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Section 18: The RERA 2016

Section 18: Return of amount and compensation

(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.

(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 subsection shall not be barred by limitation provided under any law for the time being in force.

(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.


An allottee can claim a refund of the whole amount paid to the “Promoter” under section 18 of the RERA Act. If the complainant is not an allottee he cannot seek return of money under this section. Thus, for claiming return of money the complainant must be an allottee and the defendant must be a promoter [Lavasa Corporation Ltd. vs Girish Vassan Panjwani And Others 2018]

Section 18 protects the interest of allottees. This section governs transactions between the promoter and allottee under the agreement of sale made  before commencement of RERA. Promoters cannot take a plea that the allottee has no right to claim refund of money with interest because when the agreement was made between them RERA was not in existence. Provisions of section 18 have retrospective effect. The  rate of interest payable by the promoter should be the same which he (promoter) would have charged from the allottee for causing delay in payment.

RERA (Real Estate Regulatory Authority) can compel the promoter or builder to refund the amount to the homebuyer under certain circumstances. The Real Estate (Regulation and Development) Act, 2016, provides provisions to protect the interests of homebuyers, and one such provision is related to the refund of the amount.

If the promoter fails to complete the project within the agreed-upon time or violates any of the terms and conditions of the agreement, the homebuyer has the right to seek a refund of the amount paid along with interest. The specific conditions under which a homebuyer can claim a refund may vary from state to state, as RERA is implemented by individual state authorities.

The Act also allows the homebuyer to withdraw from the project and claim a refund with interest if the promoter fails to deliver the possession as per the agreed terms. The amount to be refunded typically includes the amount paid by the homebuyer along with interest accrued during the period of delay.

Additionally, RERA also requires developers to deposit a substantial percentage (usually 70%) of the funds received from homebuyers into a separate escrow account. This measure ensures that the funds are ring-fenced and primarily used for the development of the specific project. In case the project is not completed or is delayed, the money in the escrow account can be utilized to refund the homebuyers.

It is essential for homebuyers to understand their rights under RERA and file complaints with the respective state RERA authority or Real Estate Appellate Tribunal (REAT) if they face any issues with the developer, such as delays or non-compliance with the agreement. RERA has provisions to protect the interests of homebuyers and ensure that they receive the promised benefits or appropriate compensation, including refunds if necessary.

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