Under section 13(1) of the RERA Act, a builder may not accept more than 10% of the cost of a flat, plot or building as an advance or application fee without first entering into a written agreement for sale with the buyer and registering it. Once the agreement is registered, further instalments follow its payment schedule.
The rule protects buyers from paying large sums on a booking form alone. For a builder, it sets the ceiling on token, booking and application amounts at launch, and it makes the timing of the agreement for sale a cash-flow question, not only a paperwork one.
What the section says
Section 13(1): “A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.”
Section 13(2) adds that the agreement for sale must be in the form prescribed by rules made under the Act, which is why state rules include a model agreement for sale: Maharashtra’s RERA Rules 2017 and Uttar Pradesh’s Agreement for Sale/Lease Rules 2018, for example.
A worked example (sample figures)
| Item | Amount |
|---|---|
| Cost of the flat (agreement value) | ₹80,00,000 |
| 10% ceiling before registration | ₹8,00,000 |
| Token at site visit | ₹50,000 |
| Booking amount with the booking form | ₹5,00,000 |
| Taken so far | ₹5,50,000 |
| Still allowed before registration | ₹2,50,000 |
If the payment plan asks for 20% “within 30 days of booking”, the second 10% can be demanded only after the agreement for sale is signed and registered. Plan the registration date into the booking process, or the plan and the law will collide on day 30.
What to build into the booking process
- Count every advance. Token, expression of interest, booking amount and application fee all count towards the 10% before registration.
- Show the ceiling on the cost sheet. Print the agreement value and the 10% ceiling, so sales cannot accept more by mistake.
- Block the second demand. No demand beyond the ceiling until the agreement for sale is registered and its date is recorded on the booking.
- Refund the excess. If more than 10% was taken by mistake, record it, refund it or register the agreement promptly, and note who approved what was done.
- Settle the tax question once. Whether GST collected with the booking amount counts towards the 10% is not stated in the Act. Decide it with your adviser and apply it to every booking.
How LoftRay handles bookings
LoftRay keeps cost sheets with discount approval, bookings and payment plans in one place, and the receipts, refunds and cancellations against each booking, with refunds and cancellations behind approval. Payment plans are business rules a second person signs off before use, so a plan that asks for more than 10% before the agreement can be caught at review rather than at the first complaint.