Real Estate (Regulation and Development) Act, 2016 | Chapter III

Section 13 of RERA: Advance Payment Limit and Registered Agreement for Sale

Section 13 of the Real Estate (Regulation and Development) Act, 2016 (RERA) limits the advance payment or application fee a promoter may collect before executing and registering an agreement for sale. It also requires the agreement to contain essential particulars of the property, project, payment schedule, possession date and interest for defaults.

Key rule: A promoter cannot accept more than 10% of the cost of an apartment, plot or building as an advance payment or application fee without first entering into a written and registered agreement for sale. The 10% is a ceiling before the agreement, not a mandatory booking amount.

Section 13: Statutory provisions

Section 13(1): Limit on advance payment

A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.

Both requirements must be satisfied before collecting an amount exceeding the statutory threshold: the parties must enter into a written agreement for sale, and that agreement must be registered in accordance with applicable law. Merely issuing a booking receipt, allotment letter or unregistered agreement does not, by itself, satisfy Section 13(1).

Section 13(2): Mandatory particulars of agreement for sale

The agreement for sale referred to in sub-section (1) shall be in such form as may be prescribed and shall specify the particulars of development of the project including the construction of building and apartments, along with specifications and internal development works and external development works, the dates and the manner by which payments towards the cost of the apartment, plot or building, as the case may be, are to be made by the allottees and the date on which the possession of the apartment, plot or building is to be handed over, the rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default, and such other particulars, as may be prescribed.

The agreement must follow the form prescribed by the applicable State or Union Territory rules, where applicable, and include the project and construction specifications, internal and external development works, payment dates and methods, the proposed possession date, reciprocal interest obligations in the event of default, and other prescribed particulars.

Meaning of important terms

Promoter: Section 2(zk) broadly covers persons who construct or cause construction of buildings or apartments for sale, develop land into plots for sale, and other categories specified in that definition. Allottee: Section 2(d) identifies the person to whom an apartment, plot or building is allotted, sold or otherwise transferred by the promoter, including a subsequent acquirer, but generally excluding a person occupying on rent. Agreement for sale: Section 2(c) means an agreement entered into between the promoter and the allottee.

How the 10% limit works

If the agreed cost of an apartment is Rs. 50,00,000, the promoter cannot collect more than Rs. 5,00,000 as advance payment or application fee before the written agreement for sale is executed and registered. Splitting the pre-agreement collection into multiple instalments or labels does not remove the statutory restriction. The precise treatment of a disputed charge depends on its nature and the applicable law.

Practical compliance and buyer safeguards

Verify the project's registration and disclosures on the relevant State or Union Territory RERA Authority website, where registration is required.
Review the prescribed agreement for sale, including the sanctioned plans, specifications, payment milestones, possession date and default clauses.
Ensure the agreement is properly executed and registered before paying more than 10% of the property cost.
Retain advertisements, payment receipts, booking forms, correspondence and the registered agreement.
If the promoter collects excess advance without the required agreement, consider a complaint before the competent Real Estate Regulatory Authority under RERA, subject to jurisdiction and the applicable rules.

Section 11 governs promoters' functions and duties; Section 12 addresses misleading advertisements and prospectuses; Section 14 concerns sanctioned plans and project specifications; and Section 18 addresses specified refund, interest and compensation obligations. Contraventions of Section 13 may also attract the statutory penalty framework, including Section 61, subject to the facts and applicable procedure.

Official legal resources

Consult the India Code legislative database, the Ministry of Housing and Urban Affairs and the relevant State or Union Territory Real Estate Regulatory Authority for the Act, prescribed agreement formats, rules, regulations, notifications and complaint procedure. State-specific rules can affect agreement wording and procedural requirements.