No RERA Number? When a Karnataka Project Is Legally Exempt

Seeing no RERA number on a brochure does not always mean something is wrong. Some projects in Bangalore are outside the Act by design, and others are older than it. Big new launches are another story. This guide covers where the exemption line runs, the rights a buyer forgoes on the far side of it, and ways to test an exemption story.

The ban on pre-registration sales

The 2016 Act, in section 3(1), forbids a promoter to market, advertise, book or sell plots, flats or buildings of an unregistered project. Soliciting offers counts too. K-RERA's powers under this section date from 1 May 2017.

Whoever breaks the ban faces section 59, where the fine can reach a tenth of the project's estimated cost. Carrying on regardless may mean jail for up to three years plus another fine of the same size. For that reason, exemptions are read narrowly.

What section 3(2) excuses

Three categories are named. A promoter claiming one must satisfy all its conditions.

• Small projects: a plot of no more than 500 sq m, or no more than eight apartments once all phases are tallied
• Old completions: a completion certificate received before section 3 started to apply
• Work for owners only: repairs, renovation or rebuilding where nothing is marketed or sold and nobody new is allotted a unit

States are allowed to lower the first limit. Karnataka did not, and uses the Act's numbers.

How big is 500 sq m, really?

Converted into feet, the ceiling is nearly 5,382 sq ft. Two plots of 40 by 60 feet total 4,800 sq ft, below it. A building of six to eight flats on one site of 50 by 80 or 40 by 60 feet will normally qualify, and the older residential areas have plenty of them.

Staging a big scheme does not help

Because the count includes all phases, a developer cannot present a large layout as a series of tiny buildings. An explanation in that section makes every phase of a big scheme a stand-alone project, which explains why phases get individual numbers.

If a buyer is offered one small building, the sensible question is what else is proposed alongside it. Several blocks sold one after another on adjoining sites may legally amount to one project beyond the limit.

Redevelopment without outside sales

Owners rebuilding for themselves fall in the third category. Consider a society that demolishes its old building and houses its members in new flats: no buyer is involved, so no registration is due. If extra flats are then marketed to outsiders, the work becomes a sale, and the shelter ends.

How 2017 was handled

The Act was applied to projects that were unfinished on the day it began. A promoter whose unfinished project held no completion certificate was required to register by 31 July 2017, under the first proviso to that section. In Newtech Promoters (November 2021) the Supreme Court confirmed the position.

The state's own 2017 rules, at Rule 4, then narrowed the meaning of an ongoing project. Its explanation takes out five groups:

• Layouts whose roads, amenity sites and services the local body had already taken over
• Apartment projects where a registered association backed by most allottees had received the common areas
• Projects with all works done and 60% of deeds of sale or lease registered
• Projects with all works done and the application for an occupancy or completion certificate submitted
• Parts of a project that hold a partial occupancy certificate

Resale buyers see these cases most. A block that was finished in 2016 or 2017 can be without a registration number and still be lawful. Ask for its occupancy certificate and note when it was issued.

The cost of being outside the system

An exempt scheme leaves its buyers without several benefits that come with registration. These are the usual gaps.

• The K-RERA project page with approvals, handover date and quarterly updates
• The separate account holding 70% of customer funds for land and construction
• The 10% limit on advances before the registered agreement for sale
• Compensation by way of interest or refund when possession slips, under section 18
• The five-year liability for structural defects under section 14
• The right to complain to K-RERA

Other forums remain open, namely the consumer commission (Consumer Protection Act, 2019) and the civil courts. How well they work for a buyer depends on what the contract promises, so the delay and possession clauses need close reading.

Verifying "it is too small for RERA"

The claim can be checked from paper alone. Before paying a booking amount, do the following:

• Read the land area off the sanctioned plan or khata and express it in square metres
• Tally the units on the plan, then enquire whether further blocks or phases are intended on that land or the plots beside it
• With an older building, obtain the completion or occupancy papers and read the date on them
• Look up the promoter and the project separately on the K-RERA portal
• Ask that the ground for exemption appear in the sale agreement

If a project is plainly over the limits yet not listed, it is best to wait for registration. A buyer can report an unregistered sale to K-RERA, and it can order registration and enforce section 59.

Registration numbers in advertising

Under section 11(2), a registered project's advertisements and prospectuses must carry its number and the Authority's website. A big launch that advertises without one is waving a flag. With an exempt scheme, retain every brochure, email and chat message, since along with the contract they prove what was promised.

Is buying in an exempt building sensible?

It can be. Many of the smaller buildings in Bangalore were put up by conscientious local builders. The difference is that the buyer does the scrutiny a regulator would otherwise do, using a lawyer's review of title, the approved plan, the khata, a fixed possession date and a clause on delay.

Linking payments to construction stages cuts exposure, and a bank loan adds an independent legal and technical review before money is released. To learn the registration number or standing of a listed project, go through the contact page.