Why RERA matters for lenders


Srishti Ojha and Nupur T Malde advise lenders about compliance obligations for real estate developers

The Real Estate (Regulation and Development) Act, 2016 (RERA), is enacted primarily to protect consumer interest and promote overall transparency within the real estate sector. RERA focuses on stimulating the sector by ensuring accountability and financial discipline by real estate developers. Lenders are important stakeholders in the real estate sector and this article provides a quick overview of RERA for lenders with a focus on documentation and diligence requirements.

Srishti OjhaPartnerVerist Lawsrishti.ojha@veristlaw.com
Srishti Ojha
Verist Law

While RERA does not create compliance obligations for lenders, they need to be conscious of RERA-related liability as non-compliance by borrowers (real estate developers) can jeopardize the overall financing transaction. Lenders may consider entering into financing transactions while considering the following RERA-related aspects.

Legal due diligence: RERA requires real estate developers to register each new project with the state-level real estate regulatory authority (for example, Maharashtra has the Maharashtra Real Estate Regulatory Authority). Without this, RERA developers cannot market, advertise, book or sell any new project. Developers must file specified project-related details that are uploaded to the official RERA website for public view. This declaration by the developers provides a critical preliminary review for lenders in their pre-funding legal due diligence because the public disclosures are highly material to the project as this is in effect a government-filed declaration of title, encumbrances on land and project approvals.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.



Srishti Ojha (srishti.ojha@veristlaw.com) is a partner and Nupur T Malde (nupur@veristlaw.com) is a principal associate at Verist Law.