Understanding Builder Delays Under RERA
Before the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA), homebuyers were often left at the mercy of developers when projects were delayed. Today, RERA provides a strict legal framework to protect buyers, ensuring that developers are held financially accountable for failing to deliver flats on the promised date.
Section 18 of RERA: The Homebuyer's Shield
The most crucial provision dealing with delayed possession is Section 18 of the RERA Act. Under this section, if a promoter fails to complete or is unable to give possession of an apartment, plot, or building by the date specified in the Agreement for Sale, the homebuyer is legally entitled to robust remedies.
Section 18 grants the allottee (homebuyer) two distinct choices:
Choice 1: Withdraw from the Project (Refund)
If you no longer wish to continue with the delayed project, you have the absolute right to withdraw. The builder is legally bound to return the entire amount you have paid, along with interest. This refund must be processed within the time frame specified by the respective State's RERA rules (typically within 45 to 60 days).
Choice 2: Continue with the Project (Delayed Possession Interest)
If you choose to stay invested in the project and wait for completion, the builder cannot simply delay without penalty. The promoter is mandated to pay you interest for every single month of delay, calculated from the promised date of possession until the actual date the flat is handed over.
How is the Interest Calculated?
RERA ensures that builders cannot enforce one-sided agreements with negligible penalty clauses (like ₹5 per sq. ft.). The interest rate is standardized and prescribed by the State RERA Authorities.
Typically, the mandated interest rate is the State Bank of India’s Marginal Cost of Lending Rate (SBI MCLR) plus 2%. This ensures that the compensation reflects current market realities and effectively penalizes the developer for holding the buyer's funds.
The 'Force Majeure' Exception
Builders often attempt to excuse delays by citing Force Majeure (unforeseeable circumstances that prevent someone from fulfilling a contract). However, RERA interprets this very strictly.
- Valid Force Majeure: Natural calamities like floods, earthquakes, or wars that genuinely halt construction.
- Invalid Excuses: Shortage of construction materials, lack of funds, labor disputes, or delays in getting government approvals do not qualify as Force Majeure under RERA. In these cases, the builder remains fully liable to pay interest or grant a refund.
Steps to Claim Your Remedy
If your builder has delayed possession and refuses to pay interest or grant a refund, you should not wait indefinitely.
- Send a Legal Notice: Formally demand the refund or interest as per the Agreement for Sale.
- File a RERA Complaint: File a formal complaint online with your state's Real Estate Regulatory Authority.
- Execution Petition: If the builder ignores the RERA order, you can file for execution, allowing the authority to recover your dues as arrears of land revenue.