What Happens If RERA Registration and Renewal Expire Before a Sale Deed Is Registered?

What Happens If RERA Registration and Renewal Expire Before a Sale Deed Is Registered?

The Indian real estate sector has transformed greatly since the Real Estate (Regulation and Development) Act, 2016 mandated RERA registration. The law allows home buyers to have protection from developers taking delay or fraudulent actions through greater accountability, transparency and discipline in the industry. But one issue that can be confusing is what happens if a builder’s RERA license registration or renewal has not occurred prior to the execution of the sale deed? Can a buyer register the property? Is the sale legally valid? In this blog, we'll examine these questions and answer what expiration of RERA licensing means for the sale deed, what it may mean for both developer and buyer compliance.

What Is RERA Registration and Why It Matters

To comprehend the implications of expiration, we should first review the basics.
R ERA registration, required for all real estate projects meeting specified criteria, is mandatory for:

• Projects that exceed 500 square meters and exceed 8 units for sale.

• Projects that did not receive a completion certificate prior to the implementation of RERA.

The developer must acquire RERA license registration from the proper state authority before advertising, marketing, or selling any units.

This registration guarantees:

• The layout, approvals, and financial structure are transparent for the project.

• Funds collected from the sale of units by the developer will be used only for development of the project.

• The buyer has access to project information by way of the state RERA portal to review the details of the project.

In essence, RERA registration in India protects buyers and holds the builder accountable. Any sale or promotion without valid registration would be considered illegal under the Act.

The Duration and Renewal of RERA Registration

Every RERA registration is valid for a specific period of time which is usually related to the estimated completion date of the project.

After this specific period expires, the developer must apply for a RERA registration renewal before the expiry date. Renewal of the RERA registration keeps the project legally active and allows the builder to market, sell, or register property.
If RERA registration renewal is not achieved on time:

• The registration will automatically lapse.

• The developer will be legally prohibited from marketing or selling any unit.

• The project will be noted as "expired" on the RERA portal.

Thus, renewal is not just a formality, it is a legal requirement.

What Happens If the RERA Registration Expires?

Failure by a developer to renew their RERA license registration before its expiry can have extreme consequence. For the builder, it means that they no longer have any legal authority to continue doing business under that registration. Section 7 and 8 of the RERA Act provide that upon expiry or revocation:

• The Authority has the ability to freeze the project’s bank account in order to protect the interests of buyers.

• The project shall be passed to another competent authority or association of allottees to complete remaining work.

• The builder can advertise or book or sell any unit from that point forward.

In other words, there should be no new sale deed executed after the date of expiry of the RERA registration.

The Legality of Sale Deed Registered After Expired RERA License

This is the most important question - what happens if a builder has executed a sale deed after the RERA registration has expired?

a. Sale Deed After Expiry - Void

If a project has expired under RERA’s legal framework, the builder does not have the valid authority to sell, transfer or market any unit. So,

• Any sale deed registered subsequent to expired RERA registration may be void or unenforceable under the RERA Act.

• The buyer may face considerable legal issues, particularly regarding title, subsequent resales or any bank finance.

b. Builder Liability

The builder may be liable for a:

• Significant penalty under Section 59 of the RERA Act;

• Possible cancellation of registration (if renewed in the future); and

• Criminal liability if it can be proven that the builder intended, or acted negligently, in a misleading or fraudulent manner.

c. Buyer Risk

For buyers, registering a property sold after the expiry of the project’s RERA registration is a risk due to the fact that:

• The sale deed may not be RERA endorsement of the project;

• Buyer can no longer rely on the statutory protection afforded to them under RERA and will now have to rely only on the contract; and

• Further, local authorities may not issue completion/occupancy certificates related to the sale property.

Thus, both the developer and the buyer need to ensure there is valid RERA registration on the day the sale deed is executed

Why Renewal of RERA Registration Is Equally Important

Similar to the registration process, if the project is not completed in the validity period, the renewal of RERA registration is an obligation.

What Does Renewal Mean?

If the project is not completed within the validity period (typically up to 5 years), the promoter must apply for a renewal of RERA registration to continue with development of the project and legally market or sell the project, Failure to renew the RERA registration will result in automatic lapse of the RERA registration approval, this means:

• The builder cannot sell, market, or execute any sale deed; and

• The project is classified as unauthorized under law.

So, even if a builder has legitimate reasons for a delay, continuing with the project without a valid RERA registration certificate is a violation of the Act.

Can the Sale Deed Be Regularized Later?

In some situations, developers make an attempt to regularize sales that occurred after the period of registration is lapsed but that is not very straightforward.

The RERA Authority may consider applications for renewal if:

• The builder applies prior to the expiration of the grace period and shows valid reasons for the lapse.

• The project is in compliance in every other way.

• There has been no fraudulent sale or misrepresentation.

Even then, there is a large element of just discretion on the part of the Authority. Buyers that may have purchased units during the expired period are required to approach the Authority with evidence of good faith and request for the sales to be legally regularized.

Precautions Buyers Should Take Before Registering a Sale Deed

Before signing or registering the sale deed, buyers need to do these:

1. Review RERA Registration: The buyer should log on to the official RERA website for their state (for example MahaRERA in Maharashtra, UP-RERA in Uttar Pradesh, RERA Karnataka) and look for the project registration number.

2. Review Renewal Status: Check for the current active status of the registration and whether or not it has been renewed. This is especially important with some project delays when timelines initially provided may not reflect reality anymore.

