Flat Delayed in Bengaluru? Withdraw With a Refund or Stay for Interest Under RERA Section 18
When possession is delayed, Section 18(1) of the RERA Act gives Bengaluru buyers two routes: withdraw and get the amount back with interest and compensation, or stay and receive interest for every month of delay. How Section 2(za) sets the interest, and a seven question checklist for choosing.
The possession date in a Bengaluru buyer's agreement for sale came and went. The builder's latest letter promises "a few more months". The buyer now faces the question every delayed allottee eventually asks: walk away and get the money back, or wait it out and be paid for the wait? The Real Estate (Regulation and Development) Act, 2016 answers with two clearly defined routes in Section 18(1), and the choice between them is one of the biggest financial decisions in the life of a delayed project.
This guide sets out what each route gives you under the Act, how interest is counted, and the practical questions to answer before you choose.
The short answer. Under Section 18(1), if the promoter fails to complete or is unable to give possession in accordance with the agreement for sale, an allottee who wishes to withdraw is entitled, on demand, to the return of the amount received with interest at the prescribed rate, including compensation. An allottee who does not withdraw shall be paid interest for every month of delay until possession is handed over. Section 2(za) says the interest rate the promoter pays on default equals the rate it can charge the allottee on default, and that refund interest runs from the date the promoter received each amount. The trade-off: withdrawing ends your exposure to the project but also ends your claim to the flat, while staying keeps the flat but leaves your money tied to a project that is already late.
What are the two options when possession is delayed?
Withdraw, or stay and be paid interest. In the text of the Act published by the Telangana regulator, Section 18(1) applies if the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale or by the date specified in it, or because of discontinuance of the promoter's business on account of suspension or revocation of registration or for any other reason.
In that case, the promoter is liable on demand to allottees who wish to withdraw, without prejudice to any other remedy available, to return the amount received in respect of the apartment with interest at the rate prescribed, including compensation in the manner provided under the Act. The proviso then covers the other route: where an allottee does not intend to withdraw, the promoter shall pay interest for every month of delay, till the handing over of possession, at the prescribed rate.
Two details in the wording matter. Clause (b) covers a promoter who cannot give possession because its registration has been suspended or revoked, or for any other reason, so the right does not depend only on a missed date. And the refund is owed without prejudice to any other remedy available, which means choosing to withdraw does not by itself give up other remedies the law may offer.
Section 19(4) states the same right from the buyer's side: the allottee is entitled to claim a refund of the amount paid with interest and compensation if the promoter fails to comply or is unable to give possession in accordance with the agreement for sale, or because of suspension or revocation of registration.
| Question | What the Act says | Section |
|---|---|---|
| If I withdraw, what do I get? | Return of the amount received, with interest at the prescribed rate, including compensation | Section 18(1) |
| If I stay, what do I get? | Interest for every month of delay until possession is handed over | Proviso to Section 18(1) |
| Is the interest rate the same both ways? | The rate charged to the allottee on default equals the rate the promoter pays on default | Section 2(za), Explanation (i) |
| From when does refund interest run? | From the date the promoter received each amount until it is refunded with interest | Section 2(za), Explanation (ii) |
| Who decides compensation? | An adjudicating officer appointed for Sections 12, 14, 18 and 19 | Section 71(1) |
How is interest calculated if I withdraw?
Payment by payment. The Explanation to Section 2(za) says the interest payable by the promoter to the allottee shall be from the date the promoter received the amount, or any part of it, till the date the amount or part and the interest on it is refunded. In plain terms, each instalment carries interest from the day it reached the promoter.
Take an illustration. Suppose a buyer paid Rs 10 lakh on 1 January 2023 and Rs 20 lakh on 1 January 2024, and the refund is made on 1 January 2027. The first payment would carry interest for four years and the second for three years, at whatever rate is prescribed under the applicable state rules. On a simple interest basis, that is Rs 10 lakh for four years plus Rs 20 lakh for three years, the equivalent of Rs 1 crore held for one year, so every one percentage point of the prescribed annual rate would be worth about Rs 1 lakh of interest in this example. Our earlier explainer on refund interest on each payment under Section 2(za) works through this in more detail.
