What Happens If Builder Fails to Hand Over Possession on Time?

Legal Remedies Under RERA Explained

By NyayKart Legal Team — Experts in RERA, consumer disputes and property law across India.

When a builder delays handing over possession of your booked flat or Commercial Shop, it not only causes financial strain but also deep emotional distress. Buyers continue paying EMIs for homes they can’t occupy, rent for alternate accommodation, and wait endlessly for promises that never materialize. The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to put an end to this uncertainty. It gives every homebuyer clear rights, strict timelines, and powerful legal remedies when a builder fails to deliver possession as agreed.

What Does the Law Say About Delayed Possession?

Under Section 18(1) of RERA, if a builder fails to complete or hand over possession of a property by the agreed date, the buyer has two main rights:

1. Right to withdraw from the project and claim a full refund of the amount paid along with interest and compensation.

2. Right to continue with the project and demand interest for every month of delay until possession is delivered.

This provision makes timely possession a legal obligation, not just a contractual promise.

What Counts as “Delay”?

A builder is considered in default if: The project completion or possession date mentioned in the Agreement for Sale has passed, and the builder has not offered possession with an Occupancy Certificate (OC) or Completion Certificate (CC). Even force majeure (e.g., pandemic, natural disaster) can justify only a temporary extension it does not permanently waive buyer rights.

Remedies Available to Buyers Under RERA

1. Full Refund with Interest: Refund of the entire amount paid to the builder along with interest (usually 10–12% p.a.) until refund.

2. Interest for Delay: If the buyer continues with the project, RERA entitles monthly interest for every day of delay beyond the agreed date.

3. Additional Compensation: RERA Authorities can order compensation for mental agony, harassment, and litigation costs.

Step-by-Step: How to File a Complaint Under RERA

Step 1: Gather Evidence — Agreement, receipts, bank statements, builder’s communication, project registration details.

Step 2: Send a Legal Notice — Demand possession or refund with interest, give 15–30 days to comply.

Step 3: File a RERA Complaint — Through your State RERA website under Section 31 with all supporting documents.

Step 4: Hearing and Order — RERA issues notice, conducts hearings, and may direct refund, interest, or compensation. If builder fails to comply, file a Non-Compliance Application under Section 39 of RERA.

What If the Builder Ignores the RERA Order?

Failure to comply can lead to penalties up to 10% of project cost, freezing of bank accounts, or even imprisonment of the promoter under Section 63 of RERA.

Example: Refund + Interest Calculation

Suppose you paid Rs 40,00,000 for a flat due in June 2021. Builder delays until June 2024 — 3 years late. Interest @9% = ₹3,60,000 per year → Total ₹10,80,000. You can legally claim ₹50,80,000 (refund + interest) from the builder through RERA.

Preventive Measures Before Booking a Property

• Check RERA registration and possession timeline.

• Read the Agreement carefully and note the possession clause.

• Pay only as per construction-linked schedule.

• Prefer projects 50–60% complete.

• Keep payment records through bank transfers.

Key Takeaways

• Builders are legally bound to deliver on time.

• Buyers can claim refund or interest under Section 18.

• RERA can penalize or prosecute erring builders.

• Non-compliance orders can be enforced.

• Keep proper documentation and file timely.

FAQs

Q1: Can I get refund and interest if my builder delays possession?

A: Yes, under Section 18 of RERA, you can claim refund + interest for every month of delay.

Q2: Can I approach consumer court along with RERA?

A: No, for same cause of action you cannot approach parallelly before Consumer forum and RERA, You can approach only one forum at a time, it is barred by the concept called as ‘res judicata’.

Q3: How long does RERA take to decide a case?

A: Typically 3–6 months depending on the state authority.

Q4: What if builder doesn’t follow RERA order?

A: You can file Non-Compliance Application; builder may face penalty or imprisonment.

Q5: Can builder cite COVID-19 or other force majeure as defense?

A: Only for limited temporary relief; prolonged delay isn’t excused.

How NyayKart Can Help

Facing possession delays? The NyayKart Legal Team provides end-to-end RERA support: drafting legal notices, filing complaints, representing before authorities, and enforcing refund or compensation orders.

📞 Book a free consultation today to assess your case and protect your rights under RERA.