3. Request Written Version: Request the builder provide you a copy of the RERA registration for the project prior to registration.

4. Do Not Rush: If the sale deed is registered when the RERA license registration is being renewed, don't do the sale deed - wait for it to become officially confirmed.

5. Consult a Lawyer: If you have not already done so, consult a lawyer so that you can be sure you are paying or signing on a project that is compliant with the RERA registration.

These little steps can help save you to avoid significant legal and financial trouble down the road.

What Developers Should Do to Avoid Expiry Consequences

Developers must renew RERA registration on time to ensure integrity and compliance. Here are the ways to ensure that:

• Expiry Dates Tracking: Have a system of internal alerts to keep track of renewal deadlines.

• Early Application Submission: Apply for renewal at least 60 days before it expires.

• Use of Accurate Documentation: Applications for renewal should include revised timelines, project approvals, financial disclosures, etc.

• Avoid promoting any False or Misleading claims: You cannot advertise or sell during the lapse period.

• Provide RERA Registration Service Provider: Having an expert to assist will help ensure timely renewal/ renewal approval with a process to flow the documentation.

This will not only save developers from legal consequences, but also provide trust with the client and transparency of the project.

Role of RERA Authorities in Expired Registrations

When a project's RERA registration comes to an end in India, the Authority will step in to protect the homebuyer. The Authority is authorized to:

• Take over supervision of the project.

• Appoint a new promoter or transfer control to the association of allottees.

• Ensure the funds collected are used solely for the completion of the project.

• Place penalties or restrictions on the builder.

This framework reaffirms the RERA mandate to protect homebuyers from unscrupulous builders and ensure all projects are completed honestly.

Importance of RERA Registration Service for Builders

Understanding all aspects of RERA compliance can be a daunting task especially for developers managing multiple projects in different states. This is where RERA registration services can be a true asset.

Your RERA registration service provider will assist with:

• Preparing and submitting registration and renewal documents.

• Ensuring all statutory compliance obligations are met.

• Managing communication with state RERA authorities.

• Taking measures to not be fined and not letting your registration lapse.

For growing developers, outsourcing their RERA license registration and renewal is the best way to preserve their credibility and prevent legal disruption.

How RERA Compliance Builds Buyer Confidence

From a market angle, RERA registration is not only a statutory requirement, it is a sign of trust. Today's buyers want to invest in RERA-registered projects for several reasons:

• They are sure their investments are legally protected.

• They can see transparency in both construction progress as well as how their funds are used.

• The developer is legally obliged to be responsible.

When a project’s RERA registration in India is valid and active, it doubles the credibility of the property and value for re-sale. On the other hand, expired registration is a red flag, and will automatically deter buyers and lenders.

How Builders Can Avoid These Consequences

Prevention is a better alternative to penalty. Builders and promoters can easily avoid these issues by being proactive with their RERA compliance

Here’s how:

1.Keep track of the RERA validity period

Develop the habit of recording the valid date of your RERA registration. Set alerts or reminders to renew your registration at least 60 days before it expires.

2. Submit your application in a timely manner

Builders are required to submit a RERA registration renewal application along with the necessary documents, project progress reports, and revised timelines. If they submit the renewed application in a timely manner - then the project's legal status will remain valid, allowing builders to continue to market and sell their project.

3. Engage a professional RERA registration service

Working with a highly skilled RERA registration service specialist will allow greater benefit of your time and errors. Your professional RERA registration service provider will take care of the following:

• Application filing

• Renewal submissions

• Documentation and compliance oversight

Your professional RERA registration service provider will ensure that you renew your RERA registration for builders and keep the registration valid which will in turn - save you a costly legal issue down the road.

4. Provide buyers accurate ongoing updates

Builders should always provide buyers accurate updates regarding their RERA registration, including displaying the RERA number with all marketing materials. Builders should also give updates regarding any application for renewal.

Conclusion

RERA has been a game-changer for the Indian real estate industry, providing transparency and regulation. For builders, timely registration and renewal of RERA is not only a subject to compliance, it is an essential driver of credibility in business, hope in investors, and trust from buyers. When timely registration or renewal of RERA occurs, every sale deed, transaction, and promise made is enforceable and valid. When not timely completed, builders exposed their actions to invalid sales, steep penalties, and irreparable reputational damages. Builders, do not jeopardize your reputation in business. Obtain professional expertise, through a trusted and reputable RERA registration service provider, while continuing to champion compliance, confidence and readiness for the future.

Frequently Asked Questions (FAQ)

1. What happens if RERA registration expires before a sale deed is executed?

If RERA registration expires, the builder cannot legally sell or transfer any property. Any sale deed executed after expiry can be declared invalid under the RERA Act.

2. Can a project continue if RERA registration renewal is delayed?

No. The project cannot advertise, book, or sell any units during the lapse period until the registration is renewed.

3. Is a sale deed valid if executed after RERA registration expiry but before renewal?

No. Such a deed is considered illegal and may be challenged in court or rejected by authorities.

4. How can a buyer check a project’s RERA registration status?

Buyers can visit their state’s RERA website (like MahaRERA, UP-RERA, etc.) and search by project name or registration number to confirm the current status.

5. What is the penalty for selling after RERA license expiry?

Under Section 59 of the RERA Act, the developer may face a penalty of up to 10% of the project cost and potential imprisonment for repeated violations.