RERA Compliance Checklist for Builder-Buyer Agreements

The Complete RERA Compliance Checklist for Builder-Buyer Agreements

The Real Estate (Regulation and Development) Act, 2016 fundamentally changed the legal framework governing builder-buyer agreements in India. Before RERA, these agreements were overwhelmingly one-sided — drafted by developers with clauses that heavily favoured the promoter at the buyer's expense. RERA introduced mandatory provisions that every builder-buyer agreement must contain, with serious penalties for non-compliance.

This RERA compliance checklist is designed for real estate developers, their legal teams, and in-house counsel who need to ensure every builder-buyer agreement meets statutory requirements. Whether you are drafting new agreements or auditing existing templates, this checklist covers every mandatory element.

Section 4: Project Registration Requirements

No builder-buyer agreement is valid unless the project itself is registered with the state RERA authority under Section 4 of RERA 2016. Your agreement must reference:

• RERA registration number — the unique project registration ID issued by the state authority
• Registration validity period — the approved project completion timeline as registered
• Project details as filed — the agreement terms must match what was disclosed in the RERA registration application
• Website disclosure link — the project's page on the state RERA portal

Checklist items for Section 4 compliance:

• [ ] RERA registration number prominently displayed in the agreement
• [ ] Project completion date matches RERA registration filing
• [ ] Layout plans referenced in the agreement match those filed with RERA
• [ ] All approvals and NOCs listed in the RERA filing are referenced
• [ ] Commencement certificate details included

Section 11: Developer Obligations Checklist

Section 11 prescribes the obligations of the promoter (developer). Your builder-buyer agreement must incorporate — not contradict — these statutory obligations:

Mandatory Disclosures in the Agreement

• [ ] Complete details of the project including layout plan, development plan, and specifications
• [ ] Stage-wise time schedule of project completion, including provisions for civic infrastructure
• [ ] Details of all approvals obtained and those pending, with expected timelines
• [ ] Prorata share of registration charges, municipal taxes, water and electricity charges, maintenance charges, and ground rent
• [ ] Details of the internal development works and external development works

Construction and Quality Obligations

• [ ] Specification of materials, fittings, fixtures, and amenities as disclosed
• [ ] Obligation to develop the project in accordance with sanctioned plans and specifications
• [ ] Commitment to not modify sanctioned plans without consent of two-thirds of allottees and RERA authority
• [ ] Structural defect liability for 5 years from possession — developer must rectify or compensate within 30 days of complaint
• [ ] Compliance with all applicable environmental laws

Financial Obligations

• [ ] 70% of amounts collected from allottees to be deposited in a separate designated bank account (RERA escrow)
• [ ] Withdrawals from the escrow account only in proportion to completion percentage, certified by an engineer, a chartered accountant, and an architect
• [ ] Annual audit of the escrow account
• [ ] No diversion of funds to other projects

Section 13: Carpet Area Definition — The Most Litigated Clause

Section 13 of RERA 2016 is one of the most significant provisions for buyer protection. The agreement must sell on the basis of carpet area, not super built-up area or built-up area.

RERA Definition of Carpet Area

Carpet area means the net usable floor area of an apartment, excluding:

• External walls
• Areas under services shafts
• Exclusive balcony or verandah area
• Exclusive open terrace area

But including the area covered by internal partition walls.

Checklist items for Section 13 compliance:

• [ ] Agreement specifies the apartment area exclusively in terms of carpet area
• [ ] Carpet area figure matches the RERA registration filing
• [ ] Price per square foot is calculated on carpet area basis
• [ ] No reference to "super built-up area" or "super area" as the basis of sale
• [ ] Exclusive balcony, verandah, and terrace areas listed separately
• [ ] Common areas and their allocation methodology clearly described (but not included in carpet area pricing)

Why This Matters

Before RERA, the difference between carpet area and super built-up area could be 30-40%. A buyer paying for 1,500 sq. ft. "super built-up" might receive only 900-1,000 sq. ft. of actual usable space. Section 13 eliminated this practice. Any agreement that prices on super built-up area is non-compliant.

Section 14: Adherence to Sanctioned Plans

Section 14 mandates that the promoter must adhere to the sanctioned plans, layout plans, and specifications approved by the competent authority. Your agreement must include:

• [ ] Reference to all sanctioned plan approval numbers and dates
• [ ] Commitment that no changes will be made to sanctioned plans without prior written consent of two-thirds of allottees
• [ ] Clause specifying that any minor additions or alterations (as permissible under local building bye-laws) will be disclosed to allottees
• [ ] No clauses giving the developer unilateral right to modify plans
• [ ] Specification of the apartment/unit with reference to the sanctioned floor plan

Common violation: Agreements that include broad clauses like "the developer reserves the right to modify layout and specifications" directly violate Section 14. Any modification power must be limited to what the statute permits.

Section 18: Delay Penalties — The Penalty Clause Checklist

Section 18 is the enforcement backbone of RERA. If the promoter fails to complete the project or deliver possession by the registered date, the allottee is entitled to remedies.

Mandatory Penalty Provisions

• [ ] Clear possession date specified (matching RERA registration)
• [ ] Developer's obligation to pay interest for every month of delay at the prescribed rate (SBI MCLR + 2% in most states, though this varies)
• [ ] Buyer's right to withdraw from the project with full refund plus interest in case of delay
• [ ] Buyer's right to continue in the project and receive interest for every month of delay
• [ ] Penalty rate for developer delay must be equal to the penalty rate charged to buyers for payment delays (reciprocal penalty principle)

Reciprocal Penalty Principle

This is critical and frequently violated. Under RERA, if the buyer is charged 18% interest for delayed payments, the developer must also pay 18% for delayed possession. Any agreement with asymmetric penalty rates — e.g., 18% charged to buyers but only 6% paid by the developer — is non-compliant.

