For many first-home buyers, the first big cheque is the booking amount. It is also where many quietly give up a protection the law gives them, simply because nobody mentioned it. Here is the rule in plain words, with numbers you can check yourself.
The rule in one line
Section 13(1) of the Real Estate (Regulation and Development) Act, 2016 (RERA) says a builder must not accept more than ten per cent of the cost of an apartment, plot or building as an advance or application fee, unless a written agreement for sale has first been signed and registered.
Notice who the rule is aimed at. It limits what the builder may accept. It does not punish you.
What ten per cent looks like on a first-home budget
| Cost of the apartment | Most the builder may accept before a registered agreement |
|---|---|
| ₹60 lakh | ₹6 lakh |
| ₹75 lakh | ₹7.5 lakh |
| ₹90 lakh | ₹9 lakh |
These are only examples to show the arithmetic. Ten per cent is a ceiling, not a target. Paying a smaller booking amount is common and completely fine.
Every label counts
Builders and brokers use many names: token, booking amount, blocking amount, EOI (expression of interest), application fee. The law looks at the money, not the label. All of these add up towards the same ten per cent.
"Registered" is the key word
A signed draft lying in the sales office is not enough. An allotment letter is not enough. The agreement must be both written and registered. A registered agreement is a public record with a date, which makes its promises much easier to enforce.
What the agreement must contain
Section 13(2) of RERA says the agreement must follow the form set by the state rules, and must state:
- how the project will be built, with specifications and development works;
- when and how you will pay;
- the date possession will be handed over;
- the interest rate each side pays if it defaults.
Karnataka's RERA rules include a model agreement. Compare the builder's draft with it. Where the draft differs, especially on the payment schedule, cancellation, default interest or changes to carpet area, that is what to question.
Why the order matters for your money
Money paid before a registered agreement is not lost. But it rests on a weaker paper trail. Two parts of RERA protect you better once the agreement exists:
- Section 12 makes the builder liable if you pay based on an advertisement, brochure or model flat that turns out to be wrong, and you suffer a loss.
- Section 18(1) makes the builder return your money with interest, on demand, if possession is not given as the agreement says.
The sooner you have a registered agreement, the more firmly these apply.
How to ask without sounding difficult
Good builders handle this question every week. Keep it simple and polite:
- "Could I see the draft agreement for sale before I pay more than the booking amount?"
- "When will the agreement be registered?"
- "Which clause of the agreement is this payment for?"
You are asking for a document the law requires, not accusing anyone. Keep your allotment letter and receipts too; they show what was reserved and when.
A worked example: one buyer, three payments (illustrative)
Priya is buying her first flat. The cost on the cost sheet is ₹80 lakh. Ten per cent of that is ₹8 lakh. Here is how her early payments add up.
| Step | Called | Amount | Running total |
|---|---|---|---|
| Site visit, same day | Token | ₹1 lakh | ₹1 lakh |
| A week later | Booking amount | ₹4 lakh | ₹5 lakh |
| Builder asks for more | "Agreement stage" | ₹6 lakh | ₹11 lakh |
The third request takes her to ₹11 lakh, which is ₹3 lakh above the ceiling. Unless the agreement for sale has been signed and registered by then, the builder should not accept that payment. The polite answer is: "Happy to pay this once the agreement is registered. When can we fix the date?"
The names are made up and the numbers are only there to show the sum. The point is the running total. Every label adds to the same pot.
Step by step: from token to registered agreement
- Check the project on the RERA website. Karnataka's RERA portal lists registered projects. Note the registration number, the promoter's name and the completion date the promoter has declared.
- Ask for the cost sheet in writing. You need the cost of the apartment to work out ten per cent. Keep taxes and other charges on separate lines.
- Pay only a modest booking amount. Pay by bank transfer or cheque, in the promoter's name, and get a receipt that names the unit.
- Ask for the draft agreement for sale. Read it at home. Compare it with the model form in the state rules.
- Get your loan in principle. A bank's in-principle approval tells you what you can borrow before you commit further.
- Fix the registration date. The agreement is registered at the sub-registrar's office, with stamp duty and registration fee paid as the state law sets.
- Only then pay the next stage. After registration, follow the payment schedule written in the agreement.
Common mistakes first-time buyers make
- Paying cash. A cash payment is hard to prove later. Section 269ST of the Income-tax Act, 1961 also bars receiving ₹2 lakh or more in cash in one transaction or for one event.
- Paying a broker instead of the promoter. Payments for the flat should go to the promoter's account. A broker's fee is a separate matter.
- Accepting a receipt with no unit number. The receipt should name the project, the tower and the flat.
- Signing a blank or incomplete form. Never sign pages with gaps to be "filled in later".
- Treating the allotment letter as the contract. It records a reservation. The registered agreement is the contract.
- Not reading the cancellation clause. Find out what happens to your booking amount if you, or the builder, cancel before the agreement.
If the builder says no
Most builders will simply fix a registration date. If a builder insists on more than ten per cent before any registered agreement, treat it as information about how the rest of the purchase may go. You can pause, ask for the request in writing, and take advice before paying. For a registered project, section 31 of RERA lets you file a complaint with the state authority.
Your booking-stage checklist
- RERA registration number noted and checked online
- Cost of the apartment written down; ten per cent worked out
- Every payment by bank, to the promoter, with a receipt naming the unit
- Running total of all payments kept in one place
- Draft agreement read and compared with the model form
- Registration date agreed before the total crosses ten per cent
- Allotment letter, receipts and draft agreement filed together
Plan the rest of the money
The booking amount is only the start. Your own contribution, stamp duty, registration charges and the loan EMI all come after. Before you pay anything, try our EMI calculator to see what the monthly instalment looks like on your numbers.