RERA won't help with these 6 mistakes in buying house

The road to becoming a homeowner in India is riddled with many obstacles, from securing a home loan at affordable rates to navigating legal complexities and endless instances of project delays, allotment cancellation on the part of the builder, and more.

To protect the rights of homebuyers against unfair practises of real estate developers, RERA, or the Real Estate (Regulation and Development) Act, was enacted. Over the years, RERA has emerged as a solid regulatory safeguard for homeowners in India.

In many cases across India, aggrieved homebuyers have approached RERA with their complaints, and if found valid, builders have been directed to compensate aggrieved homebuyers in case of delays in project completion, handover, and more.

However, there are some instances where even RERA regulations cannot come to the distressed homeowner’s rescue if they do not practice their due diligence while buying a property.

Says Sanjay Mandava, founder & CEO of Landeed, “The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to protect homebuyers and ensure transparency in the real estate sector. While it provides strong safeguards against delays and unfair practices, there are situations where RERA may not favor the homebuyer. Compensation for delayed possession is typically awarded, but under certain circumstances, the authority may refuse to grant relief.”

“These situations generally fall into three categories: those arising from the buyer’s actions, those stemming from the builder’s actions, and those caused by government policies or force majeure events. Understanding these exceptions can help buyers set realistic expectations and make informed decisions,” he adds.

It is important to note that RERA applies predominantly to ongoing and future projects. As a result, it automatically ends up excluding numerous projects that are pre-RERA, i.e., not registered under the act.

“Homebuyers cannot approach the RERA in projects which are pre-RERA; there has to be a breach of certain obligations imposed on the developer under the Act, and only then can a complaint lie; Complaints challenging issuance of sanctioned plans or occupancy certificates issued by the corporation are not ordinarily entertained by the RERA,” highlights Maneesha Kongovi, Partner, IndusLaw

Also, Mandava highlights that if the property in development falls below the regulatory threshold (less than 500 sq.m. or 8 units), units)—buyers may not be able to seek relief under RERA and would need to pursue legal action through consumer or civil courts.

Read on to know about 6 such instances you should take special care of while buying a home

1. Agreements with unilateral clauses

Many real estate developers frequently incorporate unilateral clauses in the agreement that allow them unfettered rights in many aspects, such as unilateral cancellation of allotments or modifications to project specifications without the explicit consent of the buyer.

Says Advocate Pranav Gupta, legal advisor at the Confederation of Real Estate Developers' Associations of India (CREDAI) and expert in real estate matters, “Many a time, homebuyers tend to execute or commit to actions mentioned in documents such as affidavits, No-Objection Certificates (NOCs), and undertakings without meticulous scrutiny. Such documents frequently contain restrictive clauses that preclude buyers from asserting future legal claims. RERA authorities, being bound to consider these executed documents, often render rulings adverse to the allottee’s interests.”

2. All-cash transactions in the booking stage
Going for cash transactions can also jeopardise the prospect of a refund in case of an event like cancellation. Gupta highlights that numerous buyers, in an effort to evade stamp duty, sometimes engage in all-cash transactions at the booking stage. “This renders them legally vulnerable in the event of cancellation. The absence of statutory recognition of booking forms substantially weakens the buyer’s position, leaving them bereft of adequate recourse under RERA,” he explains.

3. Defaulting on payment timelines

One of the most common reasons is default in payment, where buyers do not adhere to the agreed payment schedule. In such cases, the builder is not liable for project delays caused by the buyer’s financial lapses, and instead, the buyer may be subject to penalties or interest.

According to Mohit Adatiya, Director, NPV Insolvency Professionals Private Limited, “If the buyer defaults on payments, they may lose the right to seek relief for delays in possession, which was held by Gujarat High Court’s judgement in the case of Hiren Sureshbhai Patel vs. State of Gujarat. So, a home buyer must review the agreement for sale to make sure that payment schedules are not very stringent and they can fulfil their financial commitments on time.”

Also, if the buyer delays taking possession after the occupancy certificate (OC) is obtained, they may be liable for maintenance and holding costs rather than receiving compensation for further delays

4. Accepting revised possession timelines without legal consultation

Sometimes, homebuyers, either in writing or orally, accept a revised possession date or timeline for their property. However, Gupta notes that, “Such acceptance, whether express or implied through written correspondence, addenda, or verbal assurances, is construed as a waiver of the buyer’s right to claim penalties for construction delays. Any communication evidencing acquiescence to an extension may be invoked against the buyer in RERA proceedings.”

Hence, it is always advisable to exercise due caution and also seek legal advice before accepting such revised timelines.

Further, experts also highlight that buyers who agree to out-of-court settlements with builders effectively waive their right to claim further compensation under RERA

5. Delaying filing of complaint against developer

While RERA does not explicitly prescribe a statutory limitation period for complaints, courts have, time and again, underscored the necessity of filing claims within a reasonable time frame from when the cause of action took place. Where a complaint is filed after an inordinate delay, RERA may dismiss the claim.

“Delays in filing complaints can weaken a buyer’s case. If a homebuyer fails to report a builder’s default in a timely manner, RERA may consider the claim time-barred, limiting their ability to seek redress,” says Adatiya.

Additionally, technical non-compliance in filing complaints or missing deadlines can result in cases being dismissed. Defects reported after five years may not qualify for compensation as per Section 14(3), he adds.

6. Pre-EMI, Subvention, or rental return schemes may not be entertained by RERA
A pre-EMI scheme is a financing arrangement whereby the buyer initially remits only the interest component, with the principal repayment deferred until possession. Typically, the developer assumes responsibility for these payments during the construction phase.

“However, RERA does not recognize such schemes as legally binding obligations, instead treating them as private contractual arrangements. Where a developer defaults, homebuyers have limited recourse under RERA, as such schemes do not constitute part of the statutorily mandated Builder-Buyer Agreement,” adds Gupta.

Experts also note that when developers default on promised payments under subvention and Rental Return Schemes, RERA may decline intervention, treating them as private contractual arrangements rather than statutory real estate transactions.