By S&S Co. Advocates & Solicitors · Published 14 March 2026 · Informational content, not legal advice: see our disclaimer
What Section 13 Requires
Section 13 of RERA provides that a promoter cannot accept a sum exceeding 10% of the cost of an apartment, plot or building as an advance payment or application fee from a person without first entering into a written agreement for sale with that person and registering it, where required, under the law relating to registration of documents in force. In practical terms, this means a developer cannot collect a large upfront booking amount and defer paperwork to a later, unspecified date.
Why This Provision Exists
Before RERA, it was common for developers to collect substantial sums at the booking stage, sometimes 20% to 30% of the total cost, on the strength of an informal allotment letter, well before any agreement for sale was signed, leaving buyers with limited documented recourse if the project stalled or terms later changed. Capping pre-agreement collection at 10% is intended to ensure a buyer has a binding, registered agreement in place, and the protections that come with it, before committing meaningful capital.
What Counts Toward the 10% Cap
The cap applies to the aggregate of any advance payment and application fee collected before the agreement for sale is signed and registered: a developer cannot structure the same pre-agreement collection under multiple differently labelled heads (such as a separate 'booking amount' and 'processing fee') to functionally exceed the 10% threshold while technically keeping each individual head below it.
What Buyers Should Do
A buyer asked to pay more than 10% of the total cost before signing a registered agreement for sale should treat this as a compliance red flag and ask the developer directly how the request aligns with Section 13. Buyers should also confirm the agreement for sale itself is registered where state law requires registration of such agreements, since an unregistered agreement can create its own complications later, separate from the advance-payment question.
Frequently Asked Questions
How much can a developer collect before signing an agreement for sale?
No more than 10% of the total cost of the apartment, plot or building as advance payment or application fee, under Section 13 of RERA.
Can a developer split the pre-agreement collection into a booking fee and a separate processing fee to get around the cap?
No: the 10% cap applies to the aggregate of amounts collected before the agreement for sale is signed and registered, regardless of how the collection is labelled.
What should I do if a developer asks for more than 10% before an agreement is signed?
Treat it as a compliance concern and ask the developer to explain how the request complies with Section 13 before paying; seek advice if the developer is unable to give a satisfactory answer.
References & Further Reading
This article references the following statutes, rules and judicial decisions. Case citations link to the fuller discussion in our Legal Updates archive, verified against primary sources at the time of writing.
- Real Estate (Regulation and Development) Act, 2016: Section 13 (no deposit or advance to be taken by promoter without first entering into agreement for sale).
- See also our RERA Project Registration: A Practical Guide for Developers.