The Real Estate (Regulation and Development) Act, 2016 (RERA), widely recognized for protecting homebuyers, also applies to commercial real estate projects—but only under specific conditions. Legal experts stress that investors must be vigilant when purchasing commercial properties to ensure compliance with RERA regulations, especially in light of project delays and disputes.

According to Reynold D’Souza, an advocate at the Karnataka High Court, “RERA defines real estate as ‘property.’ Therefore, commercial projects can be registered under the RERA Act, provided the developer intends to sell the units rather than lease them.” This distinction is crucial, as leased properties do not involve a transfer of ownership and thus remain outside RERA’s jurisdiction.

A prime example is the unregistered commercial project PVR Pinnacle in North Bengaluru, which was initially scheduled for completion before 2022. Under Section 18 of the RERA Act, if a developer fails to complete a project or hand over possession within the agreed timeframe, they are liable to refund the amount with interest and compensation and provide a legal avenue for investors facing stalled projects.

RERA registration is mandatory for commercial projects if the project covers more than 500 square meters or involves eight or more units. Akash Bantia, a legal expert, explains, “Developers must register their commercial projects with RERA before advertising or selling them.” However, some developers exploit loopholes by claiming they intend to lease properties during construction but later sell them, evading RERA regulations.

Investors must conduct thorough due diligence before investing in commercial real estate, which includes verifying RERA registration, ensuring all approvals are in place, checking for ongoing litigations, and confirming the Undivided Share (UDS) of land. “The buyers need to first check the registration of the under-construction project and also make sure the developer has obtained all the approvals required for the project,” warns D’Souza.

While RERA offers a faster resolution for disputes than traditional civil litigation, not all commercial real estate issues fall under its jurisdiction. “Buyers can approach the RERA Authority, as the Act covers all segments of real estate that involve the transfer of ownership. However, we must allow space for the higher judiciary and state governments to provide further clarity on this matter,” D’Souza added.

With increasing scrutiny on the real estate sector, RERA remains a vital tool for ensuring transparency and protecting investors. However, legal experts caution that developers may exploit loopholes to sidestep regulations. As the market evolves, industry stakeholders anticipate further legal interpretations to strengthen investor protections in commercial real estate.