Section 18 RERA: Return of Amount, Interest and Compensation

Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) protects homebuyers when a promoter delays possession, cannot complete a project, has defective land title, or breaches other statutory or contractual obligations. Depending on the circumstances, an allottee may claim a refund with prescribed interest and applicable compensation, or remain in the project and claim interest for delayed possession.

At a glance: An allottee who withdraws because of a qualifying failure to complete or deliver possession can demand return of the amount paid with prescribed interest and compensation as provided by the Act. An allottee who stays in the project is entitled to prescribed interest for each month of delay until possession is handed over. The applicable interest rate and procedural details depend on the relevant State or Union Territory RERA rules.

What Section 18 covers

The term promoter is defined in Section 2(zk) and generally covers persons developing, constructing or selling a real estate project within the statutory definition. An allottee, under Section 2(d), includes a person to whom an apartment, plot or building has been allotted, sold or otherwise transferred by the promoter, subject to the statutory exclusions. An agreement for sale sets out the contractual terms, including the date for possession, and is regulated by Section 13.

Section 18: Return of amount and compensation - statutory provisions

Section 18(1): Failure to complete or deliver possession

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,-

(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason,

he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

Section 18(2): Defective title

(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this sub-section shall not be barred by limitation provided under any law for the time being in force.

Section 18(3): Breach of other obligations

(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.

Homebuyer's remedies for delayed possession

Option 1: Withdraw and seek refund

Where Section 18(1) applies, an allottee choosing to withdraw may demand the amount received by the promoter for the unit, together with interest at the rate prescribed under the applicable rules and compensation in the manner provided by RERA. Refund interest and a separate award of compensation are distinct legal issues; the facts, applicable rules and the competent forum's decision determine the relief.

Option 2: Continue with the project

An allottee who does not withdraw can claim interest for every month of delay until possession is handed over, at the prescribed rate. Keeping the allotment does not automatically mean waiving the statutory claim for delay interest.

How is the interest rate calculated?

Section 18 itself does not prescribe one fixed nationwide numerical interest rate. Section 2(za) defines interest and provides that the rate chargeable from an allottee for default shall be equal to the rate payable by the promoter in case of default; the respective accrual periods are also defined there. The actual prescribed rate and timelines for payment must be checked in the rules applicable to the project's State or Union Territory. Do not assume a rate from another State applies to the project.

Defective title and other breaches

Under Section 18(2), loss arising from defective title of the project land can support a compensation claim, and the subsection expressly states that the claim is not barred by limitation under other laws. Section 18(3) covers failure to perform other duties imposed by RERA, its rules and regulations, or the agreement for sale, where compensation is available in the manner prescribed by the Act.

How to make a claim under RERA

  1. Collect documents: booking and allotment records, agreement for sale, payment receipts, promised possession date, project registration details, correspondence and evidence of delay or loss.
  2. Check the project record: confirm the registration and published project status through the relevant State/UT Real Estate Regulatory Authority portal.
  3. Specify the remedy: state whether you seek withdrawal and refund, or possession with delay interest, and identify any separate compensation claim.
  4. Use the appropriate statutory procedure: Section 31 provides for complaints to the Authority or adjudicating officer, as the case may be. Compensation claims under Sections 12, 14, 18 and 19 are adjudicated under Section 71; the allocation of relief and the applicable procedure should be checked against current law and binding decisions.
  5. Keep proof: retain copies of the complaint, filing receipt, calculations and supporting evidence. Orders may be enforced using the statutory mechanisms under RERA.

Section 11 addresses promoters' duties; Section 12 addresses incorrect advertisements or prospectuses; Section 14 deals with sanctioned plans and defects; Section 17 deals with conveyance and title transfer; and Section 19 concerns allottees' rights and duties.

Frequently asked questions

Can I seek refund if the possession date has passed?

Section 18(1) permits withdrawal with a refund and prescribed interest where the promoter fails to complete or deliver possession in the circumstances specified. The agreement, applicable rules and facts should be examined before filing.

Can I claim interest without cancelling my booking?

Yes. The proviso to Section 18(1) provides for interest for every month of delay until handing over possession when the allottee does not withdraw.

Does RERA fix the same interest rate throughout India?

No. The rate is prescribed under the applicable State or Union Territory rules.

Does defective land title give rise to compensation?

Section 18(2) provides compensation for loss caused by defective title of the project land, subject to the statutory process and proof of the claim.

Official legal sources

Consult the India Code portal for the Real Estate (Regulation and Development) Act, 2016 and the Ministry of Housing and Urban Affairs for central RERA information. For prescribed interest rates, complaint procedure and project status, consult the relevant State/UT RERA Authority's official rules and portal.

This article describes the central Act. State/UT rules, amendments, judicial decisions and project-specific documents may affect the outcome of a particular claim.