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Legal Action To Be Taken Against The Builder For Delay In Possession

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The Real Estate Regulation and Development Act, 2016 (RERA) has introduced new regulations to safeguard the rights of innocent home-buyers. These regulations impose significant penalties for any wrongdoing, making compliance with RERA guidelines mandatory for all builders. This makes it easier for the regulatory body to identify and eliminate dishonest builders who are prevalent in the housing sector. The Act also includes various provisions that aim to establish a more transparent transactional system within the real estate industry. Here’s a look at everything buyers need to know about the RERA and how it safeguards their interests and the details of legal action against builders for delay in possession.

Legal Action Against Builders in RERA

Offense: Non-registration of project

In case builders fail to register the project, RERA has recommended up to three years imprisonment and fines up to 10% of the value of the project. 

Structural defects in the building land the buyer in jail for up to five years, and the company will have to rectify the defects without making the buyers incur any additional cost.

Offense: Delay in completion

Delays in completion will lead to a 10% interest-based fine which the company will have to pay the buyers rather than the old penalty, which was Rs 5 per sq. ft. Since several builders charge buyers interest at rates as high as 12% or even 36% for delays in payment, this verdict looks more than fair.

  • Also, a minimum of 70% of the money gained from investors must be maintained or utilized for the project in hand.
  • RERA has also called for the setting up of a specialized real estate tribunal that can mete out justice at faster paces. These Appellate Tribunals would have the power to adjudicate cases within 60 days, and this would help buyers receive timely justice. 
  • In the same light, the National Consumer Disputes Redressal Commission has ordered developers. They were ordered to repay with interest money lost by buyers who filed cases against them.

Six Provisions to Prevent Delays

Written Affidavit

The developer’s word will be more than just a word from now on as they have to provide a legal affidavit citing the same. This affidavit must be submitted along with the rest of the necessary documents. And will clearly outline the stipulated time of completion and handover.

Sacrosanct Possession Date

The sale agreement too will now contain a possession date. And also specify the interest rate that the builder will pay the buyer in case of any delay. For new projects, the date of delivery is left to the developer. And so the customers will need to analyze the time themselves and choose accordingly.

Land title

If the land acquired for the project gets caught in a dispute, the developer must provide a written affidavit containing documents. Moreover, the documents should prove the authenticity of the land’s ownership. 


The developer must provide a written affidavit stating and proving that the land acquiring for completion of the project is free from encumbrances.

Separate account

Over 70% of the funds collected for a project from buyers must be deposited in a separate account to be used for the completion of the project. Indeed, this account must be audited and verified by a Chartered Accountant every six months.


Any form of non-compliance to these above-mentioned rules can lead to severe penalties. It includes even the cancellation of the builder’s license and registration. Moreover, other punishments include imprisonment of up to three years and fines of up to 10% of the project cost.

Safeguard your property investment! Apply for property registration today. Streamline the process, ensure legal compliance, and protect your assets. Apply now for peace of mind!

Penalties for promoters

  1. As per Section 59, if a project is not properly registered, the fee to be paid by the promoter will be 10% of the total estimated cost of the project. Furthermore, failure to pay the fine will result in imprisonment up to a maximum of three years.
  2. As per Section 60, if a promoter provides false information regarding a project, he or she will have to pay a fine amounting to 5% of the total estimated cost of the project.
  3. Section 61 states that any default or delay will lead to the promoter having to pay up to a maximum of 5% of the total estimated cost.
  4. As per Section 64, if the promoter does not obey the orders of the tribunal, it can lead to a prison term of up to three years, along with a prerequisite fine.

Penalties for real estate agents

  1. As per Section 62, failure to comply with the rules mentioned in the Act can result in fines that add up to either Rs. 10,000 a day, and may even go up to 5% of the total cost of the project.
  2. Also, according to Section 65, failure to comply with the rules mentioned in the Rera Complaint can result in daily fines which may even go up to 5% of the total cost of the project.
  3. Furthermore, as per Section 66, failure to comply with the orders of a tribunal may result in imprisonment for a year.
Protect your rights as a homeowner! Apply for a RERA complaint today. Simplify the process, ensure legal compliance, and secure your property investments. Apply now for resolution and justice!

Penalties for Allottees

  1. As per Section 67, failure to comply with the rules mentioned in the Act can result in daily fines. It may add up to a total that amounts to 5% of the total cost of the project.
  2. Moreover, according to Section 68, failure to comply with the orders given by a tribunal may result in imprisonment for up to a year.

Moreover, it is safe to say that such stiff penalties will help in raising the standards of the real estate sector in India. Not only does RERA help in increasing the expectations of buyers. But it also goes a long way in improving customer satisfaction and ensuring the timely completion of projects.

When to take legal action?

  • Use of substandard construction materials
  • Lack of necessary permits
  • Use of illegal land/land in dispute/wrongly acquired property
  • Booking Frauds
  • Abrupt changes in layout and design without the client’s consent
  • Hidden charges
  • Unfair Cancellation
  • Large delays
  • Creation of third-party interest 
  • No Completion Certificate 

Legal action against builders

  1. Send a legal notice in case there is an excessive delay in getting the property. This may be done via a property lawyer. And if the builder does not reply to it, a case may be filed.
  2. As per the Consumer Protection Act, 1986, file a case in the Consumer ‘Court under the ‘deficiency of service; clause.
  3. Claim compensation for the delay or undue cancellation.
  4. Also, for compensation up to ₹ 20 lakhs, approach the District Commission
  5. Between ₹ 20 lakhs and 1 Crore, approach the State Commission
  6. The National Commission handles all claims that exceed ₹1 Crore
  7. Also, claim both a refund on interest on the amount paid.
  8. If all else fails, buyers also have the option of filing a criminal case for fraudulent booking.


What happens if builder does not give possession on time?

If a builder does not give possession on time, the buyer can file a case and send a legal notice to the builder for delay in possession under the Real Estate (Regulation and Development) Act, 2016 (RERA). The buyer can also claim compensation and damages for the delay in possession.

What is the compensation of builder for late possession?

The compensation for delayed possession varies depending on the provisions of the agreement and the applicable law. In India, the Real Estate (Regulation and Development) Act, 2016 (RERA) mandates a minimum compensation of 2% of the property value per month for delayed possession. However, the buyer can negotiate a higher compensation amount in the agreement.

What is the RERA legal action against builders for delayed possession?

Section 18 of the RERA Act deals with delayed possession. It mandates builders to compensate buyers for delays and provides the buyer with the right to terminate the agreement and seek a refund.

What happens if possession is delayed?

If possession is delayed, the buyer can claim compensation and damages from the builder under the RERA Act. The buyer can also withdraw from the project and claim a refund of the invested amount if the builder unilaterally changes the possession date of the project.

What is Section 13 violation of RERA Act?

Section 13 of the RERA Act prescribes that a builder or a promoter shall not accept a sum more than ten per cent. of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person.

What is Section 44 of the RERA Act?

Section 44 of the RERA Act deals with applications to the Real Estate Appellate Tribunal. It provides for the filing of an appeal against the orders of the Real Estate Regulatory Authority (RERA) with the Appellate Tribunal.

How do you deal with builder delays?

To deal with builder delays, the buyer must send a legal notice to the builder for delay in possession under the RERA Act. The buyer can also file a case with the consumer forum under the Consumer Protection Act, 1986, seeking redressal for deficiency in services of the builder.


We hope we have provided you with sufficient information regarding your concern on Legal Action Against Builders on delay in possession; however, if you require additional assistance, please do not hesitate to leave a comment below.

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