2. Projects Exempt from RERA Registration
Introduction
While the Real Estate (Regulation and Development) Act, 2016 mandates registration for most real estate projects, the law also recognizes that imposing compliance on all types of projects may not be practical. Accordingly, specific exemptions have been provided under the Act to exclude certain categories of projects from mandatory registration.
These exemptions are limited in scope and must be interpreted carefully, as incorrect classification can lead to regulatory action and penalties.
Legal Framework
Section 3(2) of RERA provides that certain classes of real estate projects are not required to be registered with the Real Estate Regulatory Authority. These exemptions are primarily based on project size, completion status, and nature of development.
The intention behind these exemptions is to reduce compliance burden for small or completed projects, while still maintaining oversight over larger developments.
Categories of Exempt Projects
Small Projects
Projects falling below the prescribed thresholds are exempt from registration. This exemption is designed to exclude small-scale developments from regulatory compliance.
The following conditions must be satisfied:
- Land area does not exceed 500 square meters
- Number of apartments does not exceed 8 units
Completed Projects
Projects that have already been completed and have received a completion certificate prior to the commencement of RERA are not required to be registered.
The exemption depends strictly on the issuance of completion certificate, not on physical completion.
Renovation or Repair Projects
Projects involving only renovation, repair, or redevelopment without any element of marketing or sale are also exempt.
However, if such projects involve:
- Sale of new units
- Fresh booking or allotment
then the exemption may not apply.
Practical Interpretation Issues
In practice, developers often misinterpret exemptions or structure projects to fall within thresholds. However, authorities evaluate the true nature and intent of the project rather than just the structure.
Artificial structuring to avoid registration may be questioned by authorities.
Risks of Incorrect Classification
Incorrectly treating a project as exempt from RERA registration can have serious consequences, as registration is a foundational compliance requirement.
Key risks include:
- Penalty up to 10% of project cost
- Restrictions on sale and marketing
- Buyer disputes and litigation
CABTA Insights
- Exemptions must be applied conservatively
- Completion certificate is a decisive factor
- Redevelopment projects require careful evaluation
- Avoid aggressive structuring for exemption
Next Article → 3. Step-by-step Process for RERA Project Registration