If your builder has missed the possession date in your agreement, you are not stuck waiting. Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) gives you a choice: leave the project with your money back, or stay and be paid interest for every month of delay.
Short answer: You can (1) withdraw and claim a refund of the amount you paid, with interest, or (2) stay in the project and claim interest for each month of delay until possession is handed over. Compensation for proven loss is decided separately.
What Section 18(1) says in plain words
Section 18(1) applies when the promoter fails to complete the project, or is unable to give you possession:
- by the date specified in the Agreement for Sale, or
- because the promoter has stopped business as a developer (for example, because registration was suspended or revoked, or for any other reason).
In that case, if you wish to withdraw, the promoter must, on demand, return the amount received for your flat with interest at the prescribed rate, including compensation as provided under the Act. The Act says this is without prejudice to any other remedy you have.
The proviso gives the second option: if you do not wish to withdraw, the promoter must pay you interest for every month of delay, until possession is handed over, at the prescribed rate.
Step 1: Confirm the delay is real
Before choosing a remedy, check four things.
- The promised possession date. Section 18 looks at the date specified in your Agreement for Sale, not the brochure or the allotment letter.
- Grace periods. Many agreements add a "grace period" of six months or more. Whether that extra time can be relied on depends on the clause and on how your state authority reads it, so check it closely.
- Extension of the project's registration. Under Section 6, the Authority can extend a project's registration for force majeure. The Act defines force majeure as war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the project. The Authority can also extend in reasonable circumstances where the promoter is not in default, for reasons recorded in writing, but such extensions together cannot exceed one year (tribunals have differed on whether force majeure extensions count towards that cap). A builder's cash-flow, funding or contractor problems do not fall within the definition on its wording. An extension of registration is a regulatory step; it does not by itself rewrite the date in your agreement (see Newtech below).
- Occupancy Certificate (OC). The promoter is responsible for obtaining the completion or occupancy certificate and making it available to allottees (Section 11(4)(b)). You, in turn, must take physical possession within two months of the OC being issued (Section 19(10)). Ask for a copy of the OC before accepting any offer of possession, and check its date. In Pioneer Urban Land v. Govindan Raghavan (2019), a consumer case where the OC came about two years after the agreed date, the Supreme Court held the buyer could not be compelled to accept possession whenever the builder chose to offer it.
Step 2: Choose between the two Section 18 options
| Option A: Withdraw | Option B: Stay | |
|---|---|---|
| What you get | Refund of the amount received by the promoter for your flat, with interest, plus compensation where applicable | Interest for every month of delay until possession is handed over |
| Project status for you | You exit | You keep your flat |
| Best when | Trust in the builder is gone, the project is stalled, or you no longer need the flat | The building is nearly complete and you still want the home |
| Interest | Prescribed rate, counted from the date the promoter received each payment until the refund is made | Prescribed rate, for each month of delay |
| Key risk | Recovery can take time if the builder resists | Further delay; you must still pay your own instalments on time |
What is the prescribed rate? It is set by each state's RERA rules, so check yours. The central rules (which apply to Union Territories without a legislature) and the rules of some states (Goa, for example) use the State Bank of India's highest marginal cost of lending rate (MCLR) plus 2%. Not every state follows that formula. In Uttar Pradesh, the Supreme Court recorded in Newtech (paragraphs 74 and 77) that the prescribed rate is MCLR plus 1%, and the UP model Agreement for Sale rules (2018) also refer to SBI's home-loan MCLR plus 1%. Rates change, so confirm the current notified rule with your Authority before you calculate any claim. See our guide on how to calculate delay interest for a worked example.
A useful symmetry. Under Section 2(za), the interest a promoter can charge you for late payment is the same rate the promoter must pay you for its own default.
What the Supreme Court said. In Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. (decided 11 November 2021), the Court described the allottee's right to a refund under Section 18(1)(a) and Section 19(4) as an unconditional, absolute right if the promoter fails to give possession within the time in the agreement. It said this holds regardless of unforeseen events or stay orders of a court or tribunal that are not attributable to the allottee. The Court also said that refund and interest are for the Authority to decide, while compensation is for the Adjudicating Officer.
Step 3: Know your other remedies
- Compensation. Section 18(1) refers to compensation as provided under the Act. Under Section 71, the Adjudicating Officer decides compensation under Sections 12, 14, 18 and 19. Under Section 31 you may file a complaint with the Authority or the Adjudicating Officer, as the case may be. Per Newtech, refund and interest go to the Authority; compensation goes to the Adjudicating Officer.
- Consumer Commission. RERA does not close the door to a Consumer Commission. In Imperia Structures Ltd. v. Anil Patni (2020), the Supreme Court held that remedies under consumer law remain available alongside RERA, because the Act's bar on civil courts (Section 79) does not cover consumer fora and Section 88 says the Act is in addition to other laws. You must qualify as a "consumer", which can be a problem for investors. Do not claim the same relief in two places at once; take advice on which forum fits your case.
- Insolvency route. Homebuyers can be treated as financial creditors under the Insolvency and Bankruptcy Code. In Manish Kumar v. Union of India (2021), the Supreme Court upheld the requirement that an application by allottees be filed by at least 100 allottees or 10% of the allottees in the project, whichever is less. This is a heavy, collective remedy and is usually considered only for stalled projects.
Step 4: A practical action plan
- Collect your documents: Agreement for Sale, payment receipts, demand letters, allotment letter, bank loan statements, and all correspondence.
- Check the project's page on your state RERA portal for the registered completion date, any extension, and quarterly progress reports.
- Make a written demand to the builder. Section 18(1) makes the refund payable "on demand", so state the delay, the option you choose and a reasonable deadline. A legal notice is not a step listed in Section 31 itself, but it creates a clear record.
- If there is no satisfactory reply, file a complaint on the RERA portal (see our walkthrough on filing a RERA complaint online).
- Keep paying your own dues unless you have exited. Section 19(7) makes you liable to pay interest for delay in your payments.
Mistakes to avoid
- Signing a waiver at handover. Some builders ask you to sign a possession letter stating you have no further claims. Read it carefully and consider taking legal advice, because such a clause may be used against your delay claim.
- Accepting possession without an OC. Without it you may face problems with utility connections, resale and bank loans.
- Relying on the brochure. The Agreement for Sale and the RERA registration documents carry legal weight. Brochure promises are harder to enforce.
- Waiting too long. Evidence fades and project finances can worsen. Authorities and courts may apply limitation principles, so act promptly.
Frequently asked questions
Can I claim both a refund and delay interest? A refund under Section 18 already comes with interest on the amount paid, counted from the date of each payment. You do not also claim monthly delay interest for the same period.
Is the builder's COVID-19 delay excusable? In May 2020, the Ministry of Housing and Urban Affairs issued an advisory to states suggesting that COVID-19 be treated as force majeure for extending project registration timelines. It was an advisory, and each state authority acted on it separately. Whether it affects the date in your own agreement, and your Section 18 rights, depends on your state's order and the facts. See our article on COVID-19 extension orders.
Do I need a lawyer? An allottee can file a complaint directly. A lawyer helps in contested cases, especially when the builder raises force majeure or limitation.
This article is for general information and is not legal advice. Laws, rules and rates change and differ by state. Verify current provisions before acting.