6 Rules in RERA to stop the Builders from Delaying Possession


The delay in possession of their homes was the biggest concern to the buyers of the real estate. For many of the home buyers, the delay has extended to nearly six years or more now, with no possession in sight. In the absence of a regulator and without rules, the builder-buyer battle appeared one-sided.

Now, the real estate sector has its own regulator from May 1, 2017, the date on which the Real Estate Act, 2016 (RERA) came into effect throughout the country. Each state and UT have their own regulatory authority (RA), which will frame regulations and rules according to the law.

Let us see what RERA has to ensure a timely possession of properties. The ongoing projects that have not received a completion certificate have to be registered by the developers. Once registered, they must also follow the rules, regulations of the state RA.

Promoter Promise

Six important provisions in RERA can prevent the builders from delaying the projects and stick to deadlines instead of making a failure.

  1. Written affidavit:

The developer’s promise will now have a legal opinion. Together with all the necessary documents, the promoter must give a declaration, supported by an affidavit, stating the period during which the project or the particular phase will be completed.

  1. The date of possession shall be sacrosanct:

Also, the “sale agreement” shall explicitly bear the date of possession and the interest rate in case of default. Remember, the time span could differ among the builders. For new projects, the dedicated delivery date is the choice of the developer. So, the customers may have to decide whether to but the apartment or not when they find out that the delivery date is too far away.

  1. Clear title of the land:

Sometimes, the land on which the project is to be built is involved in disputes that lead to a delay in construction and delivery. The promoter must provide a written affidavit that the legal claim on the land on which the building is proposed has legally valid documents with the certification of such a title if that land belongs to another person.

  1. Free from encumbrances:

It has often been stated that several projects are delayed due to hindrances that can limit the promotor’s ability to transfer the title to the property. The promoter must provide a written affidavit that the land is free of all encumbrances.

  1. Maintaining the separate account:

The diversion was the most common concern throughout the industry. Now, according to RERA, 70 percent of the amount realized from the buyers for the real estate project, will be deposited from time to time in a separate account to be maintained by a scheduled bank to cover the costs of construction and land costs. This amount is to be used only for this purpose.

The withdrawals from this account will be made according to the extent of the completed work, only after having been certified by an engineer, an architect, and an auditor, and checked every six months. Such measures are highly expected to minimize the diversion of funds if not complete.

  1. Making it an offense:

If not adhering to the rules, the builder is not only liable to lose the registration of the project but may also be punished. He may face imprisonment for a term of office extended up to three years or with a fine that can reach up to another ten percent of the estimated cost of the real estate project or both. However, some states have strengthened the crime to avoid the imprisonment of the developers.

The greatest deterrent to delay in delivery is the clause, which allows compensation for the flat buyer in the event of the delivery delay. Also, going beyond the committed date of delivery as stated in the registration of the project involves going back to the authority with the answer to the questions justifying the delay.

What if still there are Defaults?

RERA has taken steps to make the promoter not only responsible but also to pay compensation and punishment in cases of default of any provision of the rules. The enforcement of these might still leave a question unanswered and will depend on the state RA to implement them.

If the developer defaults and delays the possession of the property under the “agreement of sale,” the buyer has the right to demand reimbursement of the amount paid with interest. In this case, too, if registration of the promotor is canceled, the buyer has the right to a refund.

And if the buyer does not want to withdraw from the project and does not want a refund, the promoter has to give interest for each month until the handing over of the possession takes place. Even if this could be an existing practice, together with the option for a reimbursement under the aegis of a regulator, the delaying process could be largely restricted.

Delayed period interest

In case of default, both the buyer and the contractor must charge the same interest rate. Thus, if the homebuyer is in default in making payments on time to the builder or if the builder is in default of giving possession within the agreed period, the interest rate is equal for both.

Any delay in possession will result in a complaint being raised with the State RA. Compensation shall be provided by a judicial process involving the regulatory authority and an adjudicating officer who will be appointed by the regional government, which is, therefore, decided on a case-by-case basis.

How much interest rate?

Many states set the interest rate payable by the developer to the Allottee or by the Allottee to the builder. The State Bank of India has the highest marginal cost of lending interest plus two percent.

The interest rate and the compensation amount (to be mentioned in the sales agreement at the time of the booking) in the case of default may differ state-wise. The state governments are empowered to determine the rate of interest in case of default by the contractors. Each state government is obliged to notify the applicable interest rate in the event of default, in its rules and regulations under the law. Therefore, the interest rate may differ from state to state.


It is important that the states do not dilute the law. And if necessary, the center should also intervene in the matter. Although the rules are in place, the state RA’s are expected to have a strict vigil for their implementation and suo moto action (under Section 5 of the RERA Act, they can do so) against builders who follow any unfair practices or fail to comply with the provisions of the Law. May the house buyer no longer suffer by running around and be at the mercy of the builders.


Also Read About:  Complete Guide to Property Registration in India


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