Section 12 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 12 protects a person who pays money on the strength of what a builder said in a notice, advertisement, prospectus or model apartment, and then suffers loss because the statement was incorrect or false. The promoter must compensate him; if he decides to withdraw, the promoter must return his entire investment with interest and compensation. If you have a notice to send to a builder, our consumer notice drafting service can prepare it.
Where any person makes an advance or a deposit on the basis of the information in a notice, advertisement or prospectus, or on the basis of any model apartment, plot or building, and sustains loss or damage because of an incorrect, false statement in it, he shall be compensated by the promoter as provided under the Act. If he intends to withdraw from the project, he shall be returned his entire investment along with interest at the prescribed rate and the compensation.
Section 12 at a glance
| Part | What it provides |
|---|---|
| Main text | Compensation by the promoter where a person pays an advance or deposit relying on an advertisement, prospectus or model, and suffers loss from an incorrect, false statement |
| Proviso | Right to withdraw: entire investment returned with interest at the prescribed rate, and compensation |
What triggers section 12
Three things must be present:
- A statement in a notice, advertisement or prospectus, or the model apartment, plot or building shown. "Advertisement" and "prospectus" have the meanings in section 2(b) and 2(zl): wide terms, covering any medium and any publicity in any form that informs about a project, offers for sale or invites advances or deposits. See section 2 for the definitions.
- An advance or deposit paid on the basis of it. The section speaks of "any person who makes an advance or a deposit", so the person need not yet be an allottee under a signed agreement.
- Loss or damage caused by the incorrect or false statement.
The wording is "incorrect, false statement". The text does not distinguish between a deliberate falsehood and an honest mistake; the word "incorrect" suggests that an error without bad intent can also qualify. It does not say who must prove what, and it does not say that the promoter must have known the statement was false.
The reference to a model apartment, plot or building is important for buyers: a show flat that differs from what is built is within the section, not only printed brochures.
The main rule: compensation by the promoter
"He shall be compensated by the promoter in the manner as provided under this Act." The section does not itself give an amount or procedure. It points to the Act's compensation machinery. For compensation, see our overview of penalties and remedies under RERA and the later sections on adjudication of compensation, which are covered in this series (section 71 on the adjudicating officer).
The proviso: right to withdraw
"If the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act."
| Choice | What the buyer gets |
|---|---|
| Stay in the project | Compensation for loss or damage from the false statement |
| Withdraw from the project | Entire investment, interest at the prescribed rate, and compensation |
Three things to see:
- "Entire investment" means everything he put in, not a part after deductions. The text does not list what counts as investment, so the amounts he paid under the booking are the natural measure.
- The interest rate is "prescribed", which means it is fixed by the State rules (section 2(zi) and (zp)) and differs by State. The Act gives no percentage here.
- It is the buyer's choice. The word is "intends to withdraw". The section does not give the promoter a right to refuse, and it states no time limit within which to withdraw.
The text of section 12 does not mention the starting date of the interest. Section 2(za)(ii) says interest payable by the promoter to the allottee runs from the date the promoter received the amount till the date of refund; whether that explanation governs here depends on the "interest" definition, which speaks of rates payable by the promoter or the allottee, and you should check your State's rules.
Example. Nair Heights advertises a project with a "swimming pool and clubhouse" and a show apartment with marble flooring. Sunita pays Rs 5,00,000 as a booking advance. Later she learns that the sanctioned plan has no swimming pool and the apartments are to be tiled. If she suffers loss from the false statement, she can claim compensation. If she decides to withdraw, she can ask for the Rs 5,00,000, interest at the rate fixed by the State rules, and compensation.
How section 12 fits with other sections
| Section | Link |
|---|---|
| Section 11(2) | Advertisements must show the Authority's website and registration number |
| Section 7(1)(c) and (B) | Unfair practice, including publishing an advertisement of services not intended to be offered, is a ground for revocation of registration |
| Section 13 | Limit on advance before a written, registered agreement |
| Section 18 | Return of amount and compensation on failure to give possession |
Section 12 is wider than section 18 on one point: it does not require an agreement for sale. It works from the advance or deposit alone.
What section 12 does not say
- No amount of compensation or formula.
- No limit period for claiming.
- Which forum hears the claim; see our post on RERA versus the consumer forum and the sections on complaints and adjudication.
- Whether a disclaimer in a brochure ("images are indicative") defeats the claim; the text does not mention disclaimers, and the section speaks of statements on the basis of which the person paid.
Practical steps for a buyer
| Step | Why |
|---|---|
| Keep the brochure, advertisement, website screenshots and photos of the model apartment | They are the "statement" |
| Keep proof of payment | It shows the advance or deposit |
| Compare with the sanctioned plan and the project page on the Authority's website | Shows what is false or incorrect |
| Decide: stay with compensation, or withdraw | The proviso gives the choice |
Need a notice to the builder?
Before approaching the Authority, many buyers send a written notice setting out the false statement, the payment and the relief sought. Our consumer notice drafting team can prepare a notice that ties your brochure and receipts to the language of section 12.
Key takeaways
- A person who pays an advance or deposit on a false or incorrect advertisement, prospectus or model apartment, and suffers loss, must be compensated by the promoter.
- A model apartment, plot or building is included alongside printed material.
- On withdrawal, the entire investment comes back with interest at the prescribed rate and compensation.
- The rate of interest is fixed by the State rules, not by the Act.
- The section needs no agreement for sale, only an advance or deposit.
Read next
- Section 11: functions and duties of the promoter
- Section 13: no deposit or advance without agreement for sale
- Section 18: return of amount and compensation
- RERA vs consumer forum: where to file
Disclaimer: Based on the Real Estate (Regulation and Development) Act, 2016 as enacted, as consulted on 1 October 2026. Rules, forms, fees and procedures are made by each State and Union territory and its Real Estate Regulatory Authority and differ from State to State. This article is general information, not legal advice; check the official text and your State's rules before acting.