How to check a builder

A Karnataka RERA registration tells you the project is on the register. Our guide to reading that filing covers what it says about this one project: its litigation declaration, its complaints, its progress. This guide is about the company standing behind the filing — which is not always the name on the hoarding, and which usually has other projects, other debts and, sometimes, a history worth knowing before you sign.

None of the checks below take more than a search box and a few minutes. Most buyers never run them, because the project filing feels like the whole story. It is one chapter. The rest is in company, court and credit records that are public, free, and rarely opened.

Brand or legal entity

The name over the sales office is a brand. The name on the RERA filing, the sale agreement and the sale deed is a legal entity, and the law only recognises the second one. Under the RERA Act, the “promoter” is defined by what a person or company does — builds, develops or sells a project — not by what it calls itself, and where the entity that builds and the entity that sells are different, both are deemed promoters and are jointly liable. A large brand often runs each project through its own company: a special purpose vehicle, or SPV, formed for that one piece of land. That is not, on its own, suspicious. It is how most developers structure a project, and it limits one project’s troubles from spreading to another. But it means the entity you are actually dealing with may be a company with no other history at all, and every check below has to be run against that entity’s exact name, not the brand’s.

Get the exact registered name and CIN from the RERA filing or the draft agreement before you check anything else. A search on the brand name alone will miss the company, or find the wrong one.

Where to check what

Six public registers, each answering a different question. The sections below take each in turn.

The promoter’s track record

K-RERA’s portal is not only a project-by-project register. Search a promoter’s name and you can see every project it has filed, and a separate “Promoter Complaint Report” that lists every registered promoter against the number of complaints filed against it, with a link through to the list itself. Read that alongside the project-level complaints register our other guide describes: a promoter with a heavy count spread across several of its projects tells you more than one project’s clean record does.

Two more registers show how a promoter’s projects actually finish. An “Extension Project List” shows which registrations have been renewed past their original completion date — ordinary on its own, but worth reading against the possession date you are being sold. A “Default Project List” goes further: it separates projects formally declared in default from those whose registration has simply lapsed, unrenewed. When we checked, Karnataka’s statewide count of lapsed project registrations stood at 2,989. Most belong to promoters with no other trouble on the register. A handful belong to promoters who have several. Search the exact company name in each list before you judge which kind you are dealing with.

Finally, K-RERA publishes “Orders of the Authority”: the decisions on complaints and disputes, with the promoter’s name, the relief sought and the outcome, and a “Revenue Recovery Certificate” list for orders where a promoter did not pay what it was told to. An order against a promoter is not automatically a reason to walk away — disputes happen on real projects for real reasons — but a promoter who appears repeatedly, or whose orders sit unpaid on the revenue-recovery list, is telling you something an individual project’s filing cannot.

Inside the company: MCA21

Every company incorporated in India files with the Registrar of Companies, and the Ministry of Corporate Affairs publishes a free public search of that record at its MCA21 portal. Search the company by its CIN, or by its exact registered name, and you can see whether it is active, when it was incorporated, who its current directors are, and what charges — security a lender holds over the company’s assets — are registered against it.

1. The CIN. A 21-character identifier: here, a company (not an LLP), industry code, Karnataka, year of incorporation and a private limited company. It is unique to this legal entity and never reused.
2. The company name. Match this, exactly, against the name on the RERA filing and the draft agreement. A close but not identical name is a different company.
3. Date of incorporation. How old this entity is. A project-specific SPV incorporated shortly before launch is normal; ask who else stands behind it if it is the entity taking your money.
4. Status. “Active” is what you want to see. “Struck off”, “Under liquidation” or “Dissolved” need an answer before you go any further.
5. Directors and their DIN. Each director carries one Director Identification Number across every company they sit on. The same DIN turning up on several of the promoter’s other companies ties those projects together, even where the companies are legally separate.
6. Charges. Security the company has given a lender over its assets. An open charge is ordinary on a project under construction; what matters is whether it is ever marked satisfied once the debt is repaid.
7. What it cannot show. Pending litigation, informal group structure, or how many other companies share the same directors and the same brand. Cross-check those separately.

Reading the record

A status other than “Active” matters immediately: “Struck off” means the Registrar has removed the company from the register, usually for not filing its annual returns, and “Under liquidation” or “Dissolved” speak for themselves. A date of incorporation that sits only months before a large launch is worth a direct question: is this a fresh SPV backed by an established group, or a company with no track record of its own carrying the whole risk? Directors who also sit on the boards of the promoter’s other projects tie those projects together even where the companies are legally separate, so it is worth checking a director’s name against the projects register too. And a charge with no matching release is a live claim on the company’s assets, in the same way an unreleased mortgage is a live claim on a piece of land: see our guide to the documents behind a flat for how that works on the land itself. None of this is a reason on its own to walk away. It is context the filing does not give you.

Courts, NCLT and insolvency

Two separate systems cover two separate kinds of dispute, and it is worth knowing which is which.

