RERA Possession Delay: Compensation and Refund Rights for Homebuyers

The two paths Section 18 gives a buyer

If a promoter fails to complete construction and hand over possession by the date agreed in the agreement for sale (or any lawfully extended date), Section 18 of RERA gives the allottee (buyer) two distinct options:

• Exit the project: withdraw from the project and receive a full refund of the amount paid, along with interest at the rate prescribed under the applicable state rules (commonly linked to SBI's benchmark lending rate plus a specified margin), plus compensation.
• Stay in the project: continue holding the booking, in which case the promoter is required to pay the buyer interest for every month of delay, until possession is actually handed over.

How the interest rate is determined

The specific interest rate for delay compensation is prescribed by state-level RERA rules (not a single, uniform all-India figure), commonly structured as the State Bank of India's highest marginal cost of lending rate (MCLR) plus a specified margin (a figure like 2% has been a common reference point across several states' rules, though this should be confirmed against the specific applicable state rule). Notably, the same interest-rate logic is often applied symmetrically — meaning a buyer who delays their own payment instalments to the builder is typically liable to pay interest at the same (or a comparably structured) rate, addressing a historical imbalance where builder-buyer agreements often charged buyers a much higher penalty rate for delay than what the builder itself would owe for its own delays.

Practical steps to invoke this right

1. Confirm the agreed possession date stated in the registered agreement for sale (not a builder's informal, non-binding verbal assurance).
2. Check whether any lawful extension was validly granted (RERA does allow limited, disclosed extensions in specified circumstances like force majeure) — this affects when the delay clock actually starts running for compensation purposes.
3. File a complaint with the state RERA Authority specifying which remedy is being sought (refund with interest, or ongoing monthly interest) — this is a structured, defined complaint process, not an informal negotiation only.

Why choosing between the two options matters strategically

A buyer confident the project will eventually complete (and who still wants that specific home, or who would face a difficult, costly search for an equivalent alternative) often prefers the ongoing monthly-interest route, keeping their booking intact. A buyer who has lost confidence in the builder's ability to complete the project, or who has an urgent need for the funds, may prefer the full exit-and-refund route — this is a genuinely strategic decision that depends on the buyer's specific circumstances and read of the project's actual prospects, not a one-size-fits-all answer.