Understanding RERA for NRIs
India’s real estate market has long been an attractive investment destination for Non- resident Indians (NRIs). For many NRIs , purchasing property in India is not just a financial decision but also an emotional one –which is often tied to future plans of NRIs like :
- Returning home to India
- Securing diversifying family assets in India
- Building long term wealth in India
However, for years the real estate sector faced challenges such as :
- Delays in completion of real estate projects
- Lack of transparency in investments
- Diversion of funds by developers
- Misleading advertisements
These issues particularly affect NRIs, who invest from abroad and often rely entirely on developers or agents for information.
To address these long standing concerns and bring greater accountability to the real estate sector, the government of India has enacted the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA. Each state has its own RERA authority and its own RERA Appellate Tribunal.
The act represents a significant reform which aims at :
- Regulating property developers
- Ensuring transparency in real estate transactions
- Protecting the interests of home-buyers be it NRIs or residents of India
Understanding the purpose of RERA
The primary objective of RERA is to create a fair and transparent real estate market where both developers and buyers operate within a clearly defined legal framework. Before the introduction of this legislation, the real estate sector was largely unregulated, allowing developers considerable discretion in project timelines, pricing structures and contractual terms.
RERA introduced a system of regulatory authorities at the state level that :
- Overseas real estate projects
- Ensure compliance with the law
- Maintain public databases of registered projects
- Enforce disclosure requirements
- Adjudicate disputes between developers and buyers
- Bring transparency and accountability into the sector
RERA has significantly improved the confidence of investors, particularly those residing outside India.
Mandatory registration of real estate projects
One of the most important mechanisms through which RERA regulates property developers is the requirement of mandatory project registration.
Developers are legally obligated to register their real estate projects with the respective state RERA authority before advertising, marketing , or selling any property units.
During the registration process, developers must submit :
- Comprehensive details about the project
- Land ownership documents
- Layout plans
- Government approvals
- Project timelines
- The number of units being offered
These details are then made publicly accessible on the official RERA website (https://rera.gov.in), enabling potential buyers- including NRIs – to verify the authenticity and legal status of a project before making any investment.
Financial discipline through Escrow Mechanisms
Another critical provision introduced by RERA is the requirement that developers deposit a substantial portion of the funds received from buyers into a designated escrow account. Typically, at least seventy percent of the project funds must be placed in this account and can only be used for construction and land related expenses.
This mechanism was introduced to address a common problem in the real estate sector where developers used to divert funds from one project to finance other. Such practice often resulted in incomplete or indefinitely delayed projects.
By restricting the use of buyer funds strictly to the project by implementing escrow mechanism for which they were collected, RERA ensures :
- Greater financial discipline
- Reduces the risk of stalled developments.
For NRI investors, who may not have the ability to closely monitor the progress of construction, this provision offers an important layer of financial protection.
Ensuring timely completion of projects
Project delays were historically one of the most frequent grievances among home-buyers. Developers often failed to deliver the possession of the property within the promised timeline, leaving the buyers financially burdened and uncertain about the status of their investments.
Under RERA, developers are legally required to adhere to the completion schedule declared at the time of the project registration. If a developer fails to deliver possession within the agreed timeline:
- The buyer is entitled to withdraw from the project
- Receive interest compensation for the delay
- Buyer can file a complaint before RERA authority
- The developer has to face penalties such as monetary penalties
- The buyer can appeal in RERA Appellate Tribunal
This provision has significantly strengthened the bargaining power of home-buyers and introduced a strong incentive for developers to meet their commitments.
Standardization and transparency in property transactions
RERA has also addressed issues related to misleading measurement standards in property sales. In the past, developers frequently marketed properties based on “super built up area”, which included common spaces such as lobbies, staircases and amenities. This often resulted in confusion regarding the actual usable space within the property.
The Act now mandates that properties be sold based on “carpet area”, which refers to the net usable floor area within an apartment.
For NRI buyers evaluating properties remotely this standardized definition ensures:
- Greater clarity
- Prevents developers from inflating property sizes through ambiguous measurement practices
- Simplifies comparisons
- Improves transparency
Regulation of advertising and marketing practices
Another area where RERA plays a crucial role is in the control of advertising and promotional activities by developers.
Developers are prohibited from:
- Advertising
- Promoting real estate projects without obtaining RERA registration
- Every advertisement must include the project’s official registration number
- Making exaggerated or misleading claims regarding project features, amenities, or delivery timelines.
The requirement helps prospective buyers verify the legitimacy of a project before making financial commitments.
Protection against Structural defects
RERA also provides protection to home-buyers after possession of the property has been delivered. Developers are held responsible for addressing structural defects or poor construction quality that becomes evident within five years of possession. If such defect arise, the developer is legally obligated to rectify them without imposing additional charges on the buyer.
This provision reinforces the principle of developer accountability and ensures that buyers receive properties built to acceptable standards.
Dispute resolution and legal remedies
In addition to regulatory oversight, RERA provides an accessible dispute resolution mechanism. Home-buyers , including NRIs can file complaints against developers before the respective state RERA authority if they encounter issues such as
- Delayed possession
- Breach of agreement
- Non- compliance with project specifications
The authority has the power to conduct:
- Hearings
- Investigate complaints
- Issue legally binding orders
- If either party is dissatisfied with the decision, an appeal may be filed before the real estate Appellate Tribunal
This structured dispute resolution system offers a faster and more specialized forum compared to traditional civil litigation.
