Buying Property in India can be an exciting opportunity for Non-Resident Indians (NRIs) looking to invest in residential or commercial real estate. However, the process of buying property in India involves navigating complex legal frameworks, particularly under the Real Estate (Regulation and Development) Act, 2016 (RERA). RERA was introduced to ensure transparency, accountability, and protection for property buyers, including NRIs. Understanding RERA compliance is crucial for making safe and legally valid property investments in India.

What is RERA and Why It Matters for NRIs

The Real Estate (Regulation and Development) Act, 2016, commonly called RERA, regulates the real estate sector in India. It addresses concerns such as project delays, lack of transparency in property deals, and unfair practices by developers.

For NRIs, RERA compliance provides multiple benefits:

  • Legal protection: Ensures that property purchases are governed under a structured legal framework.

  • Transparency: Developers must disclose project details, approvals, and timelines.

  • Dispute resolution: RERA authorities offer a formal mechanism to address grievances related to real estate transactions.

RERA is applicable to all residential and commercial real estate projects above 500 square meters or eight units, making it relevant to NRIs investing in substantial property ventures.

Eligibility of NRIs to Buy Property in India

Under Indian law, NRIs are allowed to buy both residential and commercial properties in India. Key points to note include:

  • The Reserve Bank of India (RBI) must grant specific approvals before NRIs can purchase agricultural land, plantation property, or farmhouses.

  • Investment can be made in apartments, villas, or commercial units, provided the transaction adheres to Indian property laws and regulations.

  • All payments must be made in foreign exchange through proper banking channels in compliance with FEMA (Foreign Exchange Management Act), 1999.

RERA Registration Requirement for Developers

RERA mandates that all developers must register their projects with the respective State Real Estate Regulatory Authority before advertising, selling, or booking any property.

Key compliance requirements include:

  • Project details: Developers must provide a detailed project plan, including layout, approvals, and completion timelines.

  • Financial disclosure: 70% of funds collected from buyers must be kept in a separate escrow account to cover construction costs.

  • Title and legal clearances: Developers must ensure that the land has a clear legal title and all government approvals.

For NRIs, purchasing a property that is RERA-registered is essential because it guarantees transparency and reduces the risk of fraud.

Key Legal Protections for NRIs Under RERA

RERA provides several legal safeguards for NRIs investing in property in India:

  1. Right to Accurate Information
    NRIs should ensure that developers provide accurate project details, including layout plans, carpet area, possession timelines, and government approvals.

  2. Timely Delivery of Property
    RERA holds developers accountable for project delays. If possession is delayed beyond the agreed date, NRIs may be entitled to compensation as per the Act.

  3. Refund in Case of Project Cancellation
    If a developer cancels a project or fails to deliver as promised, RERA requires the developer to refund buyers with interest.

  4. Legal Recourse for Grievances
    NRIs can file complaints with the State RERA Authority for issues such as defective construction, misleading advertisements, or violations of contract terms.

  5. Penalty for Developers
    Non-compliance with RERA provisions can result in fines and penalties for developers, safeguarding the interests of buyers.

Steps for NRIs to Ensure RERA Compliance When Buying Property

NRIs should take specific steps to ensure that their property purchase is fully RERA-compliant:

1. Verify RERA Registration

Before investing, verify that the developer has registered the project with the State RERA authority. You can check this on the official RERA portal of the respective state. Ensure the registration details include the project registration number, approvals, and expected possession date.

2. Review Legal Documentation

Carefully examine all documents, including:

  • Sale agreement and payment schedule

  • Approved project plan

  • Government approvals (building permits, environmental clearance, etc.)

  • Encumbrance certificate to ensure clear title

3. Ensure Transparent Payment Methods

NRIs must transfer funds through approved banking channels in compliance with FEMA guidelines. Proper banking trails help avoid legal complications and facilitate smooth property registration.

4. Monitor Project Progress

Developers must update project progress on the RERA portal periodically, and NRIs should actively track construction updates to ensure they meet the timelines.

5. Seek Dispute Resolution Through RERA Authorities

If any issues arise, NRIs have the right to approach the State RERA authority. The authority can order compensation, enforce delivery timelines, or penalize non-compliant developers.

RERA Compliance and Title Verification

One of the most critical aspects for NRIs is ensuring that the property title is free from disputes. RERA requires developers to declare the legal title and encumbrances on the property. NRIs should request the following:

  • Encumbrance certificate: Confirms no legal liabilities exist on the property.

  • No objection certificates (NOCs): From local authorities, including municipal and utility departments.

  • Land use approvals: Ensures that the property can be legally used for residential or commercial purposes.

Verifying title ensures that the property purchase is legally valid and prevents future litigation.

Common Misunderstandings About RERA Compliance for NRIs

Many NRIs have misconceptions regarding RERA, which can lead to mistakes during property transactions. Key clarifications include:

  • Misconception 1: All properties are automatically RERA-compliant.
    Reality: Only registered projects are compliant. NRIs must verify the RERA registration number.

  • Misconception 2: RERA applies only to residential properties.
    Reality: Commercial projects also fall under RERA if they meet the size criteria.

  • Misconception 3: NRIs are not protected under RERA.
    Reality: RERA provisions apply equally to Indian citizens and NRIs.

Additional Legal Considerations for NRIs

While RERA ensures transparency and accountability, NRIs must also be aware of other legal requirements:

  1. Foreign Exchange Management Act (FEMA) Compliance
    All payments for property purchases must be made in foreign exchange through legal banking channels.

  2. Income Tax Implications
    NRIs may be subject to capital gains tax when selling property and must comply with Indian income tax regulations.

  3. Property Registration and Stamp Duty
    Property must be registered with the local sub-registrar office, and applicable stamp duty and registration charges must be paid.

  4. Power of Attorney
    NRIs often appoint a Power of Attorney to handle property transactions in India. This document must be legally notarized and registered.

Practical Tips for NRIs Buying RERA-Compliant Property

  • Always check the RERA registration number on the state RERA website.

  • Conduct due diligence on developers’ past projects.

  • Ensure that all agreements and receipts are properly documented.

  • Retain all communications with the developer for legal reference.

  • Avoid investing in unregistered or pre-launch projects without RERA approval.

FAQs on RERA Compliance for NRIs

Q1. Can NRIs buy agricultural land under RERA?
A1. No, NRIs cannot purchase agricultural land or farmhouses without specific RBI approvals. RERA primarily regulates residential and commercial projects.

Q2. What happens if the developer delays possession?
A2. NRIs can file a complaint with the State RERA Authority and may claim compensation for delays, as mandated under RERA.

Q3. Are commercial projects for NRIs covered under RERA?
A3. Yes, commercial projects exceeding 500 square meters must be RERA-registered and adhere to transparency norms.

Q4. How can NRIs verify the legal title of a property?
A4. By obtaining the encumbrance certificate, NOCs, land use approvals, and verifying RERA registration, NRIs can ensure a clear title.

Q5. Are NRIs entitled to refunds under RERA if a project is canceled?
A5. Yes, RERA ensures that buyers, including NRIs, receive a full refund with interest if the developer fails to deliver the project.

RERA compliance is a critical safeguard for NRIs buying property in India. It provides transparency, legal protection, and a reliable mechanism for grievance redressal. By verifying RERA registration, reviewing legal documents, monitoring project progress, and adhering to FEMA guidelines, NRIs can make informed and secure property investments.

Investing in RERA-compliant projects minimizes risks and ensures that NRIs enjoy the benefits of legal protection and accountability when buying property in India.