Section 13 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 13 puts a ceiling on how much a promoter can collect before the paperwork is done: no more than ten per cent of the cost as advance payment or application fee, unless a written agreement for sale has first been entered into and registered. Its second sub-section lists what that agreement must specify. If you are about to pay a booking amount or draft a sale agreement, our legal consultation service can review it against this section.
A promoter shall not accept a sum more than ten per cent of the cost of the 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 under any law in force (13(1)). The agreement must be in the prescribed form and must specify the project particulars, specifications, development works, payment dates and manner, the possession date, the rates of interest in case of default and other prescribed particulars (13(2)).
Section 13 at a glance
| Sub-section | What it provides |
|---|---|
| 13(1) | Cap of ten per cent of the cost as advance payment or application fee, unless a written, registered agreement for sale has been entered into first |
| 13(2) | The agreement must be in the prescribed form and must specify the listed particulars |
Section 13(1): the ten per cent cap
"A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and without first register the said agreement for sale, under any law for the time being in force."
The text reads in layers:
| Element | What the words say |
|---|---|
| Who | A promoter |
| What is capped | "A sum more than ten per cent of the cost" taken "as an advance payment or an application fee" |
| From whom | A person (not only an allottee) |
| When the cap lifts | After a written agreement for sale is entered into and registered |
| Registered under | "Any law for the time being in force" |
So up to ten per cent may be taken before the agreement; beyond ten per cent needs the written, registered agreement first.
Example. Prakash Builders prices a flat at Rs 80,00,000. Before any agreement, the promoter may take up to Rs 8,00,000 as advance or application fee. A demand for Rs 15,00,000 before a registered agreement for sale is outside 13(1). Once the agreement is signed and registered, the payment schedule in it governs.
Points that need care
- "Cost of the apartment, plot or building" is not defined. Section 2(v) defines the estimated cost of the project, not of a unit, so the unit cost is read from the agreement or price list. The text does not say whether taxes, parking or other charges count in the "cost" for this cap. The State rules or the agreement fix the practice.
- "Advance payment or an application fee" covers early money. The text does not mention other labels such as "booking amount" or "token", but the evident purpose covers money taken before the agreement; check how your State's rules treat them.
- Drafting slip: "without first register" for "without first registering". The meaning is as above.
- Registration "under any law for the time being in force" points to the law on registration of documents; the text does not name it.
- Penalty: section 13 states no consequence. It sits in the later penalty provisions of the Act, which are covered separately in this series; see penalties under RERA.
Section 13(2): contents of the agreement
"The agreement for sale referred to in sub-section (1) shall be in such form as may be prescribed and shall specify the particulars of development of the project including:"
| Item | Text |
|---|---|
| 1 | The construction of building and apartments, along with specifications |
| 2 | Internal development works and external development works |
| 3 | Dates and the manner by which payments towards the cost are to be made by the allottees |
| 4 | The date on which possession is to be handed over |
| 5 | Rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default |
| 6 | Such other particulars as may be prescribed |
The form is prescribed by the State rules, so there is no single national form and it differs by State. Our post on mandatory clauses of an agreement for sale under RERA goes through the practice.
Internal and external development works have the meanings in section 2(w) and 2(zb); see our article on those definitions.
Why the interest clause matters
Under the definition of "interest" in section 2(za), the rate chargeable from the allottee by the promoter on default equals the rate the promoter pays the allottee on default. The agreement must state both. A one-sided clause, with a higher rate for the buyer than for the promoter, would not match the Act's own definition. The text of section 13 does not say what happens to a clause that departs from it.
Why the possession date matters
The date for handing over possession, written into the agreement, is the reference for the delay remedies in section 18. A vague date in the agreement weakens the buyer's position; see our post on delay in possession and compensation.
How section 13 relates to nearby sections
| Section | Relation |
|---|---|
| Section 4(2)(g) | The promoter files the proforma of the allotment letter, agreement for sale and conveyance deed with the registration application |
| Section 12 | Advances paid on false advertisements |
| Section 11(5) | Cancellation of allotment only in terms of the agreement |
What section 13 does not say
- It does not give the agreement's form, which is prescribed by State rules.
- It does not forbid taking up to ten per cent before the agreement.
- It does not say whether the ten per cent includes taxes.
- It does not say what the buyer can do if a promoter takes more; the remedies are in the penalty and complaint provisions.
Need help with your booking or agreement?
Before paying more than the initial booking amount, it helps to see that the agreement carries the particulars section 13(2) lists, especially the possession date and the interest rates. Our legal consultation team can review your agreement and advise on what to ask the promoter to change.
Key takeaways
- A promoter cannot accept more than ten per cent of the cost as advance or application fee without a written, registered agreement for sale.
- The agreement must be in the prescribed form, which differs by State.
- It must state the dates and manner of payment, the possession date and the default interest rates for both sides.
- The text does not define the "cost" on which the ten per cent is computed.
- Penalties for breach are in later sections, not in section 13.
Read next
- Section 14: sanctioned plans and structural defects
- Section 12: false advertisement or prospectus
- Agreement for sale under RERA: mandatory clauses
- Obligations of promoter under RERA: sections 11 to 18
Disclaimer: Based on the Real Estate (Regulation and Development) Act, 2016 as enacted, as consulted on 1 October 2026. Rules, forms, fees and procedures are made by each State and Union territory and its Real Estate Regulatory Authority and differ from State to State. This article is general information, not legal advice; check the official text and your State's rules before acting.