Ordinary civil cases

The government’s eCourts service covers district and taluk courts nationwide, and its “Case Status” search lets you look up pending or disposed cases by party name, not only by a case number you would already need to have. Search the company’s exact registered name; a case against the brand name alone will not surface here. eCourts does not cover the High Courts, which run separate search pages, so a search here is a first pass, not the last word.

Company law and insolvency

Disputes about the company itself — oppression and mismanagement, winding up, or insolvency — go to the National Company Law Tribunal instead of an ordinary court. Bengaluru has its own NCLT bench. The tribunal’s site publishes its cause lists and its orders and judgements online, though its case-history search is built around a diary or registration number rather than a free-text company search, so a clean scan is easier once you already suspect a case exists, from a court filing, a news report or a lender’s disclosure.

If a promoter’s company were ever admitted into the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, that matters directly to you as a buyer, not just as a matter of the company’s health. The Code deems any amount an allottee has paid toward a real estate project to have “the commercial effect of a borrowing,” which makes you a financial creditor of the company, with a seat in the process alongside its banks. Once a company is admitted, a moratorium bars new suits against it and stops it transferring or encumbering its assets while a resolution is worked out. That is a serious, slow process, and not one you want to discover only after you have paid. It is also not something one buyer’s complaint can trigger: allottees under the same project can only apply to start it jointly, with at least a hundred of them or a tenth of the total, whichever is fewer.

Credit ratings

Not every developer is rated, but a fair number that issue bonds or take large bank facilities are, and a rating is a second, independent opinion on the company’s ability to repay its debt — built by an agency with no stake in selling you a flat. Nine agencies are currently registered with SEBI to issue these ratings, among them CRISIL, ICRA, CARE Ratings, India Ratings and Brickwork Ratings. If a promoter group is rated, the agency’s own website publishes the rating and a rationale, free, and SEBI requires every rationale to follow roughly the same shape.

• The rating symbol, from the agency’s scale — higher letters and fewer notches from the top mean lower assessed risk of default, but scales differ slightly between agencies, so read the scale, not just the letter.
• A rating outlook: Stable, Positive or Negative, which is the agency’s view on where the rating is heading, not where it stands today.
• Key rating drivers, listed as strengths and as risks, each explained in a paragraph rather than a label.
• A liquidity section, on the cash and credit lines the company has to meet what falls due soon — often the most telling part for a company mid-way through building something.

A rating is one opinion at a point in time, not a guarantee, and SEBI is explicit that there is no contract between an investor and the agency that rated the debt. But a downgrade, a rating placed “on watch with negative implications,” or a rating withdrawn before the debt behind it was repaid, are all facts a prospective buyer is entitled to weigh alongside everything else here.

GST and the escrow rule

Two more checks, both quick. First: the promoter’s GST registration number, or GSTIN, should appear on the tax invoice for anything it charges you GST on. The government’s GST portal lets the public search a GSTIN and see whether the registration is active. A company that is still collecting GST from buyers on a cancelled or suspended registration is a direct question to put to the promoter, in writing, before you pay anything further.

Second, and larger: under the RERA Act, a promoter must deposit at least 70% of everything it collects from allottees, project by project, into a separate account at a scheduled bank, to be used only for that project’s construction and land cost. Money can only leave that account in proportion to the work actually certified as done, by an engineer, an architect and a chartered accountant together, and the account is audited every year. Work through what that means on a project that has collected ₹60 crore from buyers so far: at least ₹42 crore of it (60 × 0.70) has to be sitting in that one account, untouched beyond whatever share of the building is certified complete. The remaining ₹18 crore is the promoter’s to use freely, for marketing, overheads or anything else. The rule exists precisely because a promoter juggling several projects can be tempted to use one project’s buyers to fund another’s shortfall; the separate account is what is meant to stop that. You cannot see the account itself, but you can ask which bank holds it, and a promoter unwilling to answer that question directly is worth noting.

Visit what they have built

Everything above is a record. A finished building is evidence. If a promoter has an older project nearby that is already handed over, go and look at it, with our site-visit checklist in hand: not the show flat, the actual building, several years in. Walk the common areas, look at the lift lobbies and the compound wall, and ask the security guard how maintenance and service have been. Where the older project has a functioning owners’ association, ask to speak to a committee member if you can arrange it, and ask plainly what the promoter was like to deal with after handover: whether the corpus and maintenance funds it was meant to hand over actually arrived, whether snags were fixed, and whether the khata process was straightforward. A promoter’s brochure describes the project you are buying. Its last project describes the promoter.

Before you pay

Put together, these are the checks worth running on any promoter before you commit:

• Get the exact legal name and CIN from the filing or draft agreement, not the brand name.
• Search K-RERA by promoter name for its other projects, their extensions, defaults and complaints.
• Search MCA21 for the company’s status, incorporation date, directors and registered charges.
• Search eCourts by the company’s exact name for pending civil cases.
• Check whether the company has ever been through NCLT, particularly an insolvency case.
• Look up a credit rating, if there is one, and read the outlook and the liquidity section.
• Check the GSTIN is active if the promoter is charging you GST.
• Visit a completed project and talk to its owners’ association, not just the sales office.