Buying before RERA registration

A pre-launch offer asks you to pay for a flat before the project is launched, in return for a price the public will not be offered later. It is sold as a reward for going first. In Karnataka, as everywhere in India, it is also an offer the builder is not allowed to make.

Under RERA, a project can be sold once it is registered, not when the builder says it has launched. Until Karnataka RERA has given it a registration number, the builder may not advertise it, market it, take a booking or sell a single flat, and no agent may do any of that for it. Registration is where the builder has to show it holds the land and has its approvals, and where it declares on oath that most of your money will be kept in a separate account. A discount for paying before that point is a discount for doing without those protections.

This guide sets out what the law bans and what breaking it costs a builder, what “pre-launch”, “EOI” and “soft launch” amount to in law, what you give up for the lower price, how to check a registration, and what to do if you have already paid.

A project’s legal life

Selling flats is the last step in a sequence the law fixes. The land comes first, then permission to build on it, then registration with Karnataka RERA, and only then the launch. Anything sold before step 03 is, by definition, sold before launch.

A project that has not reached step 03 may not have finished step 02 either. The state’s own FAQ on its RERA rules says a project can be registered “only after the project plan has been approved by the plan approving authority and issue of commencement certificate.”

What the law bans

Section 3 of the Real Estate (Regulation and Development) Act, 2016 has been in force since 1 May 2017. Its first sub-section is the whole rule: “No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building … in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority.”

It is drafted widely on purpose. Its verbs cover every stage of a sale, from the first hoarding to the final signature, and “part of it” means a single tower or a single flat is caught as surely as a whole project. The Act defines an advertisement just as widely: “any notice, circular or other documents or publicity in any form” that tells people about a project or invites them to buy, “or to make advances or deposits” for it (section 2(b)). A newspaper advertisement, a text message, a portal listing and a salesperson asking for a deposit all fall within one part of the rule or another.

The ban reaches the people who sell for the builder. A real estate agent must itself be registered with K-RERA, and may not help sell any flat in a project that is not registered (sections 9 and 10(a)). In December 2019 K-RERA gave property portals the same message, directing them not to spread “wrong information of non-registered properties”.

Once a project is registered, its advertisements have to prove it. Every one must carry the registration number and K-RERA’s web address (section 11(2)). K-RERA’s circular of 14 November 2019 adds the detail: in print and on hoardings the number goes in the top right corner, in lettering at least half the size of the project’s name; radio, electronic and SMS advertisements must state it prominently; it must be on the display board at the site; and no advertisement may carry a disclaimer that its information is subject to change. So an advertisement with no number is either for a project that cannot yet be sold or in breach of the rules. Either way, stop there.

Who does not need to register

Section 3(2) exempts three kinds of project. The first is a small one: land of no more than 500 square metres, or no more than eight flats counting every phase. The second is a project that had its completion certificate before the Act came into force. The third is renovation, repair or redevelopment that involves no marketing, advertising, selling or new allotment. The Act lets a state lower the size limits; Karnataka’s RERA Rules, 2017 do not, so the Act’s figures apply. A project with more than eight flats on more than 500 square metres of land has to be registered before anything is sold.

Two more points narrow the gaps. Where a project is built in phases, “every such phase shall be considered a stand alone real estate project” with its own registration, so a registered first phase does nothing for the second. And although the ban is written for planning areas, which the Act defines to include development and local planning areas, K-RERA can order a project outside one to register if it thinks buyers need the protection.

The penalty for selling early

Section 59 sets two levels. A promoter who breaks section 3 is liable to a penalty of up to 10% of the estimated cost of the project, as K-RERA works it out. One who then ignores K-RERA’s orders, or carries on selling, can be sent to prison for up to three years, fined up to a further 10%, or both. The estimated cost is the whole cost of developing the project, land and taxes included (section 2(v)), so the ceiling is large: on a project estimated at ₹150 crore, up to ₹15 crore, and up to ₹15 crore more if the selling goes on. An agent who sells a flat in an unregistered project faces ₹10,000 for every day the breach continues, up to 5% of the price of the flats it helped sell (section 62). Where the promoter is a company, the directors and managers in charge can be prosecuted too (section 69).