Impact on NRI investment confidence
The introduction of RERA has significantly improved investor confidence in the Indian real estate sector. For NRIs in particular, the law provides:
- Much needed transparency
- Regulatory oversight and
- Legal protection in an industry that was previously perceived as risky and opaque
- Project registration
- Financial accountability
- Standardized property measurements and
- Enforceable buyer rights
RERA has transformed the relationship between developers and investors. While challenges related to implementation and procedural delays still exist in some states, the overall framework has created a more reliable environment for property investment.
Important Points to check before making an investment :
- The buyer should check if the registration of the project is still valid or not.
- The buyers should check if the builders have taken up the extension for the project or not.
- It is very important to check the validity of the licence to development as the licence is only valid for 5 years after that it needs to be renewed.
- It is compulsory for a builder to provide the details of the land owned by the builder for the project, the builder is given permission to sell the project only for the land owned by the builder and then the builder can allot it to the buyer.
- No builder can take more than 10% of the advance amount before entering the agreement to sell.
- The agreement to sell should be registered at the office of sub registrar.
- The RERA number and name of the project must be clearly mentioned on sale deed.
- It is highly recommended to only deal with the real estate agents who are registered with RERA
- If a builder fails to deliver a property to an allottee on time, NRIs can file a complaint online via the RERA portal.
The enactment of the Real Estate (Regulation and Development) Act, 2016 marks a significant step towards reforming India’s real estate sector. By introducing transparency , accountability, and effective regulatory oversight, RERA has fundamentally reshaped the legal landscape governing property development.
For NRIs seeking to invest in Indian real estate, the act offers a crucial layer of protection that was previously absent. It empowers buyers with access to verified information, financial safeguards, and effective legal remedies against developer misconduct.
As the real estate sector continues to evolve, the effective implementation of RERA will remain central to maintaining investor trust and ensuring that property development in India proceeds in a transparent , responsible and legally accountable manner. Before investing an NRI should verify the “ground reality” check of the builder’s financial health (balance sheets), and ensure a valid occupancy certificate (OC) or completion certificate (CC) is in place before final registration.
This is solely for educational purposes, before making any investment it is advised to take professional help.
NRI Legal World can be contacted at info@nrilegalworld.com or at +91 9709692096
Frequently Asked Questions
Q.) Can NRIs buy a flat in India ?
Ans: Yes, NRIs are legally allowed to buy flats or any properties in India. The permission should be taken from the Foreign Exchange Management Act, 1999 (FEMA) and rules issued by the Reserve Bank of India (RBI).
Types of properties which NRIs can buy are as follows :
- Residential property – flats, apartments, houses
- Commercial property – offices, shops,commercial spaces
The NRIs do not need permission from the RBI for the purchase of these properties
Property which NRIs cannot buy are as follows :
- Agricultural land
- Plantation property
- Farmhouses
However, NRIs can receive these properties through inheritance or they can get it as a gift from an Indian resident.
Q.) Can NRIs buy showroom in India ?
Ans: Yes, NRIs can legally buy a showroom in India as a showroom is considered a commercial property and NRIs are allowed to purchase both residential and commercial properties in India without taking permission from RBI. This is allowed under the Foreign Exchange Management Act, 1999 (FEMA) and regulations issued by the Reserve Bank of India (RBI).
If the showroom is a part of a commercial project or complex then it must comply with the Real Estate (Regulation and Development) Act, 2016, which regulates developers and protects buyers, including NRIs.
NRIs can also rent out the showroom and earn income in India.That income is usually credited to their NRO account and is subject to Indian taxation.
Q.) Can NRIs file a complaint before RERA if they face any quality related issue after buying a property ?
Ans: Yes, NRIs can file a complaint before the RERA Authority if they face quality related issues in a property purchased in India. This right is provided under the Real Estate (Regulation and Development) Act, 2016, which protects allottees (Buyers).
Right to complain for structural or quality defects
Under section 14 (3) of RERA, if there is any structural defect or poor quality construction such as cracks in walls or foundation, water leakage or seepage, poor electrical wiring, etc. the buyer can file a complaint against the developer.
The developer must rectify the defect within 30 days without taking any extra cost from the buyer. The developer is responsible for such defects for 5 years from the date when the buyer has taken the possession.
NRIs can file a complaint through online state RERA portal , through a Power of Attorney holder in India, or through a Lawyer.
Q.) Can NRIs trust real estate builders or real estate agents in India ?
Ans: Yes, NRIs can trust real estates builders and agents in India, but they should be cautious and verify legal safeguards before investing and RERA plays a vital role in that, as per Real Estate (Regulation and Development) Act, 2016 (RERA), every real estate project and real estate agent must be registered.
The developer must disclose:
- Project details and government approvals to it
- Construction timelines
- Land ownership information
- Financial details of the project
This information is publicly available on the official RERA websites of each state, through which NRIs can verify the credibility of the developer before investing.
RERA also requires real estate agents and brokers to register with the authority, an unregistered agent cannot legally facilitate property transactions in a RERA registered project.
- So, the NRIs should take the following precautions before making any investment:
- Verify RERA registration of the project and the agent
- Check the developers past projects and reputation
- Conduct verification through a Lawyer
- Avoid making any payments outside of the official banking channels