Under-Construction Home in Karnataka: Your Rights Under RERA
An unfinished flat is a promise on paper, and the buyer carries the risk until the day of handover. The 2016 law on real estate regulation, commonly called RERA, moves some of that risk onto the developer. Read on for the main protections, the clause that creates each and the practical way for a Bangalore home seeker to claim them.
Registration Is the Gateway
The law took full effect on 1 May 2017; Karnataka's own rules came that July. The Karnataka authority maintains the register, displays each project's details to the public and settles complaints. A promoter is not allowed to advertise, accept a booking or take payment before the scheme is registered.
Section 3 exempts two kinds of scheme: land parcels not larger than 500 sq m, and developments of no more than eight apartments across every phase. Apartments, villas and plotted developments above those limits must register. Since the rights below belong to registered schemes, begin by confirming the number.
The Safeguards at a Glance
This overview lists what the law offers and its source.
| Protection | In practice | Section |
|---|---|---|
| Transparency | Ownership papers, clearances, floor plans and the finish date are published | 3, 4 and 11 |
| Separate bank account | Developer parks 70% of customer payments in a single-scheme account | 4(2)(l)(D) |
| Advance ceiling | Cap of one tenth of the price until the agreement is registered | 13 |
| Approved design | Alterations need a two-thirds majority of allottees | 14 |
| Delay compensation | Withdraw and get money back with interest, or remain and earn monthly interest | 18 |
| Quality guarantee | Free repairs for structural and workmanship issues over five years | 14(3) |
| Grievance forum | Authority and adjudicating officer decide claims | 31 and 71 |
Keeping Customer Funds Safe
Section 4 requires seventy per cent of every customer payment to be banked in a dedicated account at a scheduled bank. The balance funds the land and building of that one scheme and nothing else. Cash leaves the account against certificates signed by a CA, an architect and an engineer, each confirming the work completed.
A yearly audit then tests whether spending matched progress at the site. Some developers once drew on a running scheme's receipts to acquire land for the next one, and the rule is aimed squarely at that habit. The other 30% remains with the developer, so a stalled site is made less likely but not impossible.
Why the advance stops at 10%
Under section 13, a promoter may take no more than a tenth of the price until the agreement for sale has been signed and lodged for registration. The state prescribes the format, which records price, payment stages and the handover date. Should a seller press for 20% on a bare allotment letter, say no in writing.
Disclosures Worth Reading
Brochures leave out much of what the official project page carries. Go through these entries before booking:
- The project and promoter as registered, along with landowners in joint ventures
- Ownership papers and any loan charged on the plot
- The approved plan: number of towers, floors and homes
- Carpet area per home type
- The expected completion date
- Construction and sales updates filed each quarter
The Act defines carpet area as the net usable floor area inside a home, with the thickness of internal partition walls included. Balconies, open terraces, service shafts and outer walls are left out. The agreement price relates to this figure, so schemes can be compared on equal footing.
Section 12 covers false statements in promotion. A buyer who relied on a wrong claim made in an advert or leaflet may seek compensation, or withdraw and be repaid in full with interest.
Plan Changes and Project Transfers
Section 14 ties the developer to the sanctioned drawings and the specifications promised when units were booked. A minor adjustment to one flat requires that owner's agreement. Altering the layout, the buildings or shared areas calls for written approval beforehand from a two-thirds majority of allottees.
Under section 15, passing the scheme to another developer needs that same majority plus the authority's approval. An extra tower on open space, or a quiet sale of the whole scheme, can therefore be contested.
A Missed Possession Date
Once the possession date written into the agreement goes by, section 18 opens two paths. A buyer may withdraw and recover all payments, along with interest and compensation. Alternatively the buyer stays, and the developer pays interest for each month until delivery.
The Karnataka rate is 2% above the SBI's highest MCLR, the bank's benchmark lending rate. A late-paying allottee is charged identically. When the authority extends a registration, rights under the agreement survive.
Defects After Moving In
Section 14(3) keeps the developer answerable for five years after possession. A structural defect, or a shortfall in finish, quality or services, reported inside that window must be repaired within 30 days at no cost to the owner. Should the developer decline or stall, compensation is payable.
Section 17 completes the transaction, as the developer registers a conveyance deed for the buyer and hands shared areas over to the owners' association. Dated pictures and written complaints are the strongest proof when a defect is disputed.
Where to Take a Dispute
Section 31 lets a buyer lodge a complaint against a builder or an agent online, on the authority's website. Refunds, interest and possession are ordered by the authority, and the adjudicating officer decides compensation under section 71. An appeal goes to the state's real estate tribunal within 60 days.
Unpaid sums are recoverable through the district administration as land revenue dues. Recovery is slow if the developer is cash-strapped, and an order therefore does not equal payment. Buyers also have the consumer commissions as another forum.
What RERA Does Not Cover
Registration records only what the developer has stated. The authority makes no promise on price, construction quality or developer finances, so a lawyer still has to review the agreement, the title and the approvals. Small schemes, and homes finished before the law began, are mostly outside these rules.
A bank loan is outside the Act too. The lender continues to collect its monthly instalment during a delay, whether EMI or pre-EMI. Use our EMI calculator to see what to set aside each month through construction.
Practical Checklist for Buyers
Apply these steps to every purchase of a home under construction:
- Find the scheme on the authority's site and note the registration number plus finish date
- Match the blocks, storeys and unit sizes shown there to your brochure and cost sheet
- Decline any demand beyond a tenth of the price ahead of registration of the sale agreement
- Verify that the possession date in the contract matches the date filed officially
- Pay through the bank into the scheme account written in the contract
- Keep every receipt, demand letter and written exchange
- Study each quarterly update and set it against the site
- Tell the developer in writing about a delay or defect, then approach the authority
For the RERA particulars of any project we list, write to our team via the contact page. Please quote the project name.
