RERA Rules- Real Insights by RealDocs : Part 1

The Real Estate (Regulation and Development) Act, 2016 (the “Act”) commonly known as RERA is a consumer centric law framed to protect the rights of property buyers in India. In our previous blog, 10 things you should know about the new Real Estate Act [2016], we have covered some details on RERA. One thing peculiar about this Act is, it did not come into full force across the country overnight but provided provision for States to come up with their own set of Rules and establish Regulatory Authorities within a time frame of six months. The remaining sections were notified during this year and 21 states and union territories have already notified RERA Rules and are in the process of implementing them.

The State RERA Rules need to be framed in the same spirit as the Act, keeping intact the intent and objective of the Act to bring in transparency in the Indian Real Estate Sector and safeguard the interest of buyers.

We are studying RERA Rules framed by various States in India and will be covering them to highlight the variations in a series. In this Section, we have covered the rules notified by Karnataka government. Let’s take a look:




# POINT 1: Benefits to the Allottees


RERA Act defines allottees as people to whom units have been allotted by the Promoter.


RERA Rules added to this, associations which represent such allottees collectively. The option for the allottee to be represented by the association will definitely reduce the number of individual complaints and thereby facilitate speedy disposal of grievances.


# POINT 2: Project Details


RERA Act asks for certain information related to the Project.


In RERA Rules, there are additional documents asked for such as annual report, the number of parking slots, conversion order, change of land use order, joint development details, sanctioned plan, its specifications etc.; to ensure that the project complies with statutory norms.


# POINT 3: Requirements for Ongoing projects


RERA Act categorically states that registration is required for all ongoing projects where completion certificates are yet to be issued.


RERA Rules made the definition of ongoing projects broader by excluding projects like:

  • Layouts where streets and civic amenities have been handed over to the local/planning authorities;
  • Apartments where common area and facilities have been handed over to the Owner’s registered Association;
  • Sixty percent of the apartment/villas/sites in the project is registered in the name of individual owners;
  • Application for issue of Completion Certificate/Occupancy Certificate has been submitted to the concerned authority;
  • For the extent to which partial occupancy certificate has already been issued.


# POINT 4: Prior consent to be taken from Allottees


RERA Act has specified that prior consent of a minimum two-third majority of allottees needs to be obtained before making any alteration in the project.


RERA Rules has brought in the below exemptions:

  • If the proposed plan is disclosed to the allottee under the Agreement before registration;
  • If it complies with the order issued by the competent authority.

These exemptions provide clarity and are required to reduce the piles of complaints to the authority.


# POINT 5: Separate Bank Account


RERA Act stipulates that the promoters shall deposit seventy percent of the amount received from the allottees in a separate bank account towards land and construction costs.


Under RERA Rules, the Karnataka Government has gone ahead to ensure that the money deposited by allottees are not misused, by stipulating that the promoter deposit 100 percent of the money received if the received amount is less than the estimated Project cost.


# POINT 6: Interest Rate


RERA Act has made the interest rate same and equal for the promoters and buyers.


Karnataka RERA Rules has also fixed the rate of interest payable by the promoter and the allottee to be the highest lending rate of State Bank of India plus additional two percent. Also, the timeline of sixty days is fixed for the refund from the due date.


# POINT 7: Built-up Area


RERA Act has directed that the Promoters show the actual carpet area for the unit being sold to the buyer.


RERA Rules clarifies that in case the agreement is already made between the promoter and the allottee wherein super built up area is shown, the promoter is still responsible for disclosing the carpet area, which shall not have any impact on the legal validity of the Agreement.


# POINT 8:  Agreement for Sale


It has always been a common complaint of buyers that the Agreement for Sale is always one sided, favoring the Promoters and often the Promoters refuse to make any alterations which jeopardize the interests of a buyer.

Keeping the above in mind, RERA Act has put the responsibility on the State Government to frame the forms and the particulars of the Agreement for Sale, which shall be binding on the Promoters.  The intent of bringing the Performa in place will restrict the arbitrary practices by any Promoter.

However, it looks like Karnataka has missed out on this crucial point; the notification of RERA Rules does not contain any such Performa of Agreement for Sale.


Once the Karnataka Government starts implementing the RERA Rules, the real estate market will soon become a safe place for investment for buyers as well as investors.

We hope this article helped you understand the RERA Act and Rules defined by Karnataka government. We will be shortly coming up with Series #2, where we will cover other states.


If you are planning to buy a property sometime soon, RealDocs has created a mobile app that aims to help you determine what documents are required for a particular property based on the type of property, and most importantly, the applicable laws of your state.  Feel free to download the RealDocs app from the Google Play Store, by clicking here.



RealDocs Team

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