Which Projects Are Exempt From RERA Registration in Karnataka

Almost every apartment project, villa community and plotted layout sold in Bangalore must be registered with the Karnataka Real Estate Regulatory Authority (K-RERA). A few kinds of project fall outside that requirement by law. This guide sets out which projects are exempt from RERA registration, how older projects were treated in Karnataka, and how a buyer tests a builder's claim that a project needs no number.

The rule: registration before any sale

Section 3(1) of the Real Estate (Regulation and Development) Act, 2016 bars a promoter from advertising, marketing, booking or selling a plot, apartment or building before the project is registered. The bar covers offers and invitations to buy as well as actual sales. Section 3 came into force on 1 May 2017.

A promoter who sells without registration faces a penalty of up to 10% of the estimated project cost under section 59. Continued default can lead to imprisonment of up to three years, a further fine of up to 10% of the cost, or both. The exemptions are narrow, and a promoter has to fit one of them exactly.

Projects exempt under section 3(2)

Section 3(2) names three cases in which registration is not required:

• Small projects, where the land to be developed is 500 sq m or less, or the apartments proposed number eight or fewer, counting all phases
• Completed projects, where the promoter received the completion certificate before section 3 commenced
• Renovation, repair or redevelopment that involves no marketing, advertising, selling or new allotment of any apartment, plot or building

The Act also allows a state government to set a threshold lower than 500 sq m or eight apartments. Karnataka uses the limits given in the Act.

How small is 500 sq m?

500 sq m is about 5,382 sq ft, a little more than two 40 x 60 ft sites put together. A low-rise building of six or eight flats on a single 40 x 60 ft or 50 x 80 ft site usually falls within the limit. Small builder-floor projects of this kind are common in the older layouts of the city.

Why all phases are counted

The words "inclusive of all phases" stop a promoter from slicing a large scheme into small pieces. The eight-apartment limit is measured against the whole development, across every phase proposed. A separate explanation in section 3 treats each phase of a larger project as a project of its own, so every phase carries its own registration number.

A buyer shown a small block should ask what else the same promoter plans on the adjoining land. Two or three blocks sold one after another on neighbouring sites may add up to one project above the limit.

Redevelopment and renovation

The third exemption covers work done only for the existing owners. A housing society that rebuilds its block purely to rehouse its members sells nothing new, so registration is not required. Once the redevelopment includes extra flats offered to outside buyers, there is marketing and new allotment, and the exemption falls away.

Projects that were under construction in 2017

Projects already under way when the Act began were brought inside it. The first proviso to section 3(1) gave promoters of ongoing projects without a completion certificate three months from 1 May 2017 to apply for registration. The Supreme Court upheld this reach over ongoing projects in the Newtech Promoters judgment of November 2021.

Karnataka narrowed the meaning of "ongoing project" in Rule 4 of its 2017 rules. The explanation to that rule leaves out five kinds of project:

• Layouts where the streets, civic amenity sites and other services had been handed over to the local authority
• Apartment projects where the common areas and facilities had been handed over to a registered association made up of a majority of the allottees
• Projects where all development work was complete and sale or lease deeds for 60% of the apartments, houses or plots had been executed and registered
• Projects where all development work was complete and the application for a completion or occupancy certificate had been filed
• The portion of a project covered by a partial occupancy certificate

These carve-outs matter mainly to resale buyers. A flat in a block finished around 2016 or 2017 may have no K-RERA number for a lawful reason. The occupancy certificate and its date are then the documents to ask for.

What a buyer gives up in an exempt project

An exempt project is lawful, but it is outside the framework that registration brings. A buyer in such a project generally goes without the following:

• A public project entry on the K-RERA portal with the approvals, the completion date and quarterly progress updates
• The separate bank account that holds 70% of buyers' money for land and construction costs
• The 10% cap on money collected before a registered agreement for sale
• Interest or a refund under section 18 when possession is delayed
• The promoter's five-year liability for structural defects under section 14
• A complaint route to K-RERA against the promoter

Other remedies remain open. A buyer may approach the consumer commission under the Consumer Protection Act, 2019, or a civil court for enforcement of the agreement. Both depend heavily on what the signed contract promises, so its terms deserve close reading.

How to test an exemption claim

"Too small for RERA" is a statement of fact that documents can prove. These checks take little time:

• Read the site area on the sanctioned plan or the khata and convert it to square metres
• Count the dwelling units on the sanctioned plan, and ask about every block or phase proposed on the same or adjoining land
• Ask for the completion or occupancy certificate and its date where the claim rests on an older project
• Search the K-RERA portal by promoter name and by project name in any case
• Have the ground for exemption written into the agreement for sale

A project that is plainly above the limits and still absent from the portal is best avoided until it is registered. A buyer may also complain to K-RERA about a project being sold without registration. The Authority can direct the promoter to register and can impose the section 59 penalty.

Advertisements and the registration number

Section 11(2) requires every advertisement or prospectus of a registered project to carry the registration number and the address of the Authority's website. An advertisement for a large project that carries no number is a warning sign in itself. For an exempt project, the brochure, emails and messages should be saved, because the contract and that correspondence are the only proof of what was promised.

Buying in an exempt project

Many small buildings in Bangalore are built by careful local builders, and an exempt project can be a sound purchase. The buyer's own checks simply carry more weight. A lawyer's title report, the sanctioned plan, the khata, and a clear possession date and delay clause in the agreement do the work the regulator would otherwise do.

Payments linked to construction stages reduce the risk further. A home loan helps too, since the lender runs its own legal and technical check before releasing money. For the registration number and status of any project we market, write to us through the contact page.