When a Homebuyer Owns Nothing but a Promise: The Enforcement Gap Between RERA and Property Rights
A homebuyer may approach the Real Estate Regulatory Authority (RERA), file a complaint and even obtain a favourable order. Yet, despite succeeding before the regulatory authority, the buyer may still struggle to receive the property or recover the money already paid.
This gap between obtaining a legal remedy and actually receiving its benefit highlights an important intersection between the Transfer of Property Act, 1882 (TPA) and the Real Estate (Regulation and Development) Act, 2016 (RERA).
What does a buyer's legal right amount to when the buyer has neither acquired the property nor been able to recover the money paid for it?
Section 54 of the Transfer of Property Act and the Status of a Homebuyer
Section 54 of the Transfer of Property Act, 1882 draws a fundamental distinction between a contract for sale and an actual sale.
A contract for sale is an agreement that a sale of immovable property shall take place on settled terms. However, the agreement itself does not, by its own force, create any interest or charge in the property.
In other words, entering into an agreement for sale and paying instalments does not automatically make the purchaser the owner of the property. Ownership is transferred through the legally recognised process of conveyance, including a registered instrument where the law requires one.
A contract for the sale of immovable property creates a contractual obligation between the parties, but it does not, by itself, create an interest or charge in the property.
The Supreme Court has affirmed this distinction in Suraj Lamp & Industries Pvt Ltd v. State of Haryana, where the Court held that agreements to sell, powers of attorney and wills cannot be treated as substitutes for a registered conveyance for transferring title.
Similarly, in Narandas Karsondas v. S.A. Kamtam, the Court recognised that a contract for sale creates a contractual obligation between the parties but does not itself create an interest in the property.
The decision reinforces the distinction between contractual arrangements relating to property and the actual transfer of legal title through a legally recognised conveyance.
The Supreme Court recognised that an agreement for sale creates a contractual right between the parties but does not, by itself, create an interest in the property.
This distinction has major practical significance for homebuyers. A person who signs an agreement for sale and pays instalments may acquire enforceable contractual rights, but does not necessarily become the owner of the property.
Until the legally required conveyance takes place, the buyer may therefore remain outside the category of a person holding proprietary title.
Where RERA Enters the Picture
The absence of proprietary ownership at the agreement stage does not mean that a homebuyer is without legal protection.
This is where RERA becomes significant. Although the homebuyer may not yet have ownership under Section 54 of the TPA, the promoter is nevertheless subject to statutory obligations relating to possession, refund, interest and other remedies available under the RERA framework.
The law therefore creates an important distinction:
| Legal Position | Practical Meaning |
|---|---|
| Agreement for Sale | Creates contractual rights and obligations but does not by itself transfer ownership. |
| Registered Conveyance | Provides the legal mechanism through which ownership is transferred where registration is required. |
| RERA Remedy | Provides statutory remedies against promoter defaults, including refund and interest in appropriate circumstances. |
| RERA Enforcement | Determines whether the relief granted by the Authority can actually be realised by the successful homebuyer. |
Section 18 of RERA and the Buyer's Right to Relief
Section 18 of the Real Estate (Regulation and Development) Act, 2016 provides remedies where a promoter fails to give possession in accordance with the agreement.
Where an allottee chooses to withdraw from the project in circumstances covered by Section 18, the promoter is required to return the amount received along with the prescribed interest and compensation as applicable under the statutory framework.
Where the allottee chooses not to withdraw, the promoter may be liable to pay interest for the period of delay, subject to the statutory conditions.
- Delay in possession can trigger statutory remedies.
- An allottee may, in appropriate circumstances, seek refund.
- Interest may become payable for the period of delay.
- The effectiveness of the remedy ultimately depends upon enforcement.
Newtech Promoters and the Enforcement Framework
The Supreme Court's decision in M/s Newtech Promoters and Developers Pvt Ltd v. State of Uttar Pradesh is particularly significant in understanding the statutory rights of an allottee.
The Court recognised the statutory right of an allottee to seek refund with interest when the promoter fails to fulfil the obligation to deliver possession according to the agreed terms.
The judgment also examined the enforcement framework under Section 40 of RERA.
The judgment is important for understanding the statutory remedies available to an allottee and the framework governing enforcement of RERA orders.
These developments reveal the central problem: there can be a considerable distance between obtaining an order and actually receiving its benefits.
The Enforcement Gap: Winning the Case Is Not Always the End
A homebuyer may secure a favourable order before RERA, but that does not necessarily mean that the refund will immediately reach the buyer.
Where an order requires payment of refund, interest or compensation, the successful party may still have to navigate the execution and recovery process.
If the amount remains unrecovered, the favourable order cannot restore the buyer's financial position.
This is why enforcement cannot be treated merely as a procedural stage after adjudication. For a homebuyer who has already paid substantial sums, execution may be the most important stage of the entire dispute.
