Guides
The 10% Rule — Why You Should Never Pay More Than 10% Before a Registered Agreement
Section 13 of the RERA Act is short and powerful: a promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance payment or application fee without first entering into a written agreement for sale with you and registering it.
What this means in practice
- A "booking amount" above 10% before agreement registration is a red flag.
- "Pay 20% now to lock the price" offers ask you to give up a statutory protection.
- Keep every receipt. Payments should go to the project's bank account mentioned in the agreement, not to individuals.
The 70% escrow companion rule
Section 4(2)(l)(D) requires promoters to deposit 70% of the amounts collected from buyers in a separate bank account, to be used only for land and construction cost of that project. Together with the 10% cap, it is designed to stop money from one project funding another.
Checklist before paying anything
- Verify registration on the official register — here's how.
- Check the promoter's complaints and recovery orders.
- Get a draft agreement for sale and have it read by an advocate.
- Pay the balance only after the agreement is registered.