How your capital is protected — and where it is not

What does a registered sale deed actually give you — and how is it different from an SPV share, a fractional certificate or a timeshare?

A sale deed registered before the sub-registrar under Section 17 of the Registration Act, 1908 transfers title in a specific, demarcated unit — Villa 24, Suite 1106 — together with an undivided proportionate share in the land, into your name. It enters the public record. It can be mutated into revenue or municipal records. It shows on an encumbrance certificate. You can sell it, gift it or leave it in a will without anyone's consent. That is a materially stronger position than almost anything else marketed as a 'resort investment' in India, and it is the structure used across all eight projects we represent.

An SPV share is not this. You buy equity in a company that owns the building; your name sits on a share register, not in the land records. In insolvency, equity ranks behind every creditor — you are last. Distributions happen only if the company declares them, and exit means finding a buyer for shares in an unlisted private company.

A fractional certificate or beneficial-interest note is weaker again: a contractual entitlement to a slice of income, usually through a trust or LLP, frequently with no registered instrument at all. Governance depends entirely on the sponsoring platform's good behaviour. SEBI's small and medium REIT framework regulates part of this space; a private fractional certificate sitting outside it leaves you holding paper, not property.

A timeshare is the weakest of the four — a right to occupy for a number of nights each year, no land, no title, nothing with a resale market worth the name.

What the deed does not do is secure your income. It protects the asset; the 8-10% is a separate contractual promise from a separate balance sheet. Treat them as two independent risks, because that is what they are.

What does RERA registration actually protect — and what does it not?

RERA is real and worth insisting on, but it is narrower than salespeople imply. Registration under the Real Estate (Regulation and Development) Act, 2016 puts the project on a public portal with its approvals, layout, promoter details, litigation history and committed completion date. Section 4(2)(l)(D) requires 70% of buyer collections to be deposited into a separate designated account, withdrawable only in proportion to construction and only against certificates from the project engineer, architect and a chartered accountant. Section 14(3) gives you a five-year structural and workmanship defect liability, with a 30-day rectification window. Section 18 gives you a right to withdraw with interest, or to interest for the period of delay. Carpet area must be stated honestly. Disputes go to the Authority, then the adjudicating officer, then the Appellate Tribunal.

Now the limits, which matter more here than in a normal apartment purchase. RERA does not review, approve or underwrite the assured-return covenant — that lives entirely outside the statute. It does not vet the hotel operator or the hotel management agreement. It does not test whether the SPV can afford 8-10% a year. It says nothing about whether the return is funded from hotel operations or from the next buyer's cheque. Enforcement speed varies dramatically between Rajasthan, Goa and Karnataka, and a favourable order still has to be executed like a decree, which takes its own time.

Practical instruction: pull the registration number yourself from the relevant state portal rather than trusting the brochure, read the quarterly progress updates the promoter has filed, and check whether the completion date has already been extended. A project that has quietly revised its date twice is telling you something the sales deck will not.

Why does a REGISTERED lease matter far more than an MoU or a developer undertaking?

This is the single most useful diligence question on the income side, and the answer separates serious projects from the rest.

An MoU, a letter of assurance or an 'assured return undertaking' is a personal contract. If it is breached, you have a claim in damages against that company — enforceable in principle, worth in practice whatever the defendant is worth on the day you win, several years later. It creates no interest in your property. It does not appear on an encumbrance certificate. Critically, it does not automatically bind whoever later acquires the developer's interest in the resort.

A registered lease is different in kind, not degree. Section 107 of the Transfer of Property Act and Section 17(1)(d) of the Registration Act, 1908 together require that a lease from year to year, for a term exceeding one year, or reserving a yearly rent be made by registered instrument. Once registered, the lease creates an interest in the immovable property, it is discoverable in the public record, and under Section 109 of the Transfer of Property Act the transferee of the lessor's interest takes subject to it. An unregistered lease is, under Section 49 of the Registration Act, largely inadmissible to prove its own terms — you may not be able to establish in court the very rent you are suing for.

