A buyer at a launch event in Devanahalli felt the pressure that these events are designed to create. A sales manager said the last two bedroom unit at the launch price would go if a 5 lakh token was not paid that evening. The buyer paused and asked a simple question. What exactly does this token buy, and what happens to it if the deal falls through? The answers were vague and nothing was offered in writing, so he did not pay that evening. That instinct was sound, because the money you hand over before signing a proper agreement is where buyers most often get stuck. This guide explains the rules.

The short answer. Under RERA, a builder is not supposed to collect more than 10 percent of the property cost as advance before the agreement for sale is signed and registered. Token money and booking amounts are refundable in many situations, and a builder cannot make unlimited deductions if you cancel or if the builder defaults. The trade off is that your protection is only as strong as your paperwork, so getting the terms and a receipt in writing, and buying in a RERA registered project, is what turns these rights from theory into something you can actually enforce.

How much can a builder take before the agreement is signed?

Under Section 13 of the RERA Act, a builder cannot accept more than 10 percent of the total cost of the property as an advance or application fee before entering into a written, registered agreement for sale. In other words, the large payments are meant to follow the agreement, not precede it. If a builder demands far more than 10 percent just to hold a unit, without giving you a registered agreement, that is a red flag and, on the reported position, a violation of the rule. Because enforcement runs through your state regulator, this protection applies most cleanly in a RERA registered project, which is one more reason to buy only into registered projects and to verify that registration yourself.

What is the difference between token, booking amount and the agreement?

These are three different stages, and it helps to keep them distinct. A token, sometimes an informal expression of interest, is a small initial payment to reserve a unit briefly. A booking amount is a larger payment to formally book, and it is here that the 10 percent ceiling before the agreement becomes relevant. The agreement for sale is the registered contract that sets out the price, the payment schedule, the possession date and your rights, and it is the document that truly protects you. Our guide to the sale agreement and sale deed explains how these fit together. The single most important habit is to insist that whatever you pay is documented, with a clear written statement of what it is for and what happens if the deal does not proceed. Beware in particular of the gap between an allotment letter and a registered agreement. Many buyers pay a substantial booking amount, receive a glossy allotment letter, and then wait months for the actual agreement for sale, all the while having handed over real money on the strength of a document that carries far less legal weight. Treat the allotment letter as a promise to contract, not the contract itself, and press for the registered agreement for sale to follow promptly. The longer your money sits with the builder without a registered agreement setting out your rights, the weaker your position if anything goes wrong.

Can I get my money back if I cancel?

Often yes, at least in large part, though a builder may retain a limited amount. If you cancel, the builder can deduct only a limited portion rather than swallowing the whole sum, and courts have pushed back hard against unfair, heavy forfeiture of a buyer's money. Some sources describe a small deduction, commonly around 2 percent, where a buyer cancels within a short window of the allotment, as noted in this explainer, though the exact amount depends on your agreement and your state's rules. The key point for a buyer is that a clause allowing the builder to forfeit your entire booking amount on cancellation is the kind of one sided term to question before you sign, not after. Read the cancellation clause as carefully as the price. It also helps to separate two things people often blur, the token and the reason for cancelling. If you cancel simply because you found a better flat or changed your mind, expect the agreement's deduction terms to apply. But if you cancel because something about the project itself did not check out, such as a missing approval or a title problem your lawyer flagged, that is a stronger position, and you should record that reason in writing when you ask for the refund. The clearer you are, at the time, about why you are stepping away, the easier it is to argue later that the builder, and not you, was the cause.

When am I entitled to a full refund?

You are generally entitled to a full refund when the fault lies with the builder. If the builder fails to deliver possession, changes the project without the required approvals, or loses the project's RERA registration, the buyer is typically entitled to the money back, often with interest for the delay. This is the heart of RERA's protection, because it shifts the risk of a broken promise back onto the developer rather than leaving it with the buyer. So the refund position depends heavily on who caused the cancellation. If you walk away for your own reasons, a limited deduction may apply, but if the builder breaks the deal, the law leans firmly towards returning your money in full. This is also why the possession date written into your agreement matters so much. A vague or missing committed date makes it harder to show the builder defaulted, while a clear date, backed by the RERA declaration, gives you a firm line to point to if it is missed. Insist that the agreement states an unambiguous possession date, because that single line is often what decides a delay dispute later.

How long should a refund take?

A refund is meant to be timely, not indefinite. Under RERA, a builder is generally required to refund a buyer's money within about 45 days of the cancellation, and a delay beyond that can attract interest in the buyer's favour, according to the same explainer. In practice, getting the refund can still take persistence, which is exactly why your documentation matters so much. A clear paper trail of what you paid, when, and under what terms is what lets you press a claim, and if needed, approach the state RERA authority. The stronger your records, the faster and cleaner the refund tends to be, so keep every receipt and every written communication.

What should I do before paying any advance?

Protect yourself before the money leaves your account, not after. The table below sets out what to expect at each stage, and the checklist gives you a practical order to follow so an exciting launch does not turn into a stuck deposit.

Use this seven step order before you pay any booking amount.

1. Confirm the project is RERA registered and verify the registration yourself.
2. Ask exactly what the payment is for and get the answer in writing.
3. Keep any advance before the agreement within the 10 percent ceiling.
4. Read the cancellation and refund clauses before you pay, not after.
5. Get a dated, signed receipt for every rupee you hand over.
6. Do not let launch day pressure rush you into an undocumented payment.
7. If a refund is due and delayed, keep records and approach the state RERA authority.

How much advance can a builder take before the agreement?

Under Section 13 of RERA, a builder cannot take more than 10 percent of the property cost as advance before a written, registered agreement for sale is executed. Larger payments follow the agreement. A demand for much more than 10 percent just to hold a unit, without a registered agreement, is a warning sign and, on the reported position, a breach.

Is my booking amount refundable if I cancel?

Usually in large part, though the builder may keep a limited amount. RERA and the courts have pushed back against heavy forfeiture, so a clause letting the builder keep your entire booking amount is one to question before signing. The exact deduction depends on your agreement and state rules, so read the cancellation clause carefully and confirm the position for your case.

When do I get a full refund of my money?

Generally when the builder is at fault, such as failing to deliver possession, changing the project without approvals, or losing RERA registration. In those cases the buyer is typically entitled to a full refund, often with interest. If you cancel for your own reasons, only a limited deduction usually applies, so who caused the cancellation largely decides the refund.

How long does a builder have to refund my money?

Under RERA a refund is generally due within about 45 days of cancellation, and a delay beyond that can attract interest in the buyer's favour. Getting the refund can still need persistence, so keep every receipt and written communication. Strong records let you press the claim and, if needed, approach your state RERA authority for enforcement.

RERA rules and their application vary by state and change over time, so verify the current position and the project's registration on your state RERA portal, such as the Karnataka portal, and confirm your specific terms with a property lawyer before paying. For verifying a project see our K-RERA verification guide. This is buyer education and not legal advice.

Last updated 2026-08-25. PropNewz Team.