Summary of this article
RERA helps, but cannot guarantee safe projects.
Developer track record matters more than registration.
Escrow rule protects money, not delivery timelines.
The Real Estate (Regulation and Development) Act, 2016 was created to bring order to India’s real estate sector, but buyers tend to confuse what protections are actually provided. A Rera registration to a project does not ensure that it is financially stable and secure, well-planned and guaranteed to be completed within the promised time. It simply means the developer has submitted the documents to the regulator and agreed to follow the regulations set by the authority.
For investors, it is important to realise where the law safeguards them and where it falls short. It is an important factor that can help them in making an informed decision while buying a property.
Is RERA Registration Enough to Trust a Project
The Rera registration simply indicates that the builder has uploaded approvals, land ownership details, layout plans, timelines and financial disclosure to the state Rera authority. The regulatory body’s role is to largely administer; it checks the documents, the financial health of the builder, construction planning, and a clean project history. It does not verify the builder’s credibility entirely.
As such, buyers must investigate on their own whether the developer has faced any litigation, or whether older projects were completed on time, or if they have a reputation for diverting funds.
Even after Rera registration, several risks remain. Some developers apply for Rera registration with only partial approvals in hand, which can result in stalled construction because of pending approvals.
Ashwinder R Singh, chair, CII Real Estate, vice chair, BCD Group and advisor, NAR-India, says that Rera registration is a very important starting point because it brings the project under a transparent, accountable framework.
However, Rera registration does not replace due diligence. Some risks can still remain, such as delays in government approvals, financial stress on the developer, disputes in joint development agreements, or force majeure situations beyond anyone’s control. While Rera significantly reduces information asymmetry, but the professional track record of the developer remains the most important factor, he says.
Buyer’s Money That is Actually Protected Under RERA
The strongest safeguard extended by Rera is the 70 per cent escrow requirement; builders must keep most of the money from buyers in a specified bank account for the project. This ensures that the investor’s money is safe and exclusive for the project. Withdrawals are only allowed after permission is granted to the project engineer, architect, and the chartered accountant. This avoids the age-old practice of diverting funds from one project to support another.
“Rera ensures that 70 per cent of the buyer’s money is kept in a project-specific escrow account, to be used only for construction and land costs of that project. This prevents diversion of funds and is one of the strongest protections in the Act. It also mandates timely disclosures, quarterly updates, and strict financial discipline,” says Singh.
Builders tend to fall back on several legal and procedural gaps to push deadlines. The most common loophole is force majeure, which developers often use. Some developers hand over units in phases or partially completed projects, which Rera sometimes allows.
Says Singh: “RERA provides a strong accountability framework, but no regulation can fully eliminate external risks. The safest path for any homebuyer remains constant; trust Rera, but choose your developer even more carefully.”
A Rera registration tag to a project is not a sure-shot guarantee for timely delivery, construction quality or perks promised. It is just a simple filter that ensures people can be safeguarded if things go wrong. The only way for a homebuyer to make sure of his/her safe investments is to run checks about the builder, their past projects, and their financial health.