K-RERA has used these powers from the start. When the deadline for registering projects already under way passed on 31 July 2017, it issued a public notice that unregistered projects were barred from being advertised, booked or sold, and that penalties would follow. In December 2017 it told builders of such projects that applying late was itself a breach of section 3, and that they would have to pay a penalty of up to 10% of the project cost under section 59(1) before their registration went ahead. It also keeps a public list of projects it is investigating as unregistered, with a plain warning: “The Public is warned that dealing with these projects is at their own risk as these are not registered with RERA.”

None of this puts money back in your pocket. Penalties go to an account of the state government (section 76(2)). Your money comes back only through a claim of your own, which is what the last part of this guide is about.

Pre-launch, EOI, soft launch

None of these words appears in the Act. They are sales labels, and the law looks past them to what is actually happening.

• Pre-launch. Selling before registration. That is exactly what section 3 bans.
• Expression of interest, or EOI. A form and a payment that “reserve your interest” in a coming project, often described as fully refundable. If it asks you for a deposit towards a flat in a project that is not registered, it invites you to purchase in the sense of section 3, whatever the form calls it. Section 13 treats money taken “as an advance payment or an application fee” as part of the price, so an EOI payment is not something separate.
• Soft launch, or a private preview. An offer to existing customers, employees or a channel partner’s clients before the public launch. Section 3 bans inviting people to buy “in any manner”. A smaller audience is still an audience.
• “RERA applied for”. An application is not a registration. K-RERA has 30 days to grant or refuse one; if it does neither, the project is treated as registered and is given a number within seven days (section 5). Either way, the ban lasts until there is a number you can look up.

A promise of a refund does not make an unlawful offer lawful. It only tells you what the builder says it will do if you ask for your money back. And if the project is registered later and you go ahead, nothing you signed before the registered agreement can reduce your rights under that agreement or the Act. Karnataka’s rules say so in terms (rule 8A(2)), which is the answer to any waiver buried in an EOI form.

What the discount leaves out

A registered project comes with protections that a pre-launch deal does not have. Each is worth money, which is why the discount exists.

To put numbers on it, take a flat that will launch at ₹90 lakh and is offered before launch at 5% less, ₹85.5 lakh, against an EOI of ₹5 lakh. These figures are illustrative; no official source publishes typical pre-launch discounts. The ₹4.5 lakh saving is real. So is the ₹5 lakh sitting with a builder that has promised nothing enforceable about where it goes or when it comes back. Paid to the same builder after registration, at least ₹3.5 lakh of that ₹5 lakh would have to go into the project account.

No approved plan

A project cannot be registered without an authenticated copy of its approvals, its commencement certificate and its sanctioned plan (section 4(2)(c) and (d)). Once it is registered, the builder must build to that plan (section 14(1)), may not change your flat’s plan or specifications without your consent (section 14(2)), and must show you the sanctioned plans when you book (section 11(3)). Before registration, the floor plan in a brochure may never be approved in that form. The number of floors, the flats on each, and the size of yours can all change, and nothing you hold says they cannot.

No project account

With its application the builder has to declare on affidavit that 70% of the money it collects from buyers “shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose” (section 4(2)(l)(D)). Money comes out only in step with construction, certified by an engineer, an architect and a chartered accountant, and the accounts are audited every year. Before registration there is no such declaration. Your money can go wherever the builder decides, including into buying the land or into another project.

No registered agreement

A builder may not take more than 10% of the price “as an advance payment or an application fee” without first signing and registering a written agreement for sale (section 13(1)). On a ₹90 lakh flat that is ₹9 lakh. In Karnataka the agreement has to follow the model form in the state’s RERA rules (rule 8A), and that form recites the project’s registration number. So a proper agreement cannot be written for a project that is not registered, and an EOI that takes more than 10% breaks section 13 as well as section 3.

Refunds only by contract

RERA’s refund rights are built on a registered project and an agreement for sale. If the builder misses the agreed date or its registration is revoked, you can withdraw and be repaid with interest (sections 18 and 19(4)), at State Bank of India’s highest marginal cost of lending rate plus 2% (rule 16), which came to 10.80% a year on 10 Sep 2026, and the money is due within 60 days (rule 17). If a registered builder at fault had to repay the ₹5 lakh from the example above, it would owe ₹54,000 of interest for every year it had held it.

Before registration, what you can enforce is mostly the receipt’s own terms. The Act does give anyone two further claims. You can complain that the builder broke section 3, and section 13 if it took more than 10%. And if you paid on the strength of an advertisement or a model flat that contained a false statement, section 12 entitles you to compensation, or, if you withdraw, to “his entire investment along with interest at such rate as may be prescribed”.

