Home buying: Why you should check RERA registration of developers and agents

If you are planning to buy a house, it is essential to understand the implications of the cancellation of RERA registrations of a project and agent.

Real Estate (Regulation and Development) Act, 2016

Enacted in 2016, the Act aims to ensure accountability towards allottees (homebuyers) and protect their interests. It seeks to infuse transparency, ensure fair play, and reduce frauds and delays in the real estate sector.

The Act was also introduced to bring professionalism and standardisation across India, establish information symmetry between promoters and homebuyers, and impose certain responsibilities on both parties. Additionally, it sets up a regulatory oversight mechanism to enforce contracts, a fast-track dispute resolution system, and promotes good governance to boost investor confidence.

Mandatory registration

According to the Act, every real estate project with a land area exceeding 500 square metres or more than eight apartments must be registered with the respective RERA. Besides projects, real estate agents must also obtain RERA registration to facilitate transactions of RERA-registered projects.

Moreover, promoters applying for the registration of any real estate project must indicate the names of registered real estate agents who will be working as agents for the project. These agents' names should be displayed alongside other project specifications on the RERA website upon the project's registration.

Cancellation of agent, developer registrations

RERA can cancel the registration of developers and agents under various conditions to ensure accountability and transparency in the real estate market. Vimal Nadar, Senior Director & Head of Research, Colliers India, said, “Fraudulent activities, misleading information, project delivery delay, fund misutilisation, etc, can lead to developer registration cancellations. Similarly, RERA can cancel the registrations of real estate agents if they engage in unethical practices, provide false information, or fail to comply with regulatory requirements.”

The recent cancellation of the registration of 20,000 agents by MahaRERA was due to their failure to comply with the RERA guidelines. Aaron Solomon, Managing Partner, Solomon & Co, said, “To bring about a certain level of consistency in the practice of real estate agents, MahaRERA has initiated a training program, to enhance the knowledge of regulatory practices and to ensure enforcement of the code of conduct and professionalism required to assist the homebuyers. Real estate agents are mandated to undertake this training and obtain a Certificate of Competency.”

Agents are required to renew this certificate as per the guidelines and ensure it is updated with the RERA. As per Solomon, failure to submit this certificate would result in their registration being cancelled/revoked.

However, such cancellations of registration are not permanent and can be restored once the agents comply with the required guidelines. “If they submit the same within one year their registration would be renewed, and their names would be removed from the abeyance list,” said Solomon.

But the question arises, what happens if a homebuyer engages with an agent or buys a property in a project that is not registered with RERA?

Consequences of dealing with unregistered entities

Homebuyers may have to deal with various legal and financial consequences if they engage with an unregistered agent or purchase property in a project without a valid RERA registration. “Dealing with an agent whose RERA registration is not valid or has been cancelled can expose homebuyers to significant risks. Homebuyers could face issues such as unclear transaction terms, hidden charges, and unfulfilled promises, leaving them susceptible to agent malpractices,” said Nadar.

Solomon concurred saying, “If a homebuyer engages in any real estate transaction with an agent whose RERA registration is not valid, the legitimacy and credibility of such a transaction will be in question and the homebuyers may find it difficult to seek legal recourse or assistance from RERA authorities in case of disputes or grievances related to the transaction.”

Further, “the home buyers could suffer financial losses if the agent fails to fulfil their obligations as recovering such amounts would be challenging without any legal protection because they would lose access to remedies and safeguards available under RERA,” added Solomon.

Similarly, if you purchase a property in a project that lacks RERA registration or has had its registration revoked, you may encounter significant issues. “If a homebuyer purchases a property in an unregistered project, he/she is exposed to risks and project delays or fraud due to the lack of regulatory oversight of the project. Additionally, the absence of RERA registration can affect the marketability of the property and buyers may face difficulties in securing loans from financial institutions,” said Solomon.

Therefore, it is advisable to deal only with the agents registered with RERA and also check the RERA status of the project before paying the booking or token amount. According to Akhil Saraf, Founder and CEO, Reloy, a homeowner loyalty platform says that every buyer must meticulously check every project detail on the RERA website before buying. “If a project isn’t registered, never buy it. You’ll lose the built-in protection for your money and legal recourse will be significantly more challenging,” suggested Saraf.

How to check the RERA registration status?

According to the Act, every developer and agent must mention their RERA registration while marketing or communicating with homebuyers. If you have the RERA registration number of the developer or agent, you can verify its status on the RERA website. Even if you don't have the registration number, you can still check whether the project or agent is registered with RERA or not.

“To verify the registration status of developers and agents, individuals can visit RERA websites of their respective states. By navigating to the designated section, users can input relevant details such as the project name, promoter's name or registration number to access requisite information. This online platform provides access to crucial information, enabling homebuyers to make informed decisions regarding their real estate transactions,” Nadar said.

In addition to checking the RERA registration, you should verify that all the necessary approvals and permissions to build and complete the project are in place. Developers are required to upload and regularly update these documents on the RERA website.