How Reliable is RERA? What If Builder Goes Bankrupt After RERA Registration?
Buying a home is a big dream for every Indian family. But what if the builder runs out of money (goes bankrupt) even after registering with RERA (Real Estate Regulatory Authority)? Will you get your home? Will you lose your money?
This guide explains how safe RERA really is and what happens if a builder declares bankruptcy. We’ll explain in simple Hindi-English so even a 10th-pass person can understand.
1. What is RERA? Is It Really Helpful?
RERA (Real Estate Regulatory Authority) is a government law (since 2016) to protect home buyers from fraud builders.
How Does RERA Help Buyers?
✅ Stops Fake Promises – Builders must show real project details.
✅ No Delays – Builder must finish the project on time or pay a penalty.
✅ Money Safety – 70% of buyer’s payment must be kept in a separate bank account (only for construction).
✅ Compensation for Delay – If the builder is late, you can claim a refund + interest.
But… Is RERA 100% Safe?
❌ No law is perfect – Some builders find loopholes.
❌ Slow Legal Process – Cases can take months/years.
❌ Bankruptcy Risk – If the builder goes bankrupt, recovery is tough.
2. What If Builder Goes Bankrupt After RERA Registration?
Even if a builder is RERA-registered, bankruptcy means no money left to complete the project.
What Happens Next?
Case 1: Builder Has Some Money Left
- RERA can force the builder to complete the project using remaining funds.
- A new builder may take over (but delays happen).
Case 2: Builder Has No Money (Full Bankruptcy)
- The project may go to NCLT (National Company Law Tribunal).
- Banks & lenders get first priority (they recover their loans first).
- Home buyers are second in line – You may get a partial refund or unfinished flat.
3. How to Protect Yourself? (Even with RERA)
Since RERA cannot guarantee 100% safety, follow these steps:
Before Buying:
✔ Check RERA Website – Verify project & builder details.
✔ Avoid Pre-Launch Offers – Many scams happen at this stage.
✔ Buy Only Ready-to-Move or Nearly Complete Flats – Less risk.
After Buying (If Builder Goes Bankrupt):
✔ File a Complaint in RERA – Demand refund or completion.
✔ Go to NCLT – If the builder’s company is in debt, NCLT may help recover money.
✔ Join Other Buyers – Group complaints have more power.
4. Real-Life Examples
📌 Amrapali Group (Noida) – Builders went bankrupt, Supreme Court ordered new builders to complete flats.
📌 Jaypee Infratech (Noida-Greater Noida) – After 10+ years, new company took over and is completing flats.
Lesson: Even in big cases, recovery takes years.
5. Is RERA Better Than Nothing?
✅ Yes! Before RERA, builders cheated buyers easily. Now:
✔ Builders must update progress every 3 months.
✔ You can track your money (70% must be used for construction).
✔ You can sue builders for delays.
But… RERA cannot stop bankruptcy.
6. What Should You Do Today?
- Always check RERA registration before booking.
- Avoid under-construction projects if you can’t wait 3-5 years.
- Prefer govt-backed projects (like PMAY) – More reliable.
Final Answer: Is RERA Reliable?
🟢 Good: It gives more safety than before.
🔴 Risk: If a builder goes bankrupt, recovery is slow & uncertain.
Best Advice:
- Buy from reputed builders (TATA, Godrej, Mahindra).
- If buying under-construction, keep checking RERA updates.