Check the registration

Look the project up yourself on rera.karnataka.gov.in. A number on a brochure, a screenshot or a salesperson’s phone proves nothing until it resolves on the register to the same project name, the same promoter and the same address.

Then check that the registration covers your flat. Each phase has its own registration, so a number for phase one says nothing about phase two, and the filing lists the flats for sale in that phase with their type and carpet area (section 4(2)(h)). Find your tower and your flat type in it. Look for the project on K-RERA’s list of projects under investigation as well, which it updates every Friday.

Our guide to reading a Karnataka RERA filing walks through the record itself: what the registration number tells you, the litigation declaration, the complaints register and the quarterly progress reports. Read it before you pay a booking amount on any project, registered or not.

If you have already paid

The Act’s ban is on the promoter and its agents, not on you. What you need now is proof of what you paid and to whom, and a clear route to get it back if you decide to.

The EOI receipt, line by line

Here is the kind of receipt a pre-launch payment often comes with, and what each line should tell you.

1. The seller. A trade name, with no company or LLP name and no registration number. The Act makes the builder and anyone who sells for it jointly liable as promoters (section 2(zk)), but you have to be able to name them. Ask for the legal entity’s full name and its company or LLP number on the receipt.
2. How you paid. Cash leaves no trail. Pay by bank transfer or cheque into an account in the legal entity’s own name, and keep the proof.
3. “Upcoming project”. No registration number and no K-RERA web address, which every advertisement for a registered project must carry. This is the mark of a project that cannot yet be sold.
4. Super built-up area. The model agreement prices a flat on its carpet area. A super built-up figure tells you little about the floor you would get; our guide to carpet area and super built-up shows how big the gap can be.
5. No flat. With no tower, floor or unit number, there is nothing specific to hold the builder to at launch.
6. “RERA: applied for”. An application is not a registration. Until K-RERA issues a number, the builder may not take this money at all.
7. The refund terms. A short window, no interest, and forfeiture at the builder’s discretion. Before registration these terms are most of what you have, so read them before you pay.
8. The signature. A sales manager may have no authority to bind the company. Ask who signs for it, and get their name and designation on the receipt.

If your receipt looks like this, ask for a proper one: the legal entity’s full name and registration number, the project, the flat if one has been identified, the amount, the date, how you paid, the refund terms, and the name of an authorised signatory. Ask too, in writing, when registration is expected and what happens to your money if it does not come. Keep every reply.

Complaining to K-RERA

Section 31 lets “any aggrieved person” complain to K-RERA about “any violation or contravention” of the Act by a promoter or an agent. It does not require you to hold an allotment, or the project to be registered. K-RERA’s online complaint form allows for this: if the project is not on the register, you type in its name and the promoter’s yourself.

• Which form. A complaint about a breach of the Act, including a claim for a refund with interest, goes to the Authority on Form N. A claim for compensation, including under section 12, goes to the adjudicating officer on Form O. The Supreme Court drew that line in Newtech Promoters (2021).
• The fee. ₹1,000 for either (rules 29 and 30), paid online through the state treasury’s gateway when you file.
• What to attach. The receipt, proof of payment, the brochure or advertisement you relied on, and every message and letter about the payment.
• How long it takes. The Act asks the Authority and the adjudicating officer to decide within 60 days and to record their reasons when they cannot (sections 29(4) and 71(2)). A refund they order is due within 60 days (rule 17).

K-RERA’s website also has a form to report an unregistered project, which is the route if you want it looked into without making a claim of your own. If the sum is large or the builder disputes what you paid, a lawyer’s letter before the complaint is worth the fee; it sets out the facts and the law in a form the builder has to answer.

Before you pay anything

• Look up the registration number yourself on rera.karnataka.gov.in, and match the project, the promoter and the address.
• Find your tower or phase in that registration; a number for one phase does not cover the next.
• Check K-RERA’s list of projects under investigation for the project’s name.
• Pay no more than 10% before an agreement for sale on Karnataka’s model form has been signed and registered.
• Pay the legal entity, by bank transfer or cheque, and get a receipt with its full name, the flat and the amount.
• Read the refund terms before you pay, and keep them.
• Ask for the sanctioned plan and your flat’s carpet area, not a brochure.