Builder Says Your Flat Is Cancelled? What RERA Section 11(5) Allows for Bengaluru Buyers
RERA Section 11(5) says a promoter may cancel an allotment only in terms of the agreement for sale, and lets an aggrieved allottee approach the Authority. With allottee payment duties in Section 19 and the no-mortgage rule in 11(4)(h), here is how a Bengaluru buyer should respond to a cancellation letter.
Imagine an email landing on a Friday evening: "Due to non-payment of the slab-stage instalment, your allotment of Flat 1204 stands cancelled. Your booking amount will be adjusted as per policy." For a Bengaluru buyer who has a bank disbursement stuck in processing, it is the most frightening line a builder can write. It is also a line the Real Estate (Regulation and Development) Act, 2016 constrains in a single short sub-section.
The short answer. Section 11(5) of the RERA Act says a promoter may cancel an allotment only in terms of the agreement for sale. If the cancellation is not in accordance with the agreement, unilateral and without sufficient cause, the allottee may approach the Authority for relief. Your own duty sits in Section 19(6) and 19(7): pay as the agreement specifies, or pay interest at the prescribed rate on the delay. The trade-off: the agreement you sign is both your shield and the builder's sword, because whatever cancellation and forfeiture terms it contains become the yardstick the Authority will measure the cancellation against.
What does Section 11(5) actually say?
It is two sentences long. In the Gazette of India text of the RERA Act, Section 11(5) reads: the promoter may cancel the allotment only in terms of the agreement for sale. The proviso then says the allottee may approach the Authority for relief if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause.
Read together, the two sentences do three things. They tie any cancellation to the written agreement, not to a builder's internal "policy". They give the buyer a forum, the Authority, without needing a civil suit first. And they name the grounds the Authority will look at: whether the cancellation followed the agreement, whether it was unilateral, and whether there was sufficient cause.
The Act does not define "unilateral" or "sufficient cause" in its definitions section; the words appear in Section 11(5) without a separate definition. That leaves the Authority to apply them to the facts of each case. A buyer's best evidence is therefore documentary: the agreement, the payment record, and the correspondence showing whether the builder gave notice and a chance to cure the default before cancelling.
What must the agreement for sale contain?
Because Section 11(5) points back to the agreement, the agreement's contents matter. Section 13(2) says the agreement for sale shall be in the prescribed form and shall specify the particulars of development, specifications, internal and external development works, the dates and manner of payments towards the cost, the date on which possession is to be handed over, and the rates of interest payable by the promoter to the allottee and by the allottee to the promoter in case of default, along with other prescribed particulars.
Section 13(1) adds the timing rule. A promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance payment or application fee from a person without first entering into a written agreement for sale and registering it under the law in force. In rupees, on an Rs 1 crore flat, that cap is Rs 10 lakh before a registered agreement exists.
So in a dispute over cancellation, the questions are concrete. Is there a registered agreement? Does it contain a cancellation clause? Does it set a default interest rate for late payment by the allottee? A cancellation that skips past those terms is the kind Section 11(5) is aimed at.
What are your payment duties as an allottee?
The Act is not one-sided. Section 19(6) says every allottee who has entered into an agreement for sale shall make necessary payments in the manner and within the time specified in the agreement, and shall pay at the proper time and place the share of registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent and other charges.
Section 19(7) makes the allottee liable to pay interest, at the prescribed rate, for any delay in those payments. Section 19(8) says these obligations and the interest liability may be reduced when mutually agreed between the promoter and the allottee.
That structure matters when an instalment is late. The Act's first consequence for an allottee's delay is interest. Whether a delay is serious enough to justify cancellation is then a question of what the agreement says and whether the builder followed it. If you pay through a home loan, keep evidence of when you applied for each disbursement and when the bank released it.
Which builder obligations protect your unit meanwhile?
Two clauses of Section 11(4) protect a booked flat from what happens elsewhere in the builder's finances. Section 11(4)(h) says that after he executes an agreement for sale, the promoter shall not mortgage or create a charge on that apartment, plot or building, and if any such mortgage or charge is made, it shall not affect the right and interest of the allottee who has taken or agreed to take it, notwithstanding anything in any other law.