The same Explanation sets the symmetry. Clause (i) says the rate of interest chargeable from the allottee by the promoter in case of default shall be equal to the rate the promoter is liable to pay the allottee in case of default. So the rate you can be charged for paying late and the rate the promoter pays you on its default are meant to be the same.
What does staying in the project get me?
Monthly interest until handover, and the flat. Under the proviso to Section 18(1), the promoter pays interest for every month of delay until possession is handed over. This route suits a buyer who still wants the home, has the cash flow to keep paying any EMIs or rent in the meantime, and believes the project will be finished.
The risk is the one that made the project late in the first place. A buyer who stays is exposed to further delay. That is why the regulator's records on quarterly progress matter: a project whose construction status has moved in recent quarters is a different proposition from one where nothing has changed.
Is compensation separate from interest?
It can be. Section 18(1) refers to interest including compensation in the manner provided under the Act, and Section 71(1) says that for adjudging compensation under Sections 12, 14, 18 and 19, the Authority shall appoint an adjudicating officer, a judicial officer who is or has been a District Judge, to hold an inquiry after giving the persons concerned a reasonable opportunity of being heard. Section 18(3) separately makes the promoter liable to pay compensation if it fails to discharge any other obligations under the Act, rules, regulations or the agreement for sale. Our report on compensation for other obligations under Section 18(3) covers that clause.
How should a Bengaluru buyer decide?
Answer these questions in writing before choosing a route. Each one maps to the Act or to your own finances.
- What possession date does your agreement for sale state, and how many months late is the project today?
- What does the project's page on the regulator's website show about recent construction progress?
- How much have you paid, on which dates, so that interest on each payment can be worked out?
- What interest rate does your agreement charge you for late payment, since Section 2(za) makes it symmetrical?
- Can you carry your EMI and rent for another year or more if you stay?
- If you withdraw, do you have a plan for the home loan and for where the refunded money goes?
- Will you claim compensation as well, and have you kept the documents an adjudicating officer would need?
If your flat is in a large project on Sarjapur Road, such as Purva Kensho Hills in S Medihalli, check the specific phase and tower, since registration and progress are recorded phase by phase.
Do I have to decide immediately?
The Act frames both routes as the allottee's choice: the refund is due on demand if the allottee wishes to withdraw, and the interest is due if the allottee does not intend to withdraw. Take the time to gather the facts above, but do not let the record go stale. Send your demand in writing, state clearly which route you are choosing, attach a list of your payments with their dates, keep every receipt, and if the promoter does not respond, Section 31 allows any aggrieved person to file a complaint with the Authority or the adjudicating officer.
There is no universally right answer. There is only the answer that fits your finances and your view of the project, and the Act gives you a clear right whichever way you go.
Frequently asked questions
What are my options under RERA if my flat is delayed?
Section 18(1) gives two routes. If you wish to withdraw, the promoter must return the amount received with interest at the prescribed rate, including compensation. If you do not withdraw, the promoter must pay you interest for every month of delay until possession is handed over.
From when is interest on a RERA refund calculated?
The Explanation to Section 2(za) says interest payable by the promoter runs from the date the promoter received the amount, or any part of it, until the date that amount and the interest on it are refunded. Each instalment therefore carries interest from the day it was paid.
Is the delay interest rate the same as the late payment rate charged to buyers?
Yes. Section 2(za) says the rate of interest chargeable from the allottee by the promoter in case of default shall be equal to the rate the promoter is liable to pay the allottee in case of default. The rate itself is prescribed under the applicable rules.
Who decides compensation for a delayed flat under RERA?
Section 71(1) says that for adjudging compensation under Sections 12, 14, 18 and 19, the Authority appoints an adjudicating officer, a judicial officer who is or has been a District Judge, who holds an inquiry after giving the persons concerned a reasonable opportunity of being heard.
Last updated 2026-10-25. PropNewz Team.
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