Buying a Flat on Leasehold Land in Bengaluru? The RERA Lease Certificate and Other Checks

A Bengaluru buyer reading a project's title documents notices a phrase that was not in the brochure: the land is held on a long lease rather than owned outright. The sales team says it makes no practical difference. The buyer is not so sure. What happens when the lease ends, who pays the lease rent, and what does the buyer actually get? RERA does not stop builders from developing on leasehold land, but it does add a specific duty for exactly this case, and it is easy to miss: the lease certificate.

The short answer. Section 11(4)(c) of the RERA Act makes the promoter responsible for obtaining a lease certificate where a project is developed on leasehold land, specifying the period of the lease and certifying that all dues and charges in regard to the leasehold land have been paid, and for making that certificate available to the association of allottees. The Act's definition of allottee covers flats sold whether as freehold or leasehold, and the promoter's registration affidavit must state its legal title to the land and any encumbrances. The trade-off: a leasehold project can be a legitimate purchase, but the lease period and the dues position become part of what you are buying, so they need to be checked as carefully as the flat.

Does RERA cover flats on leasehold land?

Yes. Section 2(d) of the Real Estate (Regulation and Development) Act, 2016 defines an allottee as the person to whom a plot, apartment or building has been allotted, sold "(whether as freehold or leasehold)" or otherwise transferred by the promoter, and includes a person who subsequently acquires the allotment through sale, transfer or otherwise. It excludes a person to whom the unit is given on rent.

So a buyer of a flat on leasehold land is an allottee with the same rights under the Act as any other. The difference lies in what the promoter has to prove and hand over about the land.

What is the lease certificate under RERA?

A document the promoter must obtain and share. Section 11(4)(c) says the promoter shall be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land, specifying the period of lease, and certifying that all dues and charges in regard to the leasehold land have been paid, and to make the lease certificate available to the association of allottees.

Two pieces of information in that certificate matter most to a buyer. The period of lease tells you how long the underlying land right runs. The certification that all dues and charges have been paid tells you whether there is a pending liability on the land that could later reach the owners.

Our earlier guide to leasehold versus freehold property in Bengaluru explains the basic difference between the two forms of holding.

What does the builder have to declare about the land when registering?

Its title and the encumbrances. Section 4(2)(l)(A) requires the registration application to include a declaration, supported by an affidavit, that the promoter has a legal title to the land on which the development is proposed, along with legally valid documents with authentication of such title, if the land is owned by another person. Section 4(2)(l)(B) requires a statement that the land is free from all encumbrances, or details of the encumbrances on the land, including any rights, title, interest or name of any party in or over it.

For a leasehold project, those declarations are where to look for the lease. The lessor's ownership, the promoter's rights as lessee and any conditions in the lease are worth looking for in that declaration. Read the affidavit alongside the lease deed, and ask for both.

What protections apply if the land title turns out defective?

A compensation right and an insurance duty. Section 18(2) says the promoter shall compensate the allottees in case of any loss caused due to defective title of the land on which the project is being developed or has been developed, in the manner provided under the Act, and that a claim for compensation under that sub-section shall not be barred by limitation provided under any law for the time being in force.

Section 16(1) says the promoter shall obtain all such insurances as may be notified by the appropriate government, including insurance in respect of title of the land and building as part of the project and construction of the project. Section 16(3) says the insurance stands transferred to the benefit of the allottee or the association at the time the promoter enters into an agreement for sale, and Section 16(4) says all documents relating to it shall be handed over to the association on its formation. Our explainer on RERA title and construction insurance covers how that works.

There is an important caveat on insurance. The Ministry of Housing and Urban Affairs' FAQs on RERA, dated July 2025, say that under Section 16 the promoter is required to seek insurance towards title of the land and construction of the project, but that the provision comes into effect only after, and in the manner, notified by the appropriate government. So ask whether the requirement has been notified for your project and, if it has, ask for the policy documents.

Who pays the dues on leasehold land?

Until handover, the promoter for what it has collected. Section 11(4)(g) says the promoter shall pay all outgoings until it transfers physical possession of the project to the allottees or the association, which it has collected from the allottees for the payment of outgoings, and the list expressly includes ground rent along with land cost, municipal or other local taxes, water and electricity charges and maintenance charges. If it fails to pay them before transfer, the promoter continues to be liable even after the transfer.

After handover, ground rent becomes a buyer's cost. Section 19(6) says an allottee who has entered into an agreement for sale shall pay at the proper time and place the share of registration charges, municipal taxes, water and electricity charges, maintenance charges, "ground rent", and other charges, if any. The lease certificate's confirmation that all dues and charges on the land have been paid helps separate the builder's liability from yours.

The paperwork on the land should reach the owners too. Section 17(2) says that after obtaining the occupancy certificate and handing over physical possession, the promoter is responsible for handing over the necessary documents and plans, including of common areas, to the association of allottees or the competent authority as per local laws, and in the absence of a local law, within thirty days after the occupancy certificate. Section 19(5) separately entitles each allottee to the necessary documents and plans, including those of common areas, after physical possession is handed over. In a leasehold project, the lease deed and the lease certificate belong in that set.

The MoHUA FAQs summarise the same duty: Section 17 provides for the transfer of title of the apartment to the allottee and of the undivided proportionate title in the common areas to the association, and makes the promoter responsible for handing over the necessary documents and plans to the association or the competent authority.

How does a leasehold project compare with a freehold one under RERA?

This table sets out where the Act treats them alike and where it adds a step.

What should you check before buying in a leasehold project?

Ask for these before you pay a booking amount.

1. Ask whether the land is freehold or leasehold, in writing.
2. Ask for a copy of the lease deed and note the lessor and the lease period.
3. Read the registration affidavit on title and encumbrances.
4. Ask when and how the builder will obtain the lease certificate.
5. Ask what ground rent applies and from when it becomes your cost.
6. Check what the agreement for sale says about the lease and its renewal.
7. Ask whether title insurance under Section 16 applies and has been obtained.

Also check the transfer documents at the end. Section 11(4)(f) and Section 17(1) require a registered conveyance deed in favour of the allottee with the undivided proportionate title in the common areas to the association. In a leasehold project, read carefully what interest that deed actually conveys, and take legal advice on the lease terms if anything is unclear.

Frequently asked questions

Is a flat on leasehold land covered by RERA?

Yes. Section 2(d) of the RERA Act defines an allottee as the person to whom an apartment, plot or building is allotted, sold, whether as freehold or leasehold, or otherwise transferred by the promoter. A buyer in a leasehold project is an allottee with the same rights under the Act as any other buyer.

What is a lease certificate under RERA?

Section 11(4)(c) of the RERA Act requires the promoter of a project on leasehold land to obtain a lease certificate specifying the period of lease and certifying that all dues and charges on the leasehold land have been paid, and to make that certificate available to the association of allottees.

Who pays ground rent on a leasehold project?

Before handover, Section 11(4)(g) of the RERA Act says the promoter must pay the outgoings it collected from allottees, including ground rent, and stays liable if it fails to. After possession, Section 19(6) lists ground rent among the charges an allottee must pay at the proper time and place.

Can I claim compensation if the land title is defective?

Yes. Section 18(2) of the RERA Act says the promoter shall compensate allottees for any loss caused due to defective title of the land on which the project is or was developed, and that the claim is not barred by limitation under any law. Section 16 separately requires insurance of title as notified.

Last updated 2026-10-21. PropNewz Team.