Many Non-Resident Indians (NRIs) invest in real estate in India to secure long-term financial growth, emotional ties, or rental income. But even after the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), some developers continue to use clauses in builder-buyer agreements that violate statutory guidelines. NRI Investors Beware—these clauses may seem harmless on the surface, but they can place buyers, especially NRIs, at a significant disadvantage.

This article explains the most common illegal builder clauses under RERA, highlights why NRIs should be cautious, and outlines what legal protections exist under Indian property law. NRI Investors Beware—the goal is to educate buyers with clear, factual, and legally grounded information without offering any form of legal advice.

Why This Topic Matters for NRIs

NRIs often face unique challenges during property transactions:

  • They rely on digital communication and cannot visit sites frequently.

  • They depend on intermediaries for updates and verification.

  • They may sign agreements without reviewing detailed legal language.

  • Resolving disputes from abroad is time-consuming and expensive.

These factors create significant NRI property investment risks in India. Understanding RERA norms empowers NRIs to recognize unfair terms and avoid future disputes.

Understanding RERA and Its Impact on Builder Agreements

Purpose of RERA

The Real Estate (Regulation and Development) Act was introduced to bring transparency, accountability, and fairness to the real-estate sector. It requires builders to:

  • Register eligible projects with the state RERA authority

  • Provide accurate project details

  • Maintain financial discipline

  • Deliver possession within committed timelines

  • Avoid misleading or one-sided clauses

Key RERA Protections for Homebuyers

RERA aims to:

  • Standardize builder-buyer agreements

  • Prevent unilateral changes in plans

  • Protect buyers from hidden charges

  • Ensure clear timelines

  • Provide accessible dispute resolution

These protections apply equally to NRIs and resident Indian buyers.

Common Builder Clauses That Violate RERA Norms

Many agreements still include terms that do not comply with RERA standards. Below are the most common non-compliant clauses NRIs must watch for.

Unilateral Increase in Super Built-Up Area

Builders may attempt to increase the super built-up area by a large percentage without informing the buyer.

Why It Violates RERA

Section 14 of RERA requires written consent from two-thirds of allottees for any change in:

  • Area

  • Layout

  • Specifications

A unilateral increase is not allowed.

Risks for NRI Buyers

  • Higher overall cost

  • Reduced usable carpet area

  • Unexpected alterations in unit design

Ambiguous Possession Dates and Excessive Grace Periods

Many agreements specify a vague handover date followed by a long “grace period.”

Why It Violates RERA

RERA mandates a clear and specific possession date.
Grace periods should not be used to delay delivery indefinitely.

Risks for NRIs

  • Prolonged construction uncertainty

  • Increased financial liability

  • Loss of rental income

Clauses Allowing Layout or Design Changes Without Approval

Some builders include provisions that permit them to alter flat layouts or communal facilities.

RERA Compliance Requirement

Significant changes require the buyer’s explicit written consent. Minor changes must not affect the property’s use or value.

Risks for NRIs

NRIs may not discover such changes until possession because they live abroad. This could mean:

  • Missing promised amenities

  • Altered floor plans

  • Lower resale value

One-Sided Cancellation Clauses Favouring the Builder

Some agreements allow the builder to cancel the allotment for minor issues such as delayed payments or incomplete documents.

Why It Violates RERA’s Intent

The law promotes balanced responsibility. Cancellation must be reasonable and not disproportionately favor the developer.

Risks for NRIs

Due to time-zone challenges or overseas travel, NRIs may miss deadlines, increasing the risk of unfair cancellations.

High Penalty for Late Payment by Buyer

Builders sometimes impose interest rates as high as 18% for delayed payments.

RERA Standard

Interest must be charged equally to both the builder and the buyer.
Unreasonably high rates are not permitted.

Risks for NRIs

International remittance delays or exchange-rate fluctuations can expose NRIs to unfair penalties.

Clauses Declaring That RERA Does Not Apply

Some agreements include clauses like:

  • “The buyer shall not claim compensation under RERA.”

  • “RERA obligations shall not apply to this project.”

Why It Is Invalid

RERA is a mandatory statute.
Parties cannot contract out of the law.

Risks for NRIs

NRIs may assume they have no remedy under RERA because of the wording of the agreement.

Mandatory Arbitration Clause That Overrides RERA Remedies

Developers may insert clauses forcing disputes into arbitration.

