Under Section 13(1) of RERA, 2016, a promoter cannot take more than 10% of the unit cost as advance/booking/application money unless a written Agreement for Sale (ATS) has already been executed and registered. The mandate exists for a mix of doctrinal, evidentiary, and consumer-protection reasons:

1. It was a direct legislative response to pre-RERA malpractice

Before RERA, there was no cap — buyers were often forced to sign documents drafted entirely on the promoter's terms, and some promoters collected large advances only to forfeit them later when allotments were cancelled. It was common for developers to demand 30–40% of the cost upfront with no binding document at all, leaving buyers with no recourse if the project stalled or was diverted. Section 13 was inserted specifically to remove that leverage imbalance.

2. Registration gives the ATS legal sanctity that a mere booking receipt/allotment letter never had

An unregistered document can be denied, backdated, or disputed in execution. A registered ATS becomes a public record with a fixed execution date, is directly admissible in evidence, and can't later be repudiated by the promoter as "not binding." Section 13(1) effectively brought the agreement for sale — which is not otherwise compulsorily registrable under the Registration Act, 1908 — into the compulsorily-registrable category by requiring registration once the 10% threshold is crossed.

3. It caps the buyer's unprotected exposure

The 10% ceiling is deliberate — it is roughly to the level of "earnest money" a buyer can afford to lose if the deal falls through before any enforceable contract exists. Beyond that, RERA insists the buyer's money is matched by a document that fixes carpet area, possession date, construction-linked payment schedule, and — critically — a mutual default-interest clause (promoter delay and buyer delay attract the same rate under the model ATS format most States, including Gujarat, have notified).

4. It anchors every downstream remedy under the Act

Sections 18 (refund/compensation for delayed possession), 31 (complaint to Authority) and the specific-performance route all rest on the buyer being able to point to a registered ATS with defined terms. Without it, a buyer has no documented promise to enforce.

5. Consequence of non-compliance

A promoter who ignores Section 13(1) and collects money beyond the cap without a registered ATS is exposed to a complaint before the State RERA Authority under Section 31, and a penalty of up to 5% of the estimated project cost under Section 61, apart from being directed to execute/register the ATS retrospectively and honour its terms.