Section 11(4)(g) says the promoter shall pay all outgoings it has collected from allottees, including land cost, ground rent, municipal taxes, water and electricity charges, maintenance charges, and mortgage loan and interest related to the project, until it transfers physical possession. If it fails to pay, it continues to be liable even after transfer, along with any penal charges and the cost of legal proceedings.
The table brings these provisions together.
| Provision | Who it binds | What it says | Why it matters in a cancellation dispute | What to keep |
|---|---|---|---|---|
| Section 11(5) | Promoter | Cancel the allotment only in terms of the agreement for sale | The agreement is the test of a valid cancellation | Registered agreement with its cancellation clause |
| Proviso to 11(5) | Allottee | May approach the Authority if cancellation is not per the agreement, unilateral and without sufficient cause | Gives you a forum for relief | Cancellation letter and your reply |
| Section 13(1) | Promoter | No more than 10 percent as advance before a written, registered agreement | Shows whether the paperwork was in order | Receipts for every payment |
| Section 19(6) and 19(7) | Allottee | Pay as agreed, or pay interest at the prescribed rate for delay | Interest is the Act's first consequence of late payment | Payment schedule and loan disbursement records |
| Section 11(4)(h) | Promoter | No mortgage or charge on your unit after the agreement; any such charge does not affect your rights | Your unit is ring-fenced from later borrowing | Encumbrance search on the unit |
What should you do if a cancellation letter arrives?
Reply in writing, quickly, and keep everything. The proviso to Section 11(5) lets an aggrieved allottee approach the Authority, and Section 31(1) separately lets any aggrieved person file a complaint with the Authority or the adjudicating officer for any violation of the Act, rules or regulations against a promoter. For the full process, see our guide to the RERA complaint process.
If the builder is proposing to keep part of what you paid, the size of that deduction is a separate question from whether the cancellation was valid. We explained how courts approach forfeiture of an advance in our piece on Section 74 of the Indian Contract Act and advance forfeiture.
- Find your registered agreement for sale and read the cancellation, default interest and refund clauses before you reply.
- List every payment you made, with dates and receipts, and compare it to the payment schedule in the agreement.
- If a home loan disbursement caused the delay, gather the bank's letters showing when you applied and when funds were released.
- Reply in writing within days, stating that you object to the cancellation and asking the builder to identify the clause it relied on.
- Offer to pay any genuine arrears with interest at the agreed default rate, which is the consequence Section 19(7) attaches to delay.
- Do not sign any cancellation, settlement or refund form until you have read it carefully and, ideally, taken advice.
- If the builder does not withdraw a cancellation you believe breaches the agreement, approach the Authority under the proviso to Section 11(5) or file a complaint under Section 31.
Comparing projects in north Bengaluru? Our page on Konig Fortune County at Budigere Cross is one example of the project details worth reading alongside the agreement draft.
Does the builder need your consent to cancel?
Not if the agreement gives it a right to cancel and that right is properly exercised. Section 11(5) does not ban cancellation. It confines it. A cancellation that follows the agreement's terms, for a reason the agreement recognises, is within what the section allows. The proviso is aimed at cancellations that fail all three tests at once: not in accordance with the agreement, unilateral, and without sufficient cause. That is why the drafting stage matters. Read the cancellation clause before you sign and ask for changes if it lets the builder cancel for trivial delays.
Frequently asked questions
Can a builder cancel my flat booking under RERA?
Section 11(5) of the RERA Act says a promoter may cancel the allotment only in terms of the agreement for sale. If you are aggrieved and the cancellation is not in accordance with the agreement, unilateral and without sufficient cause, the proviso lets you approach the Authority for relief.
What happens if I pay an instalment late?
Section 19(6) requires you to pay in the manner and within the time specified in the agreement for sale. Section 19(7) makes you liable to pay interest at the prescribed rate for any delay. Section 19(8) says these obligations and interest may be reduced when mutually agreed with the promoter.
Can the builder mortgage my flat after I sign the agreement?
Section 11(4)(h) says that after executing an agreement for sale, the promoter shall not mortgage or create a charge on that unit, and if any such mortgage or charge is created, it shall not affect the right and interest of the allottee who has taken or agreed to take it.
How much can a builder take before a registered agreement?
Section 13(1) says a promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance or application fee without first entering into a written agreement for sale and registering it. On an Rs 1 crore flat, that is Rs 10 lakh.
Last updated 2026-11-14. PropNewz Team.
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