Expanding the Scope Beyond Apartments
When the Real Estate (Regulation and Development) Act, 2016 (RERA) was introduced, it was widely celebrated as a "homebuyers' law." Because the media heavily focused on delayed residential apartments, a common misconception arose that RERA only applies to residential flats and housing societies.
This is legally incorrect. RERA is a comprehensive real estate law designed to regulate the entire sector, providing robust protection for investors in commercial spaces and plotted developments as well.
The Legal Definition of a "Real Estate Project"
To understand RERA's jurisdiction, one must look at Section 2(zn) of the Act, which defines a "real estate project." The law explicitly states that a project includes:
- The development of a building or a building consisting of apartments.
- Converting an existing building or a part thereof into apartments.
- The development of land into plots or apartments.
Furthermore, Section 2(e) defines an "apartment" to include any unit intended for any type of independent use, specifically listing use for residential, commercial, or office purposes, or carrying on any business or profession.
RERA for Commercial Properties
If you are buying a shop in a mall, an office space in an IT park, or a showroom in a mixed-use development, RERA fully applies.
- Same Protections: Commercial investors enjoy the exact same statutory protections as residential homebuyers. This includes the mandatory 10% cap on advance payments before registration, the 70% escrow account rule to prevent fund diversion, and the 5-year defect liability period.
- Delay Compensation: If a commercial developer delays the handover of your office or shop, you can invoke Section 18 of RERA to demand a full refund or claim monthly interest for the delay, just like a residential buyer.
RERA for Plotted Developments
Buying a vacant plot of land in a gated layout is a very common investment in India. RERA explicitly covers the "development of land into plots."
- Infrastructure Promises: Developers often sell plots by promising future amenities like paved roads, underground sewage, electricity lines, and clubhouses. Before RERA, builders would take the money, hand over the raw earth, and abandon the infrastructure.
- Registration Mandatory: Today, a plotted development project must be registered with RERA. The promoter is legally bound to complete the promised infrastructure development within the declared timeline before finalizing the sale.
The Standard Exemptions
Whether it is residential, commercial, or plotted land, a project is only exempt from RERA registration under Section 3 if:
- The area of land proposed to be developed does not exceed 500 square meters.
- The number of apartments/units proposed to be developed does not exceed 8 units (inclusive of all phases).
- The promoter had received a completion certificate prior to the commencement of the RERA Act.