Delayed possession

Refund or possession? Your rights under Section 18 of RERA when a builder delays

By Ankur Tripathi, Advocate · 26 October 2026 · 2 min read

When a builder misses the possession date, the first question is usually whether to ask for the money back or to wait for the flat. Section 18 of the Real Estate (Regulation and Development) Act, 2016 answers that. This article explains the two options and the points that matter in practice.

What Section 18(1) says

If a promoter fails to complete or give possession of an apartment, plot or building in accordance with the agreement for sale, or by the date specified in it, the allottee has a choice:

1. Withdraw from the project. The promoter must return the amount received with interest, and compensation where applicable.
2. Stay in the project. The promoter must pay interest for every month of delay until possession is handed over.

The choice belongs to the allottee. The Supreme Court has held, in Newtech Promoters and Developers Pvt. Ltd. v. State of Uttar Pradesh (2021), that the right to a refund under this provision is unqualified where the promoter fails to give possession on time, and that it does not depend on the promoter's justifications.

How is interest calculated?

Interest is set by the rules of each state. Under the Karnataka rules, the rate is linked to the State Bank of India's highest marginal cost of lending rate plus two percent. Because rules can be amended, check the current text before relying on any rate.

Refund or possession: how to choose

The decision depends on facts rather than on a formula. Points to weigh:

• How much has been paid and how it compares with the current market value of the property
• Realistic completion date. A project with no occupancy certificate and visible construction gaps is different from one that is nearly finished
• Your personal circumstances, including rent being paid and loan interest
• The agreement's terms, including any extended dates you have agreed to in writing

Promoter defences you may see

Promoters often cite force majeure, delayed approvals, labour shortages or allottee defaults. The Act does recognise force majeure in specific circumstances, but each defence has to be proved with documents. Delays that occurred before the event relied upon, or that the agreement did not treat as exempt, are generally harder to defend.

Where to claim

Refund and interest are claimed before the Karnataka Real Estate Regulatory Authority through a complaint. Compensation is claimed before the Adjudicating Officer. Our guide on filing a K-RERA complaint sets out the steps.

One caution

If you have signed a revised agreement, a settlement letter or an acknowledgement of delay, have it reviewed first. Documents signed later can affect which dates the Authority treats as binding.

This article is for general information only. It is not legal advice, and the law and its interpretation change. Please consult an advocate about your specific facts before acting.

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