Legal Position

Arbitration cannot override a statutory right.
Buyers may still approach:

  • RERA Authority

  • RERA Appellate Tribunal

  • Consumer Court

Risks for NRIs

Arbitration may involve:

  • Higher costs

  • Longer timelines

  • Limited statutory protection

Transferring Responsibility for Approvals to the Buyer

Some clauses require buyers to verify:

  • Land titles

  • Plan approvals

  • Occupancy certificate

  • Environmental clearances

Why It Is Non-Compliant

Builders must provide complete and accurate documentation to buyers.

Risks for NRIs

Verifying documents from abroad is difficult and impractical.

Demanding Hidden or Undisclosed Charges

Buyers—especially NRIs—often face additional charges at possession, such as:

  • Clubhouse membership

  • Infrastructure fees

  • Development charges

  • Parking premiums

RERA Requirement

All charges must be declared before the agreement is signed and included in the Agreement for Sale.

Risks for NRIs

Sudden charges may cause financial stress and push buyers into accepting terms they would otherwise dispute.

Limiting the Builder’s Liability for Construction Defects

Builders sometimes reduce defect liability to one or two years in the agreement.

Correct Legal Provision

Section 14(3) of RERA mandates a five-year liability period for structural defects.

Risks for NRIs

Since many NRIs use their property occasionally, defects may not be noticed until much later.

Why NRIs Are More Vulnerable to Illegal Builder Clauses

Limited On-Ground Presence

NRIs cannot monitor project progress physically.

Dependence on Third-Party Intermediaries

Agents or brokers may not always provide complete information.

Less Familiarity with Local Regulations

NRIs may not be fully aware of RERA updates or consumer rulings.

Trust in Reputed Developers

Even top builders have received RERA penalties for non-compliance.

Complexity of Legal Documents

Agreements often exceed 50–70 pages with technical terms.

These factors compound NRI property investment risks in India and highlight why NRIs must review agreements carefully.

How RERA Protects NRI Homebuyers

Mandatory Project Registration

Builders must register all eligible projects with:

  • Clear carpet area

  • Construction timeline

  • Litigation status

  • Approved plans

Financial Discipline Through Escrow Accounts

70% of funds collected must be used only for the registered project.

Standardized Agreement for Sale

State RERA rules outline a uniform format.

Strict Penalties for Delays

If the builder defaults, the buyer is entitled to:

  • Interest

  • Compensation

  • Refund (if chosen)

Online Filing of Complaints

Most states allow digital complaints, making the process easier for NRIs.

Practical Steps for NRIs to Avoid Risky Clauses

Read the Agreement Thoroughly

Do not rely solely on brochures or verbal promises.

Check for RERA Registration

Verify the project’s registration number on the state RERA website.

Ensure All Charges Are Disclosed

Ask for a complete breakup of all charges.

Avoid Agreements With Ambiguous Clauses

Look for clear timelines, possession dates, and specifications.

Track Project Progress Online

Most builders must upload quarterly progress reports.

Keep All Documentation

Emails, letters, and receipts can support you in dispute resolution.

Understand Cancellation Rights

If you need to cancel, RERA provides guidelines to ensure fairness.

Legal References for Key Points

The major legal sections applicable include:

  • Section 3 — Mandatory registration of projects

  • Section 4 — Disclosure obligations

  • Section 11 — Duties of promoters

  • Section 13 — Agreement for sale

  • Section 14 — Adherence to sanctioned plans and defect liability

  • Section 18 — Compensation for delays or loss

  • RERA Rules — State-specific agreement formats

These provisions form the basis for identifying illegal builder clauses under RERA.

Frequently Asked Questions (FAQs)

Are NRIs protected under RERA like resident Indians?

Yes. RERA applies equally to NRIs and residents.

Can a builder force me into arbitration?

No. You may still approach RERA or consumer courts.

What happens if the builder changes the layout without consent?

Significant changes require your written approval.

Are illegal clauses enforceable if I signed the agreement?

No. Clauses violating statutory provisions are not enforceable.

Can NRIs file RERA complaints online?

Yes. Most RERA authorities allow online submissions.

NRIs must be cautious when signing real-estate agreements in India. NRI Investors Beware—although RERA has strengthened homebuyer rights, some developers still include clauses that conflict with statutory requirements. Understanding these clauses, recognizing red flags, and knowing what RERA mandates can protect NRIs from financial loss and contractual exploitation.

Staying informed and vigilant ensures that RERA compliance for builders is followed and that NRI investors beware remains not only a warning—but a practical guide for secure property investment.