RERA Registration for Builders: Process, Exemptions, and What Happens Without It

Byadmin

The complete legal framework governing mandatory project registration under the Real Estate (Regulation and Development) Act, 2016

Introduction

The Real Estate (Regulation and Development) Act, 2016 (“RERA”) was built around a single, deceptively simple requirement: a builder cannot advertise, market, book, sell, or invite offers for a real estate project until it is registered with the state Real Estate Regulatory Authority. This single gate has reshaped how Indian real estate is sold — no more launching a project on the strength of a glossy brochure and a sanctioned plan alone. For builders, understanding exactly when registration is mandatory, what limited exemptions exist, and what non-compliance actually costs is now a threshold business question, not a compliance afterthought.

This article sets out, comprehensively, the legal basis for RERA registration, the step-by-step process, the genuinely contested scope of the small-project exemption, and the real financial and criminal consequences of skipping registration altogether.

The Legal Basis: Section 3

Section 3(1) of RERA makes registration mandatory before a promoter may “advertise, market, book, sell, or offer for sale, or invite persons to purchase” any plot, apartment, or building in a real estate project — or, in the case of a plotted development, before executing sale of the plot itself. This applies equally to ongoing projects that had not received a completion certificate as of the Act’s commencement (which were required to seek registration within three months) and to any new project launched thereafter.

The Exemption Under Section 3(2)(a) — and Why It’s More Contested Than It Looks

Section 3(2) sets out limited categories of projects that don’t require registration. The most significant, and most litigated, is Section 3(2)(a), which exempts a project where:

  • (i) the area of land does not exceed 500 square metres, or
  • (ii) not more than 8 apartments are proposed to be developed, including all phases of the project.

This is where builders consistently get tripped up. The provision uses the word “or” between the two conditions, and Real Estate Regulatory Authorities and Appellate Tribunals across states have genuinely disagreed on what this means in practice:

  • View 1 (the more buyer-protective reading, and the one several authorities have adopted): a project must satisfy both the area limit and the unit-count limit to qualify for exemption — failing either condition brings the project back within mandatory registration.
  • View 2 — adopted by the majority of the Maharashtra Real Estate Appellate Tribunal (MahaREAT) in Messrs Geetanjali Aman Constructions v. Hrishikesh Ramesh Paranjpe (order dated 10 July 2019) — holds that satisfying either condition is sufficient for exemption, reasoning that the legislature’s deliberate use of “or” rather than “and” must be given its plain meaning.

The practical consequence for builders: this is not a settled, uniform national position. A project that a builder assumes is exempt because it has fewer than 8 units — even though it sits on a much larger land parcel — may be treated as requiring registration in a state or before an authority that follows View 1. Given that the underlying purpose of RERA is explicitly to protect homebuyers and ensure transparent, efficient sale — a purpose View 1 arguably serves better — builders relying on this exemption should seek a project-specific opinion or clarification from the relevant state authority before proceeding to market a project unregistered, rather than assuming the more permissive reading will apply.

Other Exemptions Under Section 3(2)

Beyond the small-project carve-out, registration is also not required where:

  • The promoter has received a completion certificate for the project before the Act’s commencement.
  • The purpose is renovation, repair, or re-development which does not involve marketing, advertising, selling, or new allotment of any plot, apartment, or building.

The Registration Process

Step 1: Prepare the Application

The promoter must compile the documentation required under the Act and the relevant state’s RERA Rules — typically including details of the promoter entity, the project land title and encumbrance status, sanctioned building plans and layout, proposed timeline, and the details of professionals (architect, engineer, chartered accountant) engaged for the project.

Step 2: File with the State Real Estate Regulatory Authority

The application is filed with the Real Estate Regulatory Authority established in the relevant state under the Act. Each state (and Union Territory, per the general Rules notified centrally and applicable to Chandigarh, Lakshadweep, Daman & Diu, Dadra & Nagar Haveli, and Andaman & Nicobar Islands) administers its own registration portal and process, though the underlying statutory framework is uniform.

Step 3: Authority Review Within 30 Days

The Authority must approve or reject the application within 30 days of submission. Where the application is not disposed of within this period, it is generally deemed approved, in accordance with the “deemed registration” mechanism built into the Act — a strong incentive for authorities to process applications within the statutory window rather than allow silent, indefinite pendency.

Step 4: Registration Number, Login Credentials, and Ongoing Disclosure

Upon successful registration, the promoter receives a unique project registration number, along with login credentials to update the project’s details on the Authority’s public portal on an ongoing basis — covering construction progress, sanctioned plans, and any changes to the project timeline. Every advertisement or marketing material for the project must display this registration number — its absence is itself a compliance red flag buyers are now trained to check for.

