What Does Section 3 of RERA Actually Say?
Section 3 of RERA prohibits any promoter (builder/developer) from advertising, marketing, booking, selling, or offering for sale any plot, apartment, or building in a real estate project without first registering the project with the Real Estate Regulatory Authority of that state. In Karnataka, this authority is RERA Karnataka, operating through the portal rera.karnataka.gov.in. The registration applies to residential and commercial projects where the total area of land proposed to be developed exceeds 500 square metres, or the number of apartments proposed to be developed exceeds 8 units. Projects that are fully completed and have received a Completion Certificate before the RERA Act came into force (May 2017) are exempted, as are renovation or repair projects that do not involve re-allotment or marketing.
Key Documents Builders Must Disclose on Registration
When a promoter registers under RERA, they are legally required to upload and publicly disclose a comprehensive set of documents on the RERA portal. Karnataka home buyers can access all of these for free. The mandatory disclosures include:
- Sanctioned plan and layout plan — the approved building plan from the local authority (BDA, BBMP, or BMRDA), showing number of floors, unit configurations, and common areas.
- Land title documents — proof that the promoter has clear legal title or development rights over the land, including encumbrance certificates and sale deeds.
- Approvals obtained and pending — a list of all approvals received (environmental clearance, fire NOC, etc.) and approvals still awaited, so buyers know what stage approvals are at.
- Proforma of allotment letter and sale agreement — the standard buyer-builder agreement template that will be used, ensuring buyers can review terms before signing.
- Project completion schedule — the declared quarter and year by which the builder commits to hand over possession, with phase-wise timelines for large projects.
- Promoter's track record — details of all previously developed projects including their completion status, giving buyers insight into the builder's reliability.
Financial Disclosures — The Escrow Account Requirement
One of the most buyer-protective provisions tied to Section 3 registration is the mandatory escrow account. Upon registration, the promoter must open a separate designated bank account for each RERA-registered project. At least 70% of all money collected from buyers — including booking amounts, instalments, and other payments — must be deposited into this account. Funds can only be withdrawn from this escrow account in proportion to the percentage of construction completed, and only after certification by an engineer, architect, and chartered accountant. This prevents the diversion of buyer funds to other projects or personal use, which was historically a major cause of builder defaults and project delays in India. Buyers in Karnataka can verify that a project has a registered escrow account by checking its RERA registration details on rera.karnataka.gov.in.
Quarterly Updates — Ongoing Disclosure Obligations
RERA registration is not a one-time event. Builders are required to update their project's status on the RERA portal every quarter. These updates must include the current percentage of construction completed, units sold versus unsold, money collected versus pending, and any changes to the possession timeline. If a builder fails to update their project quarterly, they are in default and can face penalties. As a buyer, you should periodically log in to rera.karnataka.gov.in and check your project's quarterly progress updates. Consistent delays in updates or construction percentages that do not increase meaningfully over multiple quarters are early warning signs of a distressed project. You can also file a complaint with RERA Karnataka if updates are not being made as required.
What Happens If a Builder Sells Without RERA Registration?
Selling or advertising a project without RERA registration is a serious offence under Section 59 of the Act. A promoter found guilty can face a penalty of up to 10% of the estimated project cost for the first offence, and imprisonment of up to 3 years along with a fine of up to 10% of the project cost for subsequent offences. If you discover that a builder solicited a booking from you for an unregistered project, you are entitled to seek a full refund of any amount paid along with interest at the prescribed rate. You can file such a complaint directly with RERA Karnataka, and the authority has the power to issue orders of refund and compensation.
- Always verify RERA registration first — before paying any booking amount, confirm the project appears on rera.karnataka.gov.in with an active registration number.
- Note the registration expiry date — RERA registration has a validity period tied to the project completion date. Ensure the registration is current and not lapsed.
- Quote the RERA number in all agreements — your sale agreement, allotment letter, and payment receipts should all carry the project's RERA registration number for legal enforceability.
✅ Key Takeaways
🔗 Official Portal: rera.karnataka.gov.in
📅 Published: August 22, 2026 | This blog is a public awareness initiative. Verify all information with official sources before making financial decisions.
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