Builder Asking For More Than 10% Before Registration? Read Section 13

What the section addresses

Section 13 of the Real Estate (Regulation and Development) Act, 2016 provides that a promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot or building as an advance payment or an application fee from a person without first entering into a written agreement for sale with such person and registering the said agreement for sale.

Two requirements sit in that sentence: a written agreement for sale, and registration of it. Both come before the payment crosses ten per cent, not after.

Why the sequence matters

At booking stage, what most buyers hold is an allotment letter or a booking receipt. Those record that a payment was made and a unit was earmarked. They generally do not record the specification, the carpet area, the payment schedule, the possession date or the consequences of delay, which is the substance of what you are buying.

Paying thirty or forty per cent before that substance is documented means committing a large sum on terms not yet agreed. The negotiating position at that point is considerably weaker, because the money is already with the builder.

What to do at booking

• Keep the initial payment within ten per cent until the agreement for sale is executed and registered.
• Ask to see the draft agreement before paying anything, not after.
• Check the RERA registration number of the project and verify it with the State authority.
• Confirm the carpet area, possession date and payment schedule appear in the agreement rather than only in a brochure.
• Keep the allotment letter, receipts, brochure and price sheet together with any emails.

The registration and stamping layer

Registration of the agreement is not only a RERA requirement. The Registration Act, 1908 addresses compulsory registration of instruments relating to immovable property, and an instrument requiring registration that is not registered faces difficulties being received as evidence of the transaction under Section 49.

Stamp duty is a separate obligation and is a State subject, so rates vary. An insufficiently stamped instrument faces admissibility problems under Section 35 of the Indian Stamp Act. Both are worth confirming locally rather than assuming the builder has handled them.

If you have already paid more

A great many buyers are in this position, often having paid a substantial proportion against an allotment letter alone. That does not extinguish your position, but it does change the practical approach, since the leverage of withholding payment is gone.

The immediate step is to press in writing for execution and registration of the agreement for sale, keeping a record of the request. Where the builder resists, that itself is information, and it is the point at which advice from an advocate who handles RERA matters is worthwhile.