is governed
by ordinary property and contract law rather than RERA's promoter obligations.
What is the difference between carpet area, built-up area, and super built-up area?
Carpet area is the actual usable floor space within a unit's walls; built-up area adds the thickness of the
unit's own walls and balconies; super built-up area further adds a proportionate share of common areas like
lobbies and staircases. RERA requires builders to quote and sell based on carpet area specifically, to prevent
inflated area-based pricing.