Section 40 of RERA: The Bridge Between the Right and the Remedy
Section 40 of RERA attempts to address the enforcement problem by providing mechanisms for implementing orders passed by the Authority or the adjudicating officer.
Under Section 40(1), monetary amounts ordered by the Authority or the adjudicating officer may be recovered as arrears of land revenue. Rule 25 of the Karnataka RERA Rules, 2017 operationalises this mechanism within the State framework.
Section 40(2) further provides for enforcement of orders of the Authority or the adjudicating officer as if they were decrees of a civil court, subject to the statutory mechanism.
| Provision | Broad Function |
|---|---|
| Section 40(1), RERA | Provides a mechanism for recovery of monetary amounts as arrears of land revenue. |
| Rule 25, Karnataka RERA Rules | Operationalises the recovery mechanism within Karnataka's RERA framework. |
| Section 40(2), RERA | Provides for enforcement of orders through the statutory mechanism applicable to such orders. |
Mantri Developer and the Question of Execution
The distinction between RERA's statutory recovery mechanism and ordinary civil execution became particularly significant in Mantri Developer Pvt Ltd v. Snil Pathiyam Veetil & Ors.
The Karnataka High Court emphasised that RERA is an independent statutory framework and that its orders cannot simply be treated as civil court decrees for execution under Order XXI of the Code of Civil Procedure.
The statutory recovery mechanism provided under RERA must therefore be respected.
The decision highlights the importance of following the statutory enforcement mechanism under RERA rather than assuming that every ordinary civil execution route is automatically available.
The judgment highlights an important principle: the existence of an executable right does not necessarily mean that every possible execution forum is available to the successful homebuyer.
The effectiveness of RERA therefore depends significantly on the proper functioning of the enforcement mechanism created under Section 40.
Karnataka's Enforcement Challenge
The scale of the enforcement problem became visible from Karnataka's recovery data.
As of 31 May 2025, approximately ₹724 crore remained to be recovered from promoters across Karnataka in around 1,815 cases where recovery proceedings had been ordered.
Bengaluru Urban alone accounted for approximately ₹710 crore of the outstanding amount.
Against approximately ₹821.8 crore ordered for recovery across the State, only around ₹97.4 crore had actually been recovered.
A RERA order for refund has limited practical value for a homebuyer if the ordered amount remains unrecovered. The enforcement stage is therefore an integral part of the remedy itself.
Judicial Intervention in Karnataka
The Karnataka High Court has also had to intervene in relation to the execution of K-RERA recovery certificates.
In Rajesh Rao C V & Ors v. State of Karnataka & Ors, the Court directed the designated authorities to execute K-RERA recovery certificates within eight weeks.
The decision reinforces the importance of timely implementation once a valid recovery certificate has been issued.
The decision highlights the importance of timely execution of K-RERA recovery certificates and the responsibility of the authorities involved in the recovery process.
The judicial intervention is significant because it highlights that recovery cannot remain an indefinite administrative possibility after the buyer has already obtained a valid order.
Karnataka's Evolving Enforcement Framework in 2026
Karnataka has subsequently attempted to address the enforcement gap more systematically.
On 28 July 2026, K-RERA issued a circular prescribing a procedure for the recovery of monetary and non-monetary reliefs granted in complaints under Section 31 of RERA.
The Standard Operating Procedure (SOP) introduces a more structured execution process.
What Happens After a RERA Order?
The procedure contemplates several stages following the passing of an order.
- Compliance is to be verified after the prescribed period following the order.
- Where the promoter has failed to comply, the successful party can initiate an execution petition through the K-RERA portal.
- An updated memo of calculation may be required where monetary amounts are involved.
- The procedure contemplates disclosure of the judgment debtor's movable and immovable assets and bank accounts.
- For monetary relief, the recovery certificate may be forwarded to the jurisdictional Deputy Commissioner.
- Recovery may proceed as arrears of land revenue, including attachment and auction of property and other permissible coercive measures.
- For non-monetary relief, the Authority may undertake enforcement itself or transmit the matter to the Principal Civil Court in accordance with Section 40(2).
- The SOP also envisages technological infrastructure for tracking execution petitions.
The importance of the mechanism lies not merely in digitisation. It attempts to create a defined chain of responsibility after a RERA order has already been passed.
Why Execution Is Different From Adjudication
Adjudication and execution perform different functions.
| Stage | Main Question | Purpose |
|---|---|---|
| Adjudication | Who has the legal right? | Determines entitlement and grants appropriate relief. |
| Execution | How will the order be implemented? | Converts the legal order into an actual recovery or compliance outcome. |
For homebuyers, the difference can be crucial. A favourable adjudicatory decision may establish that the promoter owes money, interest or compensation. Execution determines whether that amount actually reaches the buyer.
The Larger Question: What Does a Property Right Mean Before Ownership?
