Despite clear provisions under the Real Estate (Regulation and Development) Act (RERA), several builders in Hyderabad continue to collect more than 10 per cent of the cost of a flat or plot from buyers without executing a registered agreement for sale.
Under Section 13(1) of the RERA Act, a promoter shall not accept a sum more than 10 per cent of the cost of the apartment, plot or building as an advance payment from a person without first entering into a written agreement for sale.
Several recent cases, like Krithika Infra Developers (Boduppal), had collected amounts exceeding 10 per cent of plot cost without executing or registering sale agreements.
A developer of a project in Sheshadri’s Silver Oak at Beeramguda accepted advances exceeding 10 per cent before a written sale agreement from a buyer, Katchala Nanaji.
In another case, Pagadala Constructions told a buyer that a sale agreement would be executed only after payment of 30 per cent of the flat cost or the bank loan margin money. Sahiti Infratec also collected more than 10 per cent from its buyers.
“This is a direct violation. Unfortunately, this provision is being widely violated in Hyderabad, leaving buyers vulnerable. A stark example is the project Sahiti Sista Abode, where the developer collected well beyond the permissible 10 per cent, in several cases even over 50 per cent, before executing a registered agreement of sales. With the developer now in insolvency proceedings, many innocent homebuyers have been left stranded without possession or refund,” said Nikung Dugar, an advocate practicing in High Court and before TGRERA Authority and TG REAT Tribunal.
“These violations mostly affect first-time buyers, who are often unaware of the legal cap of 10 percent. Buyers should approach builders with this knowledge and insist on a registered sale agreement at the right stage. In some cases, there is an understanding between buyers and builders about the percentage collected and buyers may agree to it knowingly but that still does not make it legal under RERA,” said Dr Nandi Rameswara Rao, founder and CEO of Realtor Oxygen, a real estate expert.
