The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, transformed India’s real estate sector. It brought accountability, transparency, and fairness to the market. Homebuyers had long suffered delays, broken promises, and financial losses. RERA changed that by placing clear obligations on builders. Understanding RERA builder obligations helps buyers make informed decisions and protects their hard-earned investments.
What Is RERA and Why Does It Matter?
RERA is a central legislation that regulates India’s real estate industry. The government enacted it to protect homebuyers from fraudulent practices. It covers residential and commercial real estate projects. Every state maintains its own RERA authority to enforce the rules.
Before RERA, builders operated with minimal accountability. Buyers had little legal recourse when projects got delayed or rules were broken. RERA fixed this gap by mandating project registration, financial discipline, and legal compliance from all builders.
Core RERA Builder Obligations Before Project Launch
Builders must fulfil several obligations before they can launch or market a project. These rules prevent fraud and ensure project viability.
1. Mandatory Project Registration
Every builder must register the project with the state RERA authority. Projects covering more than 500 square metres or eight apartments require registration. The builder cannot advertise, book, or sell units before obtaining RERA registration. This rule protects buyers from pre-launch fraud.
2. Full Disclosure of Project Details
Builders must upload complete project details on the RERA portal. This includes approved layout plans, land ownership documents, and completion timelines. Buyers can verify all project information before making payments. Transparency is a cornerstone of RERA’s buyer protection framework.
3. Escrow Account Obligation (The 70:30 Rule)
This is one of the most significant RERA builder obligations. Builders must deposit 70% of all buyer payments into a dedicated escrow account. They can use only those funds for land and construction costs of that specific project. The remaining 30% covers other project-related expenses.
This rule stops builders from diverting buyer funds to unrelated projects. It ensures money collected goes directly into the project’s development.
Read More: What is RERA Approved Project
Key Responsibilities During Project Execution
RERA does not stop at project registration. Builders carry significant responsibilities throughout the construction phase.
- Builders must adhere strictly to approved building plans and specifications.
- They must deliver the project within the RERA-registered completion date.
- Builders must update construction progress on the RERA portal quarterly.
- They must obtain all required approvals before starting construction.
- Builders must not change the project layout without buyer consent.
- They must use the carpet area measurement to quote property size.
RERA Builder Obligations at the Time of Possession
Possession is a critical milestone. Builders must meet specific legal duties before handing over the unit to the buyer.
- Obtain an Occupancy Certificate (OC) from the local authority.
- Ensure all utility connections, water, electricity, and sewage, are in place.
- Form and register the Residents Welfare Association (RWA) or similar body.
- Hand over all project documents, drawings, and approvals to the RWA.
- Transfer common area maintenance responsibility to the buyer’s association.
Builders cannot give possession without an OC. Accepting a flat without an OC puts buyers at legal and safety risk.
Builder Responsibilities After Handover Under RERA
Many buyers wonder about their rights after possession. RERA clearly defines post-handover builder obligations as well.
Five-Year Structural Defect Warranty
RERA mandates a five-year defect liability period after possession. If any structural defect, workmanship issue, or quality problem arises, the builder must fix it free of charge. Buyers must report such defects within 30 days of discovery. The builder must rectify the defect within 30 days of the complaint.
Common Area Maintenance Transfer
The builder must transfer common area management to the RWA on time. They must also settle pending maintenance dues before the transfer. Delayed transfer can attract penalties under RERA.
Title and Documentation Responsibilities
Builders must ensure clear property title at the time of handover. They must register the sale deed in the buyer’s name. They must provide all documents needed for ownership transfer. These include NOCs, property tax records, and society formation documents.
Buyer Protection Rights Under RERA
RERA is equally a buyer protection law. It gives homebuyers powerful rights against builder violations.
- Right to Information: Buyers can access all project documents on the RERA portal anytime.
- Right to Compensation: Buyers receive interest on delayed possession at the prevailing SBI MCLR rate.
- Right to Refund: Buyers can claim a full refund with interest if the builder delays beyond the registered date.
- Right Against Defects: Buyers can file complaints for structural defects within five years of possession.
- Right to Grievance Redressal: Buyers can approach the RERA authority or appellate tribunal for disputes.
RERA Compliance Checklist for Builders
Buyers should verify this checklist before finalising any property purchase:
| Checklist Item | What to Verify |
| RERA Registration | Check the RERA registration number on the portal |
| Approved Layout Plans | Verify that approved plans match what is being built |
| Escrow Account Details | Confirm 70% funds are deposited in the escrow account |
| Completion Timeline | Check the registered project completion date |
| Land Title Documents | Ensure clear and marketable title of land |
| Approvals and NOCs | Confirm all required clearances are in place |
| Carpet Area Specification | Verify the unit is quoted in carpet area, not super built-up |
| Defect Liability Clause | Confirm five-year structural defect warranty is mentioned |
| Occupancy Certificate Plan | Ask when the builder expects to obtain the OC |
| RWA Formation Plan | Check builder’s timeline for society/RWA formation |
Penalties for Non-Compliance by Builders
RERA does not shy away from penalising non-compliant builders. The authority imposes strict penalties to ensure accountability.
- Non-registration of a qualifying project can attract up to 10% of the project cost as penalty.
- Providing false information to RERA can result in up to 5% of the project cost as penalty.
- Continued violation after an order can result in imprisonment of up to three years.
- Builders must pay interest to buyers for every day of delay in possession.
Frequently Asked Questions (FAQs)
What is the rule of 70% and 30% in RERA?
Under RERA, builders must deposit 70% of all buyer payments into a separate escrow account. This account is specifically earmarked for land acquisition and construction of that particular project. Builders can use the remaining 30% for other project-related expenses, including marketing and administrative costs. The rule prevents builders from diverting funds to other projects or personal use. It is one of the strongest financial protection mechanisms under RERA builder obligations.
What are builder responsibilities after handover as per RERA?
After handing over possession, builders carry significant legal responsibilities under RERA. They must honour a five-year structural defect liability period. If any construction defect appears, they must fix it free of cost within 30 days of the complaint. They must also transfer common area maintenance to the Residents Welfare Association (RWA). Builders must settle all outstanding dues and hand over project documents, including completion certificates, to the RWA. They must also ensure the property title is legally transferred to the buyer.
What are the roles and responsibilities of a builder?
A builder’s roles under RERA span the entire project lifecycle. Before launch, they must register the project and disclose all details publicly. During construction, they must follow approved plans, maintain construction timelines, and deposit funds in escrow. At possession, they must hand over the unit with an Occupancy Certificate and all legal documents. After handover, they must maintain a five-year defect warranty and form the RWA. Throughout the project, they must update RERA portals regularly and respond to buyer grievances promptly.
What is the checklist for RERA for builders?
A RERA compliance checklist for builders includes the following key steps:
- Register the project on the state RERA portal before marketing or selling.
- Upload land title documents, layout plans, and approval certificates.
- Open a dedicated escrow account and maintain the 70:30 fund split.
- Update project status every quarter on the RERA portal.
- Obtain all required approvals and NOCs before construction begins.
- Follow approved building plans without making unauthorised changes.
- Obtain an Occupancy Certificate before offering possession to buyers.
- Form the Residents Welfare Association and transfer common area management.
- Honour the five-year structural defect liability commitment.
- Register the sale deed and ensure complete title transfer to buyers.
Ready to Buy Your Dream Home with a RERA-Compliant Builder?
Express Builder follows every RERA builder obligation, from registration to possession and beyond. We believe in complete transparency and on-time delivery.
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