The relationship between Section 54 of the TPA and RERA exposes a peculiar vulnerability of the modern homebuyer.
At the agreement stage, Section 54 prevents the agreement itself from being treated as a transfer of ownership. The buyer therefore has contractual and statutory rights, but does not necessarily hold proprietary title.
If the promoter performs the contractual obligations, the transaction can ultimately culminate in conveyance and the buyer can acquire the property.
But what happens when the promoter does not perform?
- The buyer may not receive possession.
- The buyer may not receive title.
- The buyer may seek refund under Section 18 of RERA.
- The buyer may succeed before RERA.
- The buyer may still face difficulty if the recovery machinery does not function effectively.
In such a situation, the buyer can potentially remain without both the property and the money for a significant period.
From Paper Rights to Enforceable Rights
The contemporary homebuyer therefore occupies an unusual legal position.
The buyer may have invested heavily in an immovable property without yet acquiring an interest recognised as ownership under Section 54. RERA responds to this vulnerability by creating statutory remedies against promoter default.
But statutory remedies only become meaningful when the enforcement machinery converts an order into possession, conveyance, refund or compensation.
Karnataka's recent SOP and the High Court's insistence on timely execution therefore represent developments that go beyond ordinary administrative reform. They address the missing link between adjudication and actual recovery.
TPA and RERA: Complementary, Not Substitutes
It is important not to treat RERA as a replacement for the Transfer of Property Act.
The two legal frameworks address different aspects of the homebuyer's relationship with the property and the promoter.
| Transfer of Property Act | RERA |
|---|---|
| Addresses the legal nature and transfer of property interests. | Creates a regulatory framework for the real estate sector. |
| Section 54 distinguishes a contract for sale from an actual sale. | Provides statutory remedies against specified promoter defaults. |
| Ownership is not automatically transferred by an agreement for sale. | Provides remedies such as refund and interest in appropriate circumstances. |
| Deals with the legal significance of transfer. | Deals with regulatory compliance, allottee protection and enforcement within its statutory framework. |
Thus, RERA does not replace the TPA. Rather, the two operate alongside one another. The TPA determines the legal significance of the property transaction, while RERA provides a regulatory framework to protect buyers when promoters fail to perform their obligations.
Why Effective Recovery Matters for Homebuyers
The problem of delayed recovery is not merely technical or procedural.
For a homebuyer, the money paid towards a property may represent years of savings, borrowed funds, investments or a substantial part of the family's financial resources.
When the buyer receives an order for refund but remains unable to recover the money, the practical consequence can be severe.
This is why an effective recovery mechanism requires more than simply issuing recovery certificates.
Developers may have multiple projects, encumbered assets, complex corporate structures or ongoing litigation. Effective recovery may therefore require:
- Timely identification of assets;
- Coordination between K-RERA and revenue authorities;
- Transparent tracking of recovery certificates;
- Effective communication between concerned authorities;
- Clear responsibility for each stage of execution;
- Timely action where promoters fail to comply; and
- Technology-enabled tracking of execution proceedings.
The Difference Between Having a Right and Realising a Right
The homebuyer situation demonstrates a broader principle of legal enforcement.
There can be a significant difference between recognition of a right and realisation of that right.
A judicial or regulatory authority may determine that a person is entitled to a particular remedy. However, the effectiveness of that determination depends upon the institutions and procedures responsible for implementation.
Order → Recovery Mechanism → Execution → Actual Benefit
If the chain breaks at the execution stage, the legal victory may remain largely theoretical from the perspective of the affected homebuyer.
Conclusion
The contemporary homebuyer may occupy a legally vulnerable position. The buyer can invest substantial amounts in an immovable property without immediately acquiring proprietary title under Section 54 of the Transfer of Property Act.
At the same time, RERA provides important statutory remedies where promoters fail to fulfil their obligations. Section 18 can provide a route towards refund, interest and other reliefs in appropriate circumstances, while Section 40 provides an enforcement framework for orders.
The experience in Karnataka demonstrates, however, that the existence of a remedy and the effectiveness of a remedy are not necessarily the same thing.
The recovery figures, judicial interventions and the subsequent 2026 SOP indicate the importance of strengthening the institutional process that follows a RERA order.
There is also a continuing need to preserve the distinction between regulatory adjudication and proprietary transfer. A RERA order may grant refund, interest, compensation or other statutory relief, but it does not itself transform an agreement for sale into a conveyance. Section 54 continues to govern the question of when ownership is actually transferred.
The larger lesson is clear: property law cannot stop at determining who has a legal right. For homebuyers, the effectiveness of that right ultimately depends upon whether the legal system can convert an order into a real-world outcome.
For the buyer waiting for a home, a favourable order is not necessarily the end of the dispute. It is the point at which effective enforcement must begin.
The real measure of a property right is not simply whether it exists on paper, but whether the law can make it effective in practice.
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