RERA and real estate

Real estate transactions in India sit at the intersection of contract law, property law and, since 2016, a dedicated regulatory framework under the Real Estate (Regulation and Development) Act that applies specifically to how projects are developed, marketed and sold.

Project registration and disclosure

A promoter developing a real estate project above the threshold set by state rules must register the project with the state Real Estate Regulatory Authority before marketing or selling any unit in it, and must maintain the disclosures the Authority requires: project timelines, sanctioned plans and the funds received from allottees. A defined percentage of amounts collected from allottees must be maintained in a separate escrow account for the project, restricting how those funds can be used until construction milestones are met.

Disputes

Where a promoter delays possession, deviates from sanctioned plans, or otherwise breaches the terms on which units were sold, an allottee's complaint is heard before the Real Estate Regulatory Authority in the first instance, with an appeal available to the Real Estate Appellate Tribunal and, beyond that, the High Courts. Promoters equally rely on the same forum to resolve disputes over allottee defaults and cancellations.

Title and transaction advisory

Outside the regulatory framework, a real estate transaction still depends on the older law of property transfer: verifying title through the chain of prior conveyances, checking for encumbrances, and ensuring the sale deed, agreement for sale or construction agreement is drafted and registered correctly under the Registration Act and the Indian Stamp Act. For a non-resident Indian or an overseas citizen of India, acquiring, holding or repatriating proceeds from Indian property carries an additional layer of advisory under the foreign exchange framework, which governs what such a person may buy, in what manner, and how sale proceeds may later be remitted abroad. What a buyer, seller or promoter has to decide, in each case, is whether the transaction and its documentation are actually compliant with both the property law and the RERA framework, since a defect in either can surface well after the transaction is complete.