Buying a home is one of the biggest financial decisions in life. To protect home buyers from project delays, unfair practices, and lack of transparency by builders, the Indian government introduced the Real Estate (Regulation and Development) Act, commonly known as RERA.
Many buyers still ask simple but important questions like what are RERA rules, what is RERA rules for cancellation of flat, and what rights do buyers have under RERA. This guide answers all such questions in simple language, with a special focus on flat cancellation, refunds, and buyer protection.
Index
- What Is RERA?
- What Are RERA Rules?
- What Are the Key RERA Rules for Home Buyers?
- RERA Rules for Cancellation of Flat
- RERA Refund Rules Explained
- RERA Rules for Builder Delay in Possession
- How to File a Complaint Under RERA?
- Common Myths About RERA Rules
- FAQs on RERA Rules
- LoanNestHub Insight: Why RERA Matters for Home Buyers
What Is RERA?
RERA stands for Real Estate (Regulation and Development) Act, 2016.
It is a central law introduced to regulate the real estate sector and safeguard the interests of home buyers.
RERA applies to:
- Residential and commercial real estate projects
- Builders, promoters, and real estate agents
- Ongoing and new projects (subject to conditions)
Each state has its own State RERA Authority that implements and enforces the law.
What Are RERA Rules?
RERA rules are a set of legal guidelines that builders and real estate agents must follow while selling property. These rules aim to ensure transparency, accountability, and timely delivery of real estate projects.
Key Objectives of RERA
- Protect home buyers from fraud and delays
- Ensure timely possession of flats
- Bring transparency in pricing and carpet area
- Provide a fast grievance redressal mechanism
What Are the Key RERA Rules for Home Buyers?
Here are the most important RERA rules every home buyer should know:
1. Mandatory Project Registration
Builders must register their project with the State RERA authority if:
- The project land area exceeds 500 sq. meters, or
- The project has more than 8 apartments
Without RERA registration, a project cannot be legally sold.
2. Carpet Area Definition
Under RERA, builders can sell flats only on carpet area, not super built-up area.
This prevents misleading pricing and ensures buyers pay only for usable space.
3. 10% Advance Payment Rule
A builder cannot take more than 10% of the flat cost as advance booking amount without signing a registered agreement for sale.
4. Timely Project Completion
Builders must clearly mention:
- Project completion date
- Possession timeline
Failure to deliver on time attracts penalties and buyer compensation.
5. Separate Escrow Account
Builders must deposit 70% of the project funds collected from buyers into a separate bank account, which can be used only for that specific project.
This prevents fund diversion.
RERA Rules for Cancellation of Flat
One of the most searched queries is:
“What is RERA rules for cancellation of flat?“
Here’s the clear answer 👇
When Can a Buyer Cancel a Flat Under RERA?
A buyer can cancel the flat booking if:
- The builder delays possession beyond the promised date
- Project construction is stopped or abandoned
- Builder violates the agreement terms
- There is false advertising or misrepresentation
Buyer’s Rights on Cancellation
If the buyer cancels due to builder’s fault:
- Full refund of amount paid
- Interest compensation as per state RERA rules
- Refund must be processed within the prescribed time
Can Builder Cancel the Booking?
A builder can cancel only if:
- Buyer defaults on payments repeatedly
- Proper notice is given
- Terms are clearly mentioned in the agreement
Even then, arbitrary cancellation is not allowed under RERA.
RERA Refund Rules Explained
Under RERA:
- Refunds must be processed within 45-90 days (state-specific)
- Interest is payable if refund is delayed
- Interest rate is usually SBI MCLR + 2% (may vary by state)
Refund applies to:
- Booking amount
- Installments paid
- Any other charges collected illegally
RERA Rules for Builder Delay in Possession
If a builder delays possession:
- Buyer can continue with the project and claim monthly interest
- OR exit the project and claim full refund with interest
The choice lies entirely with the home buyer, not the builder.
How to File a Complaint Under RERA?
If a buyer faces issues, RERA provides a fast complaint mechanism.
Steps to File RERA Complaint:
- Visit your State RERA website
- Register as a complainant
- Fill complaint form with details
- Upload documents (agreement, receipts, emails)
- Pay nominal complaint fee
- Track case status online
Most cases are resolved much faster than traditional courts.
Common Myths About RERA Rules
❌ RERA applies only to new projects
✅ RERA also applies to ongoing projects (with conditions)
❌ Builders can change layout anytime
✅ Major changes need buyer consent
❌ Refunds are optional
✅ Refunds are legally enforceable under RERA
FAQs on RERA Rules
What are RERA rules in simple words?
RERA rules protect home buyers by ensuring transparency, timely delivery, and fair practices by builders.
Can I cancel my flat under RERA?
Yes, especially if the builder delays possession or violates the agreement.
How long does RERA refund take?
Usually between 45 to 90 days, depending on state rules.
Is RERA applicable to all projects?
RERA applies to most residential and commercial projects above a certain size.
Can builders charge cancellation penalties?
Only if allowed under the agreement and not due to builder’s fault.
LoanNestHub Insight: Why RERA Matters for Home Buyers
RERA has significantly changed the real estate landscape in India by:
- Reducing project delays
- Increasing accountability
- Giving buyers legal confidence
However, buyers must still read agreements carefully, verify RERA registration, and understand their rights before booking a flat.
Final Takeaway
If you are planning to buy a flat or are stuck in a delayed project, understanding what are RERA rules can save you from major financial and legal trouble. RERA empowers buyers, but only if they are informed.