What Registration Actually Requires of Builders Going Forward

Registration is not a one-time filing — it anchors several ongoing obligations central to RERA’s buyer-protection design:

  • The 70% escrow requirement. At least 70% of the amounts realised from buyers for a project must be deposited into a separate escrow account, to be used only for the cost of construction and the land — preventing the historically common practice of diverting one project’s buyer funds to finance a different, unrelated project.
  • Carpet area disclosure. Builders must quote and sell on the basis of carpet area, not the more generous “super built-up area” figure historically used to inflate advertised space — carpet area is statutorily defined to include usable spaces like the kitchen and toilets, giving buyers a comparable, standardised figure across projects.
  • Defect liability. The promoter must rectify any structural defect or other deficiency brought to its notice by a buyer within five years of possession, and must do so within 30 days of the complaint.

What Happens Without Registration: The Real Consequences

Financial Penalties Under Section 59

Under Section 59(1), a promoter who contravenes Section 3 (i.e., markets, sells, or books units in an unregistered project that required registration) is liable to a penalty of up to 10% of the estimated cost of the real estate project, as determined by the Authority. This is a genuinely severe figure for any project of meaningful scale — the Haryana Real Estate Regulatory Authority, for instance, imposed a penalty of ₹3 crore on a major developer for advertising and marketing two projects without registration.

Continued Non-Compliance: Imprisonment

Under Section 59(2), if the promoter fails to comply with the Authority’s orders or directions issued under Section 59(1), or continues to violate Section 3 despite them, the consequence escalates to imprisonment for up to three years, or a further fine of up to an additional 10% of the estimated project cost, or both. This makes non-registration one of the few real estate compliance failures in India that carries a genuine, non-theoretical risk of imprisonment for a repeat or defiant offender.

Penalties for Real Estate Agents

The Act separately regulates real estate agents who deal in registered projects — under Section 9, agents must themselves register before acting in any transaction involving a RERA-registered project. Failure to do so attracts a penalty of ₹10,000 per day of default, cumulatively capped at 5% of the cost of the plot, apartment, or building involved in the transaction.

False or Misleading Information

Providing false or misleading information during the registration process itself attracts a separate penalty of up to 5% of the estimated project cost — meaning a builder who registers but does so with materially inaccurate disclosures does not escape the Act’s penal architecture simply by having filed an application.

Enforcement in Practice

Where penalties or compensation orders are not honoured voluntarily, RERA Authorities have real enforcement teeth: amounts due can be recovered as arrears of land revenue, through the district Collector or Revenue Officer, including asset attachment, bank account freezing, and property auction where necessary. Where an Authority itself fails to enforce its own order, an aggrieved party can approach the relevant High Court under Article 226 of the Constitution for a writ of mandamus compelling enforcement — an important backstop given that enforcement delays have, in practice, been a recurring criticism of the RERA regime.

Why Buyers — and Builders — Should Both Care About This

For a prospective buyer, checking a project’s RERA registration number on the relevant state Authority’s public portal before making any payment is now one of the single most effective due diligence steps available — it confirms the project legally exists in the Authority’s system, and gives access to the sanctioned plans, promoter details, and construction timeline the builder is bound to keep updated.

For a builder, the incentive runs the other way but points to the same conclusion: registering properly, on time, and with accurate disclosures is now measurably cheaper than the alternative. A ₹3 crore penalty for unregistered marketing, a potential three-year imprisonment exposure for continued defiance, and the reputational cost of a public RERA order are all considerably more expensive than the modest administrative burden of registering a project correctly from the outset.

Conclusion

RERA registration is not a formality builders can defer until a project is substantially sold, nor is the small-project exemption under Section 3(2)(a) a safe default assumption given the genuine, unresolved split in how different state authorities interpret it. Builders should treat registration as a pre-launch, non-negotiable step — verified against the specific state Authority’s interpretation of the exemption criteria where a project is close to the threshold — because the cost of getting this wrong has moved well beyond a modest administrative fine into genuinely severe financial and, on continued non-compliance, criminal territory.

This article is intended for general informational purposes and does not constitute legal advice. Builders should have their specific project’s registration requirements and exemption eligibility assessed by qualified legal counsel before commencing any marketing or sale activity.

If you need help with RERA project registration, assessing exemption eligibility, or responding to a non-registration penalty notice, feel free to reach out to VNC Corporate & Legal, Advocates & Solicitors.