Read the lease itself, not the summary. Identify the lessee by exact legal name and check whether it is the developer, a project SPV or the hotel operating company. Note the term (commonly 15-30 years with renewal options), the lock-in, the escalation, the rent commencement date and what triggers it, the definition of the fixed period versus any revenue-share period, the notice and cure rights on non-payment, and whether the owner's stay-nights (25 at Wyndham Grand Jaipur Amer, Regenta Pushkar, KAMAH Jawai, KAMAH Coorg and AME Sakleshpur; 12 at the Dolce properties) are written into the registered document or only into a side letter.

Escrow and construction-linked payment: what should you insist on before you transfer money?

Where your money sits between booking and registration is the part of the transaction you have the most control over — and the part buyers most often concede without argument.

The non-negotiables are short and specific. Everything below should be verified against documents, not conversation, and the payment schedule should be attached to the agreement to sell rather than described verbally.

Title and encumbrance verification: what is actually being checked, and by whom?

Appoint your own advocate. The developer's panel lawyer is competent but is not your lawyer, and a title opinion addressed to the developer is not addressed to you. On a ticket that starts at Rs 65 lakh and runs past Rs 13 crore, an independent search report costs a rounding error and is the highest-return spend in the whole transaction.

A proper search covers a 30-year title chain from the mother deed forward, verifying each transfer, succession and partition in between. It pulls the encumbrance certificate from the sub-registrar for the same period — online through Kaveri for the Karnataka assets at Coorg and Sakleshpur, and through the relevant sub-registrar for the Rajasthan sites at Amer, Pushkar and Jawai. It reconciles the deed against revenue records: jamabandi, khasra and khatauni entries in Rajasthan, and the corresponding RTC and mutation records in Karnataka.

Then the land-use layer, which is where resort projects most often have hair on them. Confirm the conversion order changing agricultural land to non-agricultural hotel or commercial use, the change-of-land-use approval, the sanctioned layout and building plans, the fire and other statutory NOCs, and environmental clearance where the project crosses the threshold. Site-specific checks matter: Coastal Regulation Zone status for Goa Mandrem, Western Ghats eco-sensitive area and district-level restrictions for Coorg and Sakleshpur, and wildlife-habitat and buffer questions around Jawai.

Finally, the encumbrance that catches buyers cold: resort land is frequently mortgaged to a lender who financed construction. That charge must be traced, and you need the lender's written NOC plus a partial release deed for your specific unit before, not after, registration. A sale deed registered over a subsisting mortgage without release leaves you owning an encumbered asset. Also verify occupancy certificate status, since it changes both your GST cost and your completion risk.

What happens to your unit if the hotel changes flag?

A hotel brand is a licence over the operation, not an owner of your property. Wyndham, Trademark by Wyndham, Dolce by Wyndham, Regenta by Royal Orchid and Clarks each operate under a hotel management or franchise agreement with the developer or its SPV, typically for a defined term with performance and brand-standard termination triggers on both sides.

Legally, a flag change does not touch you directly. Your registered sale deed is unaffected. Your income right sits in the lease or the assured-return covenant with the developer or SPV, so it continues on its own terms unless that document itself makes the brand a condition — which you should check, because a few do, and a termination-linked rent reset is a clause you want to find before signing rather than after.

Economically, a flag change can matter a lot. A brand supplies distribution, corporate and loyalty demand, revenue management and rate positioning. A downgrade in flag typically means weaker occupancy and average daily rate, which weakens the operating cash flow the SPV uses to fund your rent. During a fixed assured phase, that pressure is absorbed by the developer's balance sheet — until it cannot be. During a revenue-share phase, such as Clarks Pushkar after its initial five years at 8%, it lands directly on your income.

So ask, in writing: the term and expiry date of the hotel management agreement, both parties' termination rights, whether any minimum performance guarantee exists, whether an FF&E reserve is funded (commonly 3-5% of revenue) and who controls it, who pays the re-branding and re-fit capex on a flag change, and whether owner consent is required. A developer who cannot produce the HMA term in a sentence has not read it either.

