Missed a Builder Instalment? What RERA Says You Owe as a Bengaluru Buyer

The demand letter arrives on a Tuesday: the slab for the twelfth floor is cast, and the next instalment of Rs 10 lakh is due in fifteen days. A Bengaluru buyer, halfway through an under construction purchase, checks the home loan disbursement status and realises the money will not reach the builder in time. The question that follows is simple. What will the delay cost?

The Real Estate (Regulation and Development) Act, 2016 sets out what builders must pay when they are late. It also sets out what buyers owe when they are late, and it ties the two together. This guide reads the relevant provisions from the Act and explains how a Bengaluru buyer can keep instalments on track and what to do when one slips.

The short answer. Under Section 19(6) of the RERA Act, an allottee who has signed an agreement for sale must make payments in the manner and within the time the agreement specifies. Section 19(7) makes the allottee liable to pay interest at the prescribed rate for any delay. The explanation to Section 2(za) says that rate must equal the rate the promoter pays the allottee for its own default, and it runs from the date of default until payment. On an instalment of Rs 10 lakh paid 60 days late, an illustrative 10 percent a year works out to about Rs 16,438. The trade-off: the rule is even-handed, which protects you from penal rates, but it also means delay interest builds daily, so timing your loan disbursement matters.

What does RERA say a buyer must pay, and when?

Section 19(6) of the Real Estate (Regulation and Development) Act, 2016 in its Gazette text says every allottee who has entered into an agreement for sale to take an apartment, plot or building under Section 13 shall be responsible to make necessary payments in the manner and within the time as specified in the agreement for sale.

The same sub-section adds that the allottee shall pay, at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent and other charges, if any. Your obligations therefore cover more than the instalments on the price.

The agreement for sale is where the timing is fixed. Section 13(2) requires the agreement to specify the dates and the manner in which payments towards the cost are to be made, and the rates of interest payable by the promoter to the allottee and by the allottee to the promoter in case of default. Read that schedule and the interest clause before you sign, and again whenever a demand arrives.

How much interest do you owe on a late instalment?

Section 19(7) says the allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under Section 19(6). The rate is the one prescribed under the rules that apply to your project, and your agreement for sale should state it.

The definition of interest in Section 2(za) sets two further rules in its explanation. First, the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default. Second, the interest payable by the allottee runs from the date the allottee defaults in payment until the date it is paid.

The table below shows how the arithmetic works on a single instalment. It uses an illustrative simple rate of 10 percent a year to show the method, not the rate that applies to you; use the rate in your agreement for sale.

The figures are simple interest calculated as amount, times rate, times days divided by 365. Your agreement may set out a different method; where it does, follow the agreement and ask the promoter to show its working on any interest demand.

Why is the rate the same for buyer and builder?

The equal rate rule in Section 2(za) is one of the quieter protections in the Act. Its explanation requires the rate charged to the allottee to be equal to the rate the promoter is liable to pay for its own default.

For a buyer, that has two practical effects. It caps what a promoter can charge you at the rate it would owe you, so a high penal rate in a demand letter is worth questioning. And it gives you a mirror image to rely on if the project is delayed: the same rate, running from the date the promoter received the amount until it is refunded, applies when the promoter is the party in default.

Our guide to delayed possession interest and refund under RERA covers that other side of the ledger, when the builder misses the possession date.

If an interest demand looks wrong, respond in writing. Set out the due date in the agreement, the date your payment actually reached the promoter, the number of days in between and the rate in your agreement, and ask the promoter to reconcile its figure with yours. Keep bank statements and the lender's disbursement advice as proof of dates.

If the disagreement cannot be settled, the Act provides a forum. Section 31(1) allows any aggrieved person to file a complaint with the Authority or the adjudicating officer for any violation or contravention of the Act or the rules and regulations, including against a promoter. A clear, dated record of your payments is the most useful thing you can bring.

Can a builder cancel your flat for a late payment?

A late instalment creates an interest liability, but cancellation is governed separately. Section 11(5) says the promoter may cancel the allotment only in terms of the agreement for sale. Its proviso says the allottee may approach the Authority for relief if aggrieved by a cancellation that is not in accordance with the agreement, is unilateral and is without sufficient cause.

That makes the cancellation clause in your agreement important reading. Check what default triggers it, what notice must be given, and what deductions apply. If you receive a cancellation notice, compare it line by line with that clause before responding, and keep evidence of every payment and of your communication about any delay.

Section 19(8) also leaves room for agreement. It says the obligations of the allottee under Section 19(6), and the liability towards interest under Section 19(7), may be reduced when mutually agreed between the promoter and the allottee. If a delay is short and explained, it is reasonable to ask in writing whether the promoter will agree to reduce the interest.

How can a Bengaluru buyer avoid late payment interest?

In an under construction purchase, each instalment depends on the timing of three things: a construction milestone, the builder's demand and, where you have a loan, the bank's disbursement. The Act places the payment duty on the allottee and its text contains no exception for a lender's delay, so it is worth building a buffer into your plan.

Start by mapping the payment schedule in your agreement for sale against your loan's disbursement process. Ask your lender how long it takes to release a stage payment after receiving a builder demand, and what documents it needs. Ask the promoter to send demands to both you and the lender at the same time. Our explainer on pre-EMI and full EMI for an under construction flat covers how stage-linked disbursements affect your outgoings.

If you are comparing projects, ask each promoter for its payment schedule and interest clause before booking. For a project such as the one in our review of Century Astoria in Jakkur, a clear schedule tied to construction stages makes planning easier.

Use this checklist to stay ahead of every instalment:

1. Note the payment dates and interest clause in your agreement for sale.
2. Ask your lender how long a stage disbursement takes after a demand.
3. Ask the promoter to copy every demand letter to your lender.
4. Keep a small cash buffer for your own contribution to each stage.
5. Pay registration, tax and utility shares when they fall due, not just instalments.
6. If a payment will be late, tell the promoter in writing before the due date.
7. Check any interest demand against the agreed rate and the days of delay.

RERA treats buyers and builders alike when money is late. Planning your side of the schedule keeps that rule working for you rather than against you.

What do Bengaluru buyers ask about interest on late instalments?

Do I have to pay interest if I pay a builder instalment late?

Yes. Section 19(7) of the RERA Act makes the allottee liable to pay interest at the prescribed rate for any delay in payments due under Section 19(6). Under Section 2(za), that interest runs from the date of default until the date the amount is paid.

Can a builder charge a higher interest rate than it pays for delay?

No. The explanation to 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 its own default. Your agreement should state that rate.

Can a builder cancel my flat for a delayed payment?

Section 11(5) says the promoter may cancel an allotment only in terms of the agreement for sale. If a cancellation is not in line with the agreement, is unilateral and is without sufficient cause, the allottee may approach the Authority for relief. Read your agreement's cancellation clause closely.

Can the builder and I agree to waive late payment interest?

Yes, to an extent. Section 19(8) says the allottee's payment obligations under Section 19(6) and the interest liability under Section 19(7) may be reduced when mutually agreed between the promoter and the allottee. Put any such agreement in writing and keep a copy.

Last updated 2026-10-17. PropNewz Team.