The Role of RERA in Protecting Buyers from Fraud

Introduction

For years, buying property in India was considered risky. Many buyers faced delayed projects, misleading advertisements, or worse—losing money to fraud. To address this, the Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced. It reshaped the property market, especially for first-time buyers and NRIs, by setting rules that developers and agents must follow.

In this blog, we’ll look at how RERA protects buyers from fraud, why it matters, and what you should still watch out for.

Why RERA Was Needed

Before RERA, property buying often felt like entering a maze. Developers could launch projects without approvals, delay possession for years, or change layouts without notice. Buyers had little power because the contracts were usually one-sided.

For example, a family in Hyderabad who booked a flat in 2012 kept waiting until 2019 with no clarity on delivery. This wasn’t unusual. With thousands of such cases across India, trust in real estate was weakening.

RERA was designed to change this—bringing transparency, accountability, and legal protection.

Key Ways RERA Protects Buyers

1. Mandatory Project Registration

Developers cannot market or sell a project without registering it with the state RERA authority. Registration requires approvals, sanctioned plans, and disclosure of details.

• How this helps: If a project is listed on the RERA website, you know it has passed basic checks. You can also verify all project details online.

• What to do as a buyer: Always check the project’s RERA number before paying any booking amount.

2. Escrow Account for Buyer Money

One of the biggest frauds earlier was developers diverting buyer money from one project to fund another. RERA now requires 70% of buyer payments to be kept in a separate bank account, used only for construction and land costs of that project.

• How this helps: Your money is safer and more likely to be used for the home you booked.

• What to do as a buyer: Ask for payment receipts and confirm that transactions are linked to the project’s escrow account.

3. Timely Project Delivery

Under RERA, developers must declare the possession timeline at registration. If they delay, they must compensate buyers with interest for every month of delay.

• How this helps: You’re not left waiting endlessly.

• What to do as a buyer: Keep a copy of your agreement and monitor project status updates on the RERA website.

4. No False Advertising

Earlier, glossy brochures and big promises misled many buyers. Now, developers are legally bound to market only what is approved in the project plan. If they advertise extra features that aren’t delivered, buyers can file a complaint.

• How this helps: Marketing must match reality.

• What to do as a buyer: Save all promotional material and verify it against the sanctioned plan on RERA.

5. Standardized Sale Agreements

Before RERA, agreements heavily favored developers. Today, agreements must follow a standard format that protects buyers’ interests, including clauses on delivery, payments, and penalties.

• How this helps: Contracts are less biased and more transparent.

• What to do as a buyer: Read your agreement carefully and ensure it follows RERA’s standard clauses.

6. Defect Liability Period

If structural issues or poor construction quality show up within 5 years of possession, the builder must fix them at no cost to the buyer.

• How this helps: It ensures accountability for construction quality.

• What to do as a buyer: Report any issues in writing within the defect liability period.

7. Right to Information

Buyers can access details like land ownership, approvals, construction status, and litigation history on the RERA portal.

• How this helps: Transparency reduces the chance of hidden disputes or illegal projects.

• What to do as a buyer: Always check the project’s page on your state’s RERA portal before booking.

How Buyers Can Use RERA to Avoid Fraud

1. Verify Project Details – Check project registration, approvals, and timelines on the official state RERA site.

2. Check the Builder’s Track Record – Past projects, delay complaints, or penalties are usually listed on RERA portals.

3. File a Complaint if Needed – RERA offers a quick redressal mechanism. Buyers can file complaints online and expect time-bound hearings.

4. Stay Updated – Subscribe to alerts or check updates regularly for any changes or notices about your project.

What RERA Doesn’t Cover

While RERA has changed the game, buyers should remember it isn’t a complete shield. Some risks still exist:

• Projects below 500 sq. meters or under 8 units don’t need RERA registration.

• Illegal land dealings outside RERA’s scope may still occur.

• Complaints may take time to resolve depending on the state authority’s efficiency.

This means due diligence is still crucial, even in the RERA era.

Case Example: RERA in Action

In 2022, a Hyderabad-based builder was penalized for failing to deliver a project despite collecting large sums from buyers. The Telangana RERA ordered the developer to refund the money with interest. For the affected families, this law meant financial recovery that wasn’t possible earlier.

Such enforcement has helped rebuild confidence in real estate, especially for NRIs who can’t be physically present to track progress.

Conclusion

RERA has transformed Indian real estate by bringing order to what was once an unregulated sector. From ensuring transparency to penalizing delays, it gives buyers more power and protection than ever before.

Still, laws work best when buyers use them wisely. Always verify RERA registration, track project updates, and know your rights.

At Relai, we believe real estate should be simple, safe, and trustworthy. With the right mix of due diligence and legal protection like RERA, buyers can focus less on risks and more on building a future in their new home.

Let’s Join Together to Bring Change to the World of Real Estate.