Delayed Possession in Bengaluru: RERA Section 18 Refund or Interest
Builder missed the possession date? RERA Section 18 lets you take a refund with interest or stay and get monthly delay interest. See the Karnataka rate and steps.
Written by
Justin
20 October 2026 · 6 minutes read
Builder Delayed Your Possession in Bengaluru? Your RERA Section 18 Options
The possession date in your agreement has passed, and the flat isn’t ready. What are your options, and what should you avoid signing?
Imagine a buyer whose agreement promised possession in June, with a short grace period. The date passes. The builder sends a friendly message with a new date and a request to sign a short “addendum” confirming it, in return for a small discount. The buyer is tired of waiting and nearly signs. What the buyer doesn’t realise is that the law already gives a clear remedy for a missed date, and the addendum could quietly change the date that remedy is measured against.
Quick answer
Under Section 18 of the RERA Act, 2016, if a promoter fails to hand over possession by the date in your agreement for sale, you have two choices:
Withdraw from the project and get back the money you paid, with interest and compensation, or
Stay in the project and be paid interest for every month of delay until possession.
The choice is yours, not the builder’s. In Karnataka, the prescribed interest rate is SBI’s highest MCLR plus 2%. Don’t sign anything that moves your possession date until you have taken advice.
What does Section 18 give you?
Option | What you get | When it suits you |
|---|---|---|
Withdraw | Refund of the amount paid, interest at the prescribed rate, and compensation | You no longer want the flat, or you have lost trust in the builder |
Stay | Interest for every month of delay until possession | You want the home and the builder is likely to deliver |
Compensation claim | A separate claim before the adjudicating officer, for example for defective title or other failures | When you have losses beyond interest |
The Supreme Court has described the refund right as unconditional. It doesn’t depend on how far construction has progressed, and builders’ excuses don’t dilute it.
What interest rate applies in Karnataka?
The rate is not set by the builder. In Karnataka it is SBI’s highest MCLR plus 2%, which has been about 10.8% a year in recent calculations. The rate moves when the MCLR changes, so check the current figure. Interest runs from the date of each payment you made, not from the possession date.
Illustration (not a quote): if you have paid ₹40 lakh and the applicable rate is about 10.8% a year, the monthly interest is about ₹36,000 (₹40 lakh × 10.8% ÷ 12). Your own figure depends on the amounts and dates you paid, and the rate on the dates that apply.
Should I withdraw or stay?
Withdraw | Stay | |
|---|---|---|
Your money | Returned with interest | Stays with the builder |
The home | You give it up | You keep it |
Your risk | A refund order still needs collecting | The project could be delayed further |
Good to consider when | Little progress, financial trouble, or lost trust | Construction is well advanced and the builder is credible |
Treat the refund right as a lever you hold. In a rising market, the money returned may not buy an equivalent flat, so decide with care.
What should you not sign?
Addenda that reset the possession date. The date in your agreement is the date your remedy is measured against.
Waivers of delay interest, often offered in return for a small discount or a waiver of dues.
“Full and final” settlement letters, unless you have had them reviewed.
Revised payment schedules that increase what you must pay before possession.
If the builder offers a revised timeline, treat it as a negotiation in which your existing rights are something you hold, not something to give away for a token concession.
What if I accept possession late?
Courts have held that accepting possession doesn’t, by itself, wipe out your right to delay interest. Still, don’t rely on silence. When you take possession, add a short written reservation that you continue to claim delay interest, and keep a copy.
What about force majeure and extensions?
Builders often point to force majeure or ask the authority to extend the project’s registration. The Supreme Court’s reading is that the refund right isn’t diluted by such excuses, but the details of your case can differ. Ask a lawyer how any extension or force majeure claim affects your agreement date.
Where do I complain?
K-RERA (the Karnataka Real Estate Regulatory Authority), through its portal, against the registered project and promoter.
The adjudicating officer handles compensation claims.
A consumer commission is an alternative route that the Supreme Court has said RERA doesn’t shut out, though it is a separate set of proceedings.
Orders can be enforced as arrears of land revenue, as reported, but collection can take time, so move early and keep your records.
What should I do? (8 steps)
Find the possession date in your agreement, and any grace period.
Check the project is RERA registered, and what the registration page says about the completion date.
Collect every payment receipt and the agreement, since the refund is calculated on what you paid.
Decide in writing whether you want to withdraw or stay.
Write to the builder by email and registered post, stating your choice and asking for payment of interest or a refund.
Don’t sign addenda or waivers without legal advice.
If the builder doesn’t respond, file a complaint with K-RERA, with a lawyer’s help.
Reserve your rights in writing if you accept possession.
What should Bengaluru buyers check on top of this?
Loan costs: if you have a home loan, ask the bank how disbursement and pre-EMI work during a delay, and keep paying only what your agreement and the construction stage require.
Rent and EMI together: delay interest is meant to offset the double burden, so keep a record of your extra costs.
Payment linked to construction stage: don’t pay ahead of progress.
Before you book: read the possession date and grace period carefully, as in our carpet area and PLC guides on the numbers in the agreement.
Papers: verify the title and approvals, as in our legal opinion guide.
Frequently asked questions
What can I do if my builder delays possession under RERA?
Under Section 18, you can withdraw and get a refund with interest and compensation, or stay and be paid interest for every month of delay until possession.
What interest rate applies in Karnataka?
SBI’s highest MCLR plus 2%. The rate changes with the MCLR, so check the current figure.
Does interest run from the possession date?
No. It runs from the date of each payment you made.
Do I lose my claim if I accept possession late?
Not automatically. Courts have held that taking possession doesn’t by itself forfeit delay interest, but reserve your rights in writing when you accept.
Does Section 18 apply to every project?
It applies to projects registered under RERA, so confirm the registration before you book.
Where do I file a complaint in Karnataka?
With K-RERA through its portal, and compensation claims go to the adjudicating officer. A consumer commission is an alternative.