Builder late with possession, or won't refund your money

What has probably happened

You booked a flat, a plot or a house from a builder and paid a large part of the price — perhaps with a home loan. The agreement promised possession by a certain date. That date has passed. The site is half built, the builder keeps giving new dates, and you are paying EMIs and rent at the same time.

Or you decided to leave the project, or the builder cancelled your booking, and the money you paid has not come back.

The law that deals with this is the Real Estate (Regulation and Development) Act, 2016, called RERA. In the Act the builder is the promoter, and you, the buyer, are the allottee. Every state has a Real Estate Regulatory Authority to enforce it.

The key rule is Section 18. If the builder fails to complete the flat or give possession by the date in the agreement for sale — the written contract you signed for the flat — you have two choices:

1. Leave the project. The builder must return everything you paid for that flat, with interest at the rate your state's RERA rules prescribe, plus compensation under the Act.
2. Stay in the project. The builder must pay you interest for every month of delay, at the prescribed rate, until possession is handed over.

The same refund right applies if the builder stops business, or the project's registration is suspended or revoked. Section 19(4) gives you the same right to a refund with interest and compensation.

What to do, step by step

Day 0 — write down the dates. Find the possession date in your agreement for sale. Note any extension the agreement allows, and any new date the builder has given you in writing. List every payment you made, with its date and how you paid.

Week 1 — check the project on your state's RERA website. Every project that is not exempt must be registered before it is advertised or sold (Section 3). Search by the project name or its registration number, which should be printed on the brochure and the agreement. Look at the completion date the builder declared, and whether the registration has been extended. Section 6 allows an extension for force majeure — war, flood, drought, fire, cyclone, earthquake or another natural calamity — or in other reasonable circumstances, for not more than one year in all.

Week 1 — decide: refund or delay interest. This is the big decision, and the whole complaint is built around it.

• A refund ends your right to the flat. You get your money back with interest. It suits you if you have lost faith that the project will be finished, or you need the money.
• Delay interest keeps the flat. You are paid for each month of delay. It suits you if the project is moving and you still want the home.

Week 2 — send the builder a written demand. Section 18 makes the refund payable "on demand", so put your demand in writing. Say which choice you have made, list your payments, and ask for the refund with interest, or for monthly delay interest, within a fixed time. Send it by registered post or speed post with acknowledgement due to the builder's registered office, and email a copy. Keep the receipts. A demand sent by an advocate puts the builder's answer — or silence — on record.

Keep paying what is due — unless an advocate says otherwise. Under Section 19(6) and 19(7), you must pay instalments as the agreement says, and you owe interest if you pay late. Stopping payments in anger can hand the builder an argument.

If the builder does not pay — file a RERA complaint. Under Section 31, any aggrieved buyer can complain to the Authority, or to its adjudicating officer (a serving or former District Judge) who decides compensation under Section 71. Each state sets its own complaint form and fee. Most accept complaints online.

After the order. If the builder does not pay the interest or compensation ordered, it can be recovered as arrears of land revenue (Section 40) — the way unpaid land tax is collected. Either side can appeal to the Real Estate Appellate Tribunal, and a builder who appeals must first deposit at least 30% of the penalty, or the full amount payable to you, or both (Section 43(5)).

Read what a RERA complaint involves for the full procedure.

Timeline and costs

When	What	Who pays
Day 0	Possession date missed, or refund not paid	—
Week 1	Check the project on the state RERA site; decide refund or interest	—
Week 2	Written demand to the builder	The advocate's fee, if an advocate sends it, quoted first
After the demand period	RERA complaint to the Authority or adjudicating officer	The filing fee set by your state's RERA regulations; the advocate's fee, quoted first
After the order	Recovery, or the builder's appeal	—

Documents to keep handy

• The allotment letter and the agreement for sale, with the possession date.
• Every payment receipt and the bank statement entries showing each payment.
• The project's RERA registration number and a printout of its page on the state RERA website.
• Brochures, advertisements and emails that promised dates or amenities.
• Letters and messages from the builder giving reasons or new dates.
• Your home-loan agreement and the interest you have paid, if you took a loan.
• Your written demand, the postal receipt and the tracking record.

Mistakes that sink people

• Waiting for "one more date". Builders often give new dates. Each month of waiting is a month you could have been claiming interest on.
• Not deciding between refund and staying. A complaint that asks for both, or changes its mind halfway, is weaker.
• Stopping all payments without advice, and then being charged interest for late payment yourself.
• Signing a fresh letter or addendum that moves the possession date, without reading what it gives up.
• Relying on phone calls. Put everything in writing: the demand, the follow-ups, the builder's promises.
• Accepting possession of an incomplete flat without noting the defects in writing.

When RERA may not be the route

Some small projects are exempt from registration — for example, where the land is not more than 500 square metres or the project has not more than eight apartments, including all phases, and a state government can lower those limits (Section 3). You can still complain to the Consumer Commission, because housing construction is a service under the Consumer Protection Act, 2019 (Section 2). A consumer complaint must be filed within two years of the problem arising (Section 69). For anything the RERA Authority, the adjudicating officer or the Tribunal can decide, a civil court cannot hear a suit (Section 79).

Not sure which route fits? A 30-minute call with an independent advocate from our panel starts at ₹999.