You signed the builder-buyer agreement, got your home loan sanctioned, and started paying EMIs every month. But did you know that RERA, the Real Estate Regulation and Development Act, 2016, gives you a set of powerful rights that go far beyond protection against project delays? Most homebuyers know the basics. Very few know the full picture. Here is what you are actually entitled to.
RERA Changed The Rules – But Most Buyers Missed The Fine Print
Before RERA, the balance of power in any property transaction sat firmly with the developer. Agreements were one-sided, funds were routinely misused, and buyers had little meaningful legal recourse. The Act fundamentally shifted that dynamic – particularly for buyers financing their purchase with a home loan. The rights it grants are specific, enforceable, and largely unknown to the very people they were designed to protect.
Your Right To Interest When A Project Is Delayed
Under Section 18 of RERA, a delayed project does not simply entitle you to an apology. It entitles you to financial compensation. You have two options:
- Exit the project – receive a full refund of every rupee paid, including all home loan disbursements and your down payment, along with interest
- Stay in the project – the developer must pay you monthly interest for every month of delay, calculated at SBI’s Marginal Cost of Lending Rate plus 2 per cent
This is particularly significant for home loan buyers who find themselves simultaneously paying rent and EMIs whilst waiting for possession. The interest compensation under RERA is designed specifically to offset that double financial burden.
The 70% Escrow Rule That Protects Your Loan Disbursements
Every time your bank disburses a portion of your home loan to the developer, that money is meant to go directly towards building your home, not towards funding another project entirely. RERA enforces this through a mandatory escrow account requirement:
- 70 per cent of all funds collected from buyers must be held in a dedicated, project-specific escrow account
- Withdrawals from this account require written certification from an engineer, an architect, and a chartered accountant
- All funds within the account can only be used for that specific project’s construction and land costs
This single provision significantly reduces the risk of your project stalling because the developer diverted your money elsewhere. If you are a home loan buyer, your disbursed funds are protected by law from the moment they leave your bank.
Protection Against Unfair Contractual Changes
Developers have historically used builder-buyer agreements to retain the right to alter plans, change specifications, and introduce charges well after the original agreement was signed. Section 14 of RERA places firm limits on this:
- A developer cannot change the design, layout, or structural specifications of a project without written consent from at least two-thirds of all allottees
- The sale must be based on a clearly defined carpet area – no additional charges for inflated super built-up area can be imposed after the agreement is in place
- Any clause in a builder-buyer agreement that contradicts RERA provisions is legally unenforceable, regardless of what you have signed
This means that even if you signed an agreement with unfair one-sided clauses, RERA can override them. Your agreement to sell is not the final word – the Act is.
Five Years of Structural Defect Liability Coverage
This is amongst the most overlooked rights in the entire legislation. Under Section 14(3), if any structural defect, quality issue, or workmanship problem surfaces within five years of taking possession, the developer is legally obligated to rectify it within 30 days at no cost whatsoever to you. This liability coverage extends to:
- Structural defects in walls, columns, beams, and slabs
- Substandard quality of construction materials used
- Defective workmanship in any part of the property
If the developer fails to act within the 30-day window, you are entitled to compensation. Keep all possession-related documents carefully – the five-year clock begins from the date of possession, not the date of registration.
Your Right To Real-Time Project Information
Transparency is a legal obligation under RERA, not a courtesy. Every registered project must publish and regularly update the following details on the relevant state RERA portal:
- Quarterly reports on construction progress
- Current status of approvals and regulatory clearances
- Details of units sold, unsold, and under mortgage
- Financial reports confirming the project remains on track
If your developer is not maintaining these updates, that constitutes a RERA violation in itself, one you are entitled to report directly to the state authority.
RERA Covers Ongoing Projects Too
A significant number of buyers with older purchases assume RERA does not apply to them. This is a costly misconception. Any project that had not received a Completion Certificate by 1st May 2017, regardless of when it was originally launched, was required to register under RERA. If your project met that condition, every right under the Act applies to you in full, including interest on delays, escrow protections, and the five-year structural defect warranty.
The 10% Advance Rule
Before a registered builder-buyer agreement is executed, a developer cannot legally demand more than 10 per cent of the total property cost as an advance payment or application fee. If you were asked to pay more than this prior to any formal agreement being signed, that is a direct and actionable RERA violation.
You Can File In RERA And Consumer Court At The Same Time
Most buyers believe they must choose a single legal forum and commit to it. They need not. RERA explicitly permits homebuyers to pursue a complaint before the RERA adjudicating authority whilst simultaneously filing in consumer court. This gives you two parallel legal routes to seek compensation, enforce delivery timelines, or demand rectification – without one proceeding blocking or invalidating the other.
The Bottom Line
RERA did not merely regulate the real estate sector, it fundamentally rewrote the terms of every transaction between a buyer and a developer. If you have a home loan running against an under-construction or recently delivered property, these rights belong to you by law. Understanding them is the first step to exercising them – and exercising them is the only way they work.
FAQ
Q1- What is the rule of 70% and 30% in RERA?
This 70 % pool of funds can be used only for specific purposes, mostly on construction and land costs. Then the remaining 30 % of the funds can be deposited to another account.
Q2- Is RERA mandatory for home loans?
Yes, RERA registration is practically mandatory for obtaining home loans on new projects.
Q3-Is it safe to buy property without RERA approval?
Buying property without RERA (Real Estate Regulatory Authority) approval is generally risky and not advised.
Disclaimer: The information provided on this website is for general informational purposes only and should not be considered financial or legal advice. Please consult with a qualified financial advisor before making any decisions.
