RERA Home Warranty: Everything you need to know

RERA Home Warranty Clause

Have you ever thought of investing your hard-earned money in a home, then when the time comes to move in, discovering faults and fissures. It goes without saying that it will be a dream that turns into a terrible nightmare in which you end yourself chasing after every possible opportunity to have the errors fixed. Well, the RERA Home Warranty Clause has ended that. 

RERA Home Warranty Clause

RERA Home Warranty Clause: What Is It?

  • The Promoter must correct/make good any structural or other quality-related defects that are brought to its attention within 5 years.
  • Within a period of 30 days from notice, in accordance with Real Estate (Regulation & Development) Act, 2016, section 14 titled Adherence to Sanctioned Plans and Defect Liability. 
  • The allocators must be reimbursed appropriately if the promoter fails to uphold its defect liability. 
  • Additionally, this will motivate builders to maintain the quality of their initial work. After all, they don’t have many options left. 
  • Most developers used to limit the time for repairs in their agreements to no more than two years in the past. However, the five-year warranty policy is the outcome of the new rule’s application.
  • Five years is a long time, and developers would lose money as well as their reputation if customers frequently complained.
  • As of today, customers are content and delighted to have a warranty since it gives them confidence in the quality of the goods. Additionally, clients now have the assurance that the developer is responsible for fixing the issue if any defects are found.

What Exactly Does a RERA Home Warranty Clause Cover?

According to RERA, the guarantee clause will only apply to structural flaws brought on by deficiencies in the building. It develops as a result of design errors, poor construction practices, or poor planning.Poor construction can lead to foundation fractures, plumbing problems, electrical and mechanical concerns, and leaks and moisture because of poor raw material quality. 

All of these problems are covered by the house warranty provision of the RERA. 

In order to avoid any problems down the road, the developer also maintains a close check on workers who are subcontracted to ensure everything runs properly. As mentioned, the promoter is now expected to fix foundation cracks, plumbing concerns, and other mechanical flaws.

RERA Home Warranty: Why?

Homebuyers have long complained that developers are given preference in real estate. The primary market buyers and sellers are both intended to get equitable and fair transactions under the Act. 

The new legislation should make buying real estate properties easier and increase accountability and openness. India will receive its first real estate regulator as a result.

5 Best features of RERA’s

The single legal framework that will be applicable to all real estate purchases has the greatest favourable effect. Standardisation is the goal of the Act. Here are this Act’s top five features.

1. Required registration

Any construction project that is more than 500 square metres or has more than eight flats needs to be registered with the appropriate governmental agency. It is also necessary to register any ongoing projects that have not yet been issued a completion certificate (CC) or occupancy certificate (OC). At the time of registration, developers must provide comprehensive information, such as the status of the land, any approvals, an estimated completion date, and promoter information. Only after successfully registering and receiving the required approvals may builders promote the project.

2. The reserve account

When developers transferred money from one project to another before the enactment of this Act, there were delays. The Act currently mandates that contractors keep 70% of the project receivables in a reserve account in order to prevent such diversions. Only the costs of land development and construction, as determined by experts, may be covered by this funding.

3. Use of the title

Each promoter is required to provide a firm warranty regarding the ownership of the properties. These details may be useful to homebuyers in the event that any title-related problems are found. Additionally, promoters are required to purchase insurance for title and construction, and when the sale agreement is finalised, the buyers can access the insurance proceeds.

4. Promoters’ ongoing disclosures

Home buyers will be able to follow the project’s development if this Act is successfully implemented. Promoters are frequently required to provide all relevant project details for the advantage of the buyers.

5. Uniform sale agreement

A uniform model sale agreement between developers and homebuyers is made possible by RERA home warranty clause. In case buyers were penalised for defaults, such as a delay in the disbursement of the home loan, developers would frequently tack on harsh terms. Punitive provisions for potential developer defaults, however, were not included in the selling agreement. With the passage of this Act, prospective homebuyers can now anticipate fair sale contracts.

A financial penalty shall be applied to anyone who violates this Act’s rules in order to stop future infractions. This might result in a fine of up to 10% of the project’s cost and/or jail time.

Positive changes to the real estate industry are anticipated as a result of RERA. Financial firms anticipate a rise in the demand turning more of  housing loan opportunities.

Real Estate Market Effect

  • Naturally, purchasers across the country enthusiastically embraced this house warranty provision.While the worldwide real estate market’s defect liability period varies by jurisdiction, it can be as long as 10 years in some nations with well-organised and effective systems for builder responsibility and legal dispute resolution. 
  • Developers surely aim to improve the quality of their construction using the RERA’s five-year warranty clause. Due to the increased construction expenses, property values have increased.
  • On the other hand, the developers have also welcomed the action because it eliminates the amateurs and potential defaulters who were causing them to lose the confidence of the buyers.
  • The developers will need to devise a mechanism for obtaining the raw materials from different suppliers and assigning the construction to contractors in a more open manner in order to get over this problem. 

Effects on property values

  • It is understandable that the price of the house will increase with the home warranty in place and the fact that the developers must now tie up any loose ends to improve the quality of their construction.
  • The houses that cost more and have stronger guarantees will be presented to buyers. 
  • However, experts are of the firm belief that purchasers will not mind paying a premium for properties with warranties since, in the absence of such, customers have up until now been the victims, compelled to make repairs at their own expense in case of any building mistake.


Both developers and consumers embrace RERA home warranty since it intends to reduce developers’ dishonest business practices and strengthen relationships between builders and consumers. Due to such tactics and expensive prices, the majority of buyers used to put off their ambitions of becoming homeowners. When this ends, there will be more demand among prospective buyers.

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