Pre-Launch Property Scams in India: What Buyers Should Know

A pre-launch property scam is becoming a serious risk for homebuyers in India. Many buyers are attracted by lower prices and early bird offers. They believe booking at the start will give them higher returns later. But in many cases, the project is sold before it has proper approvals.

A pre-launch property is often marketed before it is registered under RERA or before key permissions are granted. This creates space for pre-launch property fraud, where money is collected from buyers even though construction cannot legally begin. Some of these turn out to be fake pre-launch projects that remain stuck for years.

The danger is simple. Buyers trust brochures and verbal promises instead of checking documents. For most Indian families, buying a flat means investing life savings. One wrong step can freeze your funds for years. Understanding the risks of buying early-stage projects is the first step towards protecting your money.

What is a Pre-Launch Property?

A pre-launch property is a real estate project that is offered for sale before it is officially launched to the public. At this stage, the builder starts marketing and collecting booking amounts even though some approvals may still be in process.

Typically, the project may not yet have final registration under RERA or complete permissions from local authorities. The building plans, land clearances, or other approvals might still be pending. In simple words, a pre-launch property means buyers are investing at a very early stage of the project, before full legal and construction formalities are completed.

What the Law Says About Pre-Launch Property Sales?

In India, property sales are regulated under the Real Estate Regulation and Development Act, 2016. Section 3 of this law clearly states that a builder cannot advertise, market, book, or sell any project without registering it under RERA. This means selling units before registration is illegal.

Section 13 further states that a builder cannot collect more than 10% of the flat cost before signing a registered sale agreement. Also, construction cannot begin without a valid Commencement Certificate issued by the local authority. When these rules are ignored, the risk of a pre-launch property scam increases significantly.

How a Pre-Launch Property Scam Works?

A pre-launch property scam usually follows a step-by-step pattern. It does not look like cheating in the beginning. It looks like a smart investment opportunity. But the structure is often the same:

Attractive Brochure and Heavy Discount

The builder releases glossy brochures and digital ads. Prices are shown much lower than nearby projects. Buyers are told they are getting a special early rate before the official launch.

Creating Urgency and Pressure

Limited units are announced. Buyers are told prices will increase soon. This pushes people to book quickly without checking approvals.

Collecting Token Amount

A booking amount is collected. Sometimes large sums are taken even before RERA registration. In risky cases, no registered agreement is signed.

Diversion of Funds

Instead of starting construction, money may be used to repay old debts or fund other stalled projects. This is where pre-launch property fraud begins to take shape.

Project Delay or Stoppage

Approvals get delayed. Construction slows down or never starts. Buyers realise they are stuck in one of many fake pre-launch projects across the country.

Common Red Flags in Pre-Launch Offers

Not every early-stage offer is illegal. But many pre-launch property scam cases show similar warning signs. If you notice even a few of these, stop and verify before paying any money:

• No RERA Registration Number: If the builder refuses to share a RERA number or says registration is in process, treat it as a serious warning. Selling without registration increases the risk of pre-launch property fraud.
• Payment in Personal Account: Booking money should never be transferred to an individual bank account or personal UPI ID. This is common in many fake pre-launch projects.
• Unclear Land Title: If land ownership documents are not shown clearly, do not proceed. Land disputes can stop construction for years.
• No Sanctioned Plan or Approvals: If the building plan or Commencement Certificate is missing, the project may not legally start.
• Unusual Price Difference: If the rate is far lower than nearby approved projects, question the reason.

Real Life Incident in India

A report published by The Times of India in 2025 highlighted a serious case in Hyderabad involving a pre-launch sale.

In this case, a homebuyer had paid around 30 lakh during a pre-launch phase. The project was not properly registered at the time of booking, and a valid agreement for sale was not executed as required under the law. Construction did not progress as promised. The state regulatory authority later examined the matter and directed the company to refund the amount with interest. The order clearly stated that collecting money without proper registration and compliance violated legal provisions.

This incident shows how a pre-launch property scam can unfold. Buyers pay early. Approvals are unclear. Delays begin. Recovery of money then requires legal action.

Why Buyers Fall for Pre-Launch Deals?

Many buyers know the risks. Yet they still enter early-stage projects. Why does this happen? The answer is simple. Emotion often wins over logic.

The biggest trigger is price. A flat offered 10 to 20% below market rate feels like a smart deal. Buyers believe they are entering before appreciation begins. This makes them ignore the risks of buying pre-launch property in India.

Fear also plays a role. Builders create pressure by saying prices will rise soon. Buyers worry they will miss out. There is also social influence. Friends, brokers, and family members encourage quick booking. In many cases, people assume every early-stage project is safe. That is how a pre-launch property scam succeeds. It feeds on urgency, hope, and incomplete verification.

How to Verify Project Approvals Before Buying

Before paying any booking amount, you must verify documents yourself. Do not rely only on brochures or verbal assurances. Many cases of pre-launch property scam could have been avoided with basic checks:

• Visit the official website of your state RERA authority and search for the project using its registration number. Make sure the project status is active and approved for sale.
• Download the project details available on the RERA portal. Check the sanctioned building plan, layout approval, and declared completion timeline.
• Ask for a copy of the Commencement Certificate issued by the local authority. Without this, construction cannot legally begin.
• Do not pay more than 10% of the flat cost before signing a registered agreement for sale. This protects you from pre-launch property fraud.
• Get the Title Deed and land documents verified by an independent property lawyer before making a major payment.

Safe Ways to Invest in Pre-Launch Properties

Investing early does not automatically mean falling into a pre-launch property scam. But you must follow strict safeguards. Discipline matters more than discount:

Choose Builders With a Proven Track Record

Select developers who have completed multiple projects over the past 15 to 20 years. Check actual delivery, not just advertisements. A strong history reduces the risk of pre-launch property fraud.

Invest Only After RERA Registration

Never rely on statements like registration in process. Verify that the project is properly registered before making any major payment.

Limit Your Advance Payment

Do not pay more than 10% of the flat cost before signing a registered agreement for sale. This protects you legally and financially.

Avoid Cash and Personal Account Transfers

All payments should go to the official project account. Cash dealings increase the chances of fake pre-launch projects.

Keep Everything in Writing

Maintain receipts, email communication, and signed documents. Written proof becomes critical if disputes arise.

Conclusion

A pre-launch property scam rarely looks like a scam in the beginning. It usually appears as a limited-period offer with an attractive price and the promise of strong future returns. Many buyers enter at this stage believing they are making a smart financial move. The real problem starts when approvals are incomplete, and documents are not verified properly.

Buying early is not automatically wrong. Buying without checking legal compliance is where the danger lies. In India, property is often a family’s biggest investment, and one rushed decision can block hard-earned savings for years. Legal remedies exist, but they involve time and stress.

The safest approach remains simple. Verify RERA registration, check approvals, sign a registered agreement, and never pay large amounts based only on verbal promises. A lower price should never outweigh legal safety.

Frequently Asked Questions