What happens if the developer becomes insolvent?

This is the scenario that decides whether the structural protections above were real, so it deserves plain language.

Your unit and your income are in completely different positions. If the sale deed is registered and possession has passed, the unit is generally your property and not part of the corporate debtor's estate in a corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. That is the whole reason registration timing matters. If the deed is not yet registered, you are an allottee — treated as a financial creditor in a class under the explanation to Section 5(8)(f), voting through an authorised representative, subject to the Section 14 moratorium that halts your recovery proceedings, and dependent on a resolution plan whose homebuyer recoveries in Indian real estate have historically been slow and partial. Class allottees also need a threshold of 100 allottees or 10% of the class, whichever is lower, to trigger an application under Section 7. Project-wise or 'reverse' resolution has been used to ring-fence viable towers, which helps, but takes years.

The assured-return covenant is worse placed than the unit. Say it precisely: it is an unsecured contractual claim on the developer or its SPV — not on Wyndham, Clarks, Royal Orchid or any bank. There is no deposit insurance and no regulator standing behind it. Capital is at risk. In an insolvency the assured-return covenant is an unsecured contractual claim, and unsecured claims generally rank behind secured creditors under the Section 53 waterfall — how a particular claim is characterised is for the resolution professional and the tribunal, so take insolvency advice rather than assuming a position.

What genuinely reduces this exposure: registering as early as the structure allows, paying only into escrow, preferring completed inventory with an occupancy certificate over pre-launch pricing, reading the SPV's own filed financials rather than the group's, and asking directly whether the assured return is paid out of hotel operations or out of new sales collections. A structure that pays yesterday's investors from tomorrow's buyers has a shape you should recognise.

What are the realistic exit routes, and how long does a resale actually take?

Four routes exist in practice: resale to another investor, a developer buyback if one is contractually written, a sale to the operator or SPV, and an intra-family transfer or gift. Only the first is reliably available.

Be realistic about timing. Six to eighteen months is a fair planning assumption, and longer is common while the developer still holds unsold inventory — because you are then competing against a primary seller with a sales team, a show villa and a published price list. Resale typically clears at a discount to that list. Buyers in this segment price off yield, so what you can realise tracks the capitalised value of the contractual rent and, above all, the market's confidence in the party paying it. A project mid-way through a clean payment record sells far better than one that missed two quarters.

If a buyback clause is offered, read whether it is an option or an obligation, at what price or formula, in what window, and whether anything at all secures it. A buyback promise from the same entity that owes you the rent adds no independent credit.

Exit costs, FY 2025-26 and illustrative: brokerage around 2%; long-term capital gains at 12.5% without indexation for transfers on or after 23 July 2024 (the alternative 20%-with-indexation route is available only to resident individuals and HUFs for property acquired before that date, not to NRIs); holding period of 24 months to qualify as long-term. Where the seller is an NRI, the buyer must deduct TDS under Section 195 on the gross consideration rather than the gain, unless a lower or nil deduction certificate under Section 197 is obtained in advance — arrange this early, because it visibly narrows your buyer pool. Sale proceeds moving out of NRO are capital, and it is here that the USD 1 million per financial year limit (roughly Rs 8.5-9 crore) applies. Confirm all of this with a qualified adviser in your country of residence and a CA in India.

Which documents should an independent advisor check before recommending any project?

This is our internal checklist, published so you can hold us to it. If a project cannot produce these, we do not put it in front of clients — and you should apply the same test to anyone else selling you resort inventory.

The risks no brochure will list

We would rather lose a booking than have a client discover these after registration. Read this section twice.

None of this makes the asset class a bad one. A registered deed, a registered lease, a real brand and a real escrow is a genuinely better structure than most Indian yield products aimed at the same buyer. But it is an unsecured, illiquid, concentrated, unregulated-income investment in a cyclical business, and it should be sized as one — a slice of a portfolio, never the portfolio. Speak to a SEBI-registered investment adviser about allocation, and to a CA in India and a qualified adviser in your country of residence about tax.