Is RERA Applicable to Commercial Projects?

The Real Estate (Regulation and Development) Act, 2016, commonly referred to as RERA, is one of the most significant reforms in the Indian real estate sector. Introduced to protect the interests of homebuyers, promote transparency, and bring discipline to an otherwise unregulated sector, RERA’s impact is visible across the country. 

Most people associate RERA with residential projects, but many are still unsure about its application to commercial projects. Does RERA really cover commercial spaces such as shops, offices, and malls? The answer is yes, but with specific conditions.

RERA: Not Just for Residential Projects

At its inception, RERA was primarily envisioned for residential projects. However, during the legislative process, it was realised that commercial buyers and investors face similar risks as homebuyers—like delays, lack of information, false promises, and disputes over possession.

Recognising this, the final version of RERA explicitly covers both residential and commercial real estate projects. Whether you are buying a flat, a shop, an office, or a commercial space in a mall, RERA can apply—provided the project meets certain thresholds.

What Commercial Projects Come Under RERA?

RERA does not cover every commercial real estate transaction or property. The Act lays down clear criteria for a project to be included:

Land Area

If the commercial project is being developed on 500 square metres or more of land, it must be registered with the relevant RERA authority.

Number of Units

Any project—residential or commercial—that offers eight or more units (such as shops, offices, showrooms) for sale or allotment must register.

Ongoing Projects

If a commercial project was still “ongoing” (not completed or without a completion certificate) as on 1st May 2016, it also comes under RERA.

Examples:

• A shopping complex with 12 shops on 600 sq m of land is covered by RERA.
• A stand-alone shop or office in a small building (less than 8 units or less than 500 sq m) is not covered.
• A co-working office floor with more than 8 offices will require RERA registration.

Key Provisions of RERA for Commercial Projects

When a commercial project meets the RERA thresholds, it must comply with the same strict provisions as residential projects:

Mandatory Registration

No commercial project covered under RERA can be advertised, booked, or sold without prior registration with the State RERA authority.

Transparency in Details

All important information must be disclosed to the RERA authority and made available to buyers:

• Approved layout and building plans
• Carpet area and number of units
• Project timeline for completion
• Legal title of the land and encumbrances, if any

Escrow Account Requirement

Seventy percent of the money collected from buyers must be deposited in a separate escrow account. This fund can only be used for the specific project’s land and construction costs.

Adherence to Project Timeline

The developer is required to complete and deliver the commercial project by the date declared at the time of registration. Delay attracts strict penalties.

Defect Liability

For a period of five years from handing over possession, the developer is responsible for repairing any structural or quality defects, including those in commercial spaces.

Quarterly Updates

The developer must regularly update construction progress, sales status, and other important information on the State RERA website.

Exclusions: What Commercial Projects Are Not Covered?

Despite its wide scope, RERA also has some clear exclusions:

• Commercial projects on less than 500 sq m land and with less than 8 units are not covered.
• Projects that received a completion certificate before 1st May 2016 are not covered, even if they are commercial.
• Renovation, redevelopment, or repair projects, where no fresh sale or allotment is taking place, are outside RERA’s scope.
• Resale of ready-to-move-in commercial units does not fall under RERA.

Why Is RERA Registration Important for Commercial Projects?

Many investors and businesses have historically faced issues such as delayed possession, changes in project plans, or non-delivery. RERA registration brings significant benefits for commercial buyers:

Legal Safeguard

Buyers have a legal mechanism for redressal if the developer fails to deliver as promised.

Greater Transparency

Access to authentic information on project status, legal title, and developer history is ensured.

Timely Completion

Developers are legally bound to deliver the project as per the declared date, or face penalties.

Financial Discipline

The escrow account system prevents diversion of funds and ensures the money is used for construction and development.

Accountability

The developer is held responsible for construction quality and defect rectification even after handing over the property.

How Does RERA Benefit Developers?

While RERA does impose additional compliance requirements on developers, it also brings several advantages:

• Enhances credibility and trust among buyers and investors
• Attracts funding from private equity and institutional investors, who prefer projects with transparent compliance
• Reduces frivolous litigation and disputes through standardised contracts and processes
• Improves the reputation of the developer and the real estate sector as a whole

RERA and Commercial Leasing

A common question is whether RERA covers only the sale of commercial spaces, or also leasing. The Act’s language generally refers to sale or allotment, but several states include certain leasing or sub-leasing arrangements, especially if long-term leases with an option to buy are involved.

Thus, commercial units intended for long-term lease in large projects may also come under RERA in some states.

How to Check if a Commercial Project Is RERA-Registered?

It is easy for buyers and investors to check the RERA status of a commercial project:

1. Visit the official website of your State RERA authority (e.g., MahaRERA for Maharashtra, UP RERA, Karnataka RERA, etc.)
2. Search by project name, developer name, or location.
3. Access all mandatory disclosures, certificates, and approvals uploaded by the developer.

Tip: Always verify a project’s RERA registration before making any payment or booking a commercial unit.

Remedies Available to Commercial Buyers under RERA

If a developer of a commercial project fails in their obligations, RERA provides buyers with several remedies:

• Filing a complaint with the State RERA authority for delay, fraud, or non-compliance
• Claiming interest for delayed possession, or seeking a full refund with interest
• Approaching the RERA Appellate Tribunal if dissatisfied with the Authority’s decision
• Enforcing defect liability for up to five years after possession

The RERA mechanism is generally faster and more efficient than traditional civil court litigation.

Conclusion

RERA has changed the face of the Indian real estate market by making it more regulated, accountable, and transparent. Commercial projects are very much within the ambit of RERA if they meet the minimum area or unit thresholds. Both buyers and developers benefit from a more predictable, transparent, and disciplined system.

If you are planning to invest in a shop, office, or commercial space in India, always look for RERA compliance. It is your legal shield against delays, fraud, and non-performance. For developers, RERA registration is no longer just a statutory requirement—it is a mark of credibility and trust that helps in attracting investors, partners, and tenants alike.