Avoiding Real Estate Pitfalls: 5 Mistakes Homebuyers Should Never Make
Explore the top five pitfalls for homebuyers in India's real estate market. Insights from experts highlight the importance of due diligence and legal awareness.
Real EstateHomebuyersReraProperty MarketLegal AdviceReal EstateMay 17, 2025
Since its inception, many dissatisfied buyers have approached RERA to resolve grievances, with the regulator often directing developers to compensate for delays or mismanagement. However, as Sanjay Mandava, Founder and CEO of Landeed, highlights, RERA's support might wane if homebuyers fail to perform thorough due diligence.
He explains that while RERA establishes a strong framework to tackle builder-induced delays, some exceptions do exist. These typically involve factors related to the actions of the buyer, the developer, or unforeseen matters such as government policies and force majeure events.
RERA's protections apply primarily to projects underway or commenced after its enforcement, leaving buyers of pre-RERA projects with limited options. According to Maneesha Kongovi, a partner at IndusLaw, older project complaints can only be made concerning breaches of specific obligations, with challenges on issued plans or occupancy certificates often not entertained by RERA.
Additionally, as Mandava notes, properties under 500 square metres or containing fewer than 8 units may not fall under RERA's jurisdiction, pushing buyers to seek redress in consumer or civil courts.
Buyers Beware: Common Pitfalls
1. **One-sided Clauses in Agreements**: Potential homeowners should remain vigilant against certain developer practices. Pranav Gupta, a legal advisor, warns that buyer agreements often feature one-sided clauses favouring developers, which can preclude future claims if not carefully reviewed.
2. **Cash Transactions**: Cash transactions, frequently employed to sidestep stamp duty, can compromise the buyer's legal position if refunds become necessary. Gupta advises that such transactions undermine a buyer's standing under RERA.
3. **Payment Default Issues**: Payment default issues can exempt builders from liability for delays, potentially resulting in penalties or forfeiting compensation rights. Mohit Adatiya from NPV Insolvency stresses careful examination of payment schedules to ensure financial obligations are met.
4. **Modifying Project Timelines**: Modifying project timelines without legal advice might hinder buyers from claiming penalties. Gupta points out that even informal agreements can impact buyers adversely in RERA hearings.
5. **Delay in Filing Complaints**: Delay in filing complaints could lead to case dismissal due to a lack of statutory limitation periods, emphasising the necessity of timely action.
6. **Pre-EMI or Rental Return Schemes**: Participants in pre-EMI or rental return schemes may find limited support from RERA, as these arrangements typically fall outside its regulatory scope.
By being aware of these common pitfalls and taking proactive steps, homebuyers can better protect their interests in the real estate market and avoid potential legal and financial issues.
Frequently Asked Questions
What is RERA and how does it protect homebuyers?
RERA, or the Real Estate (Regulation and Development) Act, is a regulatory framework that aims to protect the rights of homebuyers. It ensures transparency, accountability, and timely completion of projects. RERA provides mechanisms for resolving grievances and can direct developers to compensate for delays or mismanagement.
What are the limitations of RERA?
RERA's protections apply primarily to projects underway or commenced after its enforcement. Pre-RERA projects have limited options for redress. Additionally, properties under 500 square metres or containing fewer than 8 units may not fall under RERA's jurisdiction, requiring buyers to seek redress in consumer or civil courts.
What are some common pitfalls homebuyers should avoid?
Common pitfalls include one-sided clauses in agreements, cash transactions, payment default issues, modifying project timelines without legal advice, and delays in filing complaints. Homebuyers should also be cautious of pre-EMI or rental return schemes, which may not be covered by RERA.
Why are one-sided clauses in agreements problematic?
One-sided clauses in agreements often favour developers and can preclude future claims by homebuyers. These clauses can limit the buyer's ability to seek compensation or hold the developer accountable for delays or other issues. Careful review of the agreement is crucial to protect the buyer's interests.
What should homebuyers do if they encounter issues with a developer?
If homebuyers encounter issues with a developer, they should first review their agreement and gather all relevant documentation. They can then approach RERA for assistance if the project falls under its jurisdiction. Timely action is crucial, as delays in filing complaints can lead to case dismissal due to statutory limitation periods.
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