Checklist items:

• [ ] Penalty interest rate for developer delay explicitly stated
• [ ] Penalty interest rate for buyer payment delay explicitly stated
• [ ] Both rates are equal (reciprocal)
• [ ] No cap on the total delay penalty payable by the developer
• [ ] No force majeure clause that unreasonably extends the possession timeline

Additional Mandatory Clauses

Beyond the key sections above, a RERA-compliant builder-buyer agreement must also include:

Payment Schedule

• [ ] Stage-wise payment plan linked to construction milestones
• [ ] No demand for more than 10% of apartment cost as advance before execution of the agreement for sale
• [ ] Payment linked to actual construction progress, not arbitrary dates
• [ ] GST and other tax implications clearly stated

Cancellation and Refund

• [ ] Buyer's right to cancel and receive refund as per Section 18
• [ ] Timeline for refund processing (typically 45 days from cancellation)
• [ ] Interest payable on delayed refunds
• [ ] No forfeiture clauses that contradict RERA provisions
• [ ] Earnest money forfeiture limited to reasonable amounts (state-specific rules apply)

Title and Encumbrance

• [ ] Clear title declaration by the developer
• [ ] Disclosure of all encumbrances, mortgages, and charges on the land
• [ ] Commitment to obtain mortgage NOC before delivery (if project land is mortgaged)
• [ ] Indemnity clause for title defects

Common Areas and Facilities

• [ ] List of all common areas and facilities as registered with RERA
• [ ] Timeline for completion of common amenities
• [ ] Handover of common areas to the residents' association or body corporate
• [ ] Maintenance charges and their basis until handover

Force Majeure

• [ ] Force majeure events clearly defined (not open-ended)
• [ ] Extension period for force majeure is reasonable and capped
• [ ] Force majeure clause does not override RERA statutory provisions
• [ ] No inclusion of events within the developer's control (e.g., "delay in approvals" when the developer is responsible for obtaining approvals)

State RERA Variations You Must Account For

While the central RERA Act provides the framework, state rules introduce important variations:

| Provision | Maharashtra RERA | Karnataka RERA | UP RERA | Tamil Nadu RERA | |---|---|---|---|---| | Interest Rate (Developer Delay) | SBI MCLR + 2% | SBI PLR + 2% | SBI MCLR + 1% | SBI PLR + 2% | | Advance Before Agreement | Max 10% | Max 10% | Max 10% | Max 10% | | Escrow Percentage | 70% | 70% | 70% | 70% | | Structural Defect Period | 5 years | 5 years | 5 years | 5 years | | Cancellation Refund Timeline | 45 days | 45 days | 45 days | 45 days | | Model Agreement | Prescribed format | Prescribed format | Prescribed format | Prescribed format |

Note: Several states have prescribed model builder-buyer agreements. Where a model agreement is prescribed, your agreement must substantially conform to that model. Deviations that reduce buyer protections below RERA minimums are void.

Common Non-Compliance Issues Found in Audits

Based on RERA authority orders and tribunal decisions, these are the most frequently flagged non-compliance issues:

1. Super built-up area pricing — still the most common violation despite being explicitly prohibited under Section 13
2. Asymmetric penalty clauses — developer paying lower interest than buyer for respective delays
3. Unilateral modification rights — clauses allowing the developer to change plans, specifications, or amenities without allottee consent
4. Excessive forfeiture provisions — forfeiture of 20-30% of the paid amount on cancellation, contradicting RERA's refund provisions
5. Open-ended force majeure — clauses that effectively give the developer unlimited time extensions
6. Missing escrow account details — no reference to the designated bank account for the 70% deposit requirement
7. No RERA registration number — agreements executed without referencing project registration

Penalties for Non-Compliance

The consequences of RERA non-compliance are severe:

• Non-registration of project (Section 59): Penalty up to 10% of the estimated cost of the project. Continued violation can lead to imprisonment up to 3 years.
• Violation of Section 4 (selling unregistered project): Penalty up to 10% of project cost, with imprisonment up to 3 years for continued violation.
• Non-compliance with RERA authority orders (Section 63): Imprisonment up to 3 years, or fine for every day of non-compliance, or both.
• Providing false information (Section 62): Penalty up to 5% of the estimated cost of the project.

How to Automate RERA Compliance Checks

Manually reviewing every builder-buyer agreement against this checklist is feasible for individual transactions, but real estate developers executing dozens or hundreds of agreements need a scalable solution.

LexiReview automates RERA compliance checking as part of its Indian law compliance engine. When you upload a builder-buyer agreement, LexiReview's AI engines automatically verify compliance with RERA 2016 provisions — including carpet area definitions, penalty clause reciprocity, mandatory disclosures, and alignment with registered project details.

With Quick Triage, you can get an instant go/no-go on any builder-buyer agreement in under 2 seconds at zero cost, before committing to a full 6-engine review. For developers processing agreements in bulk, LexiReview's batch processing handles 100+ contracts simultaneously.

The platform also covers related compliance requirements that intersect with builder-buyer agreements, including the Indian Contract Act, 1872 (enforceability of specific clauses), state Stamp Acts (stamp duty calculations across 28 states), and DPDP 2023 (buyer data processing obligations).

Frequently Asked Questions