Section 18 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 18 gives a buyer two paths when the promoter fails to complete or give possession on time: withdraw and take the money back with interest and compensation, or stay in the project and receive interest for every month of delay until possession. It also gives compensation for defective title, with no limitation bar, and for breach of other obligations. If your possession date has passed, our legal dispute resolution service can help you decide which path to take and prepare the claim.
If the promoter fails to complete or is unable to give possession by the date in the agreement for sale, or because he discontinues business (including suspension or revocation of registration), he is liable on demand, where the allottee wishes to withdraw, to return the amount received with interest at the prescribed rate, including compensation (18(1)). If the allottee does not withdraw, he is paid interest for every month of delay till possession at the prescribed rate (proviso). Loss from defective title is compensated, and that claim is not barred by limitation (18(2)). Failure in any other obligation attracts compensation (18(3)).
Section 18(1): the two triggers
The promoter "fails to complete or is unable to give possession of an apartment, plot or building":
- (a) "in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein"; or
- (b) "due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason".
Trigger (a) is tied to the date in the agreement for sale; this is why the possession date required by section 13(2) matters. Trigger (b) does not need a failed date: discontinuance of business, whether by suspension or revocation under section 7 or "for any other reason", is enough. The words "for any other reason" make the clause wide.
Path one: withdraw and take the money back
"He shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act."
| Element | Text |
|---|---|
| Who decides to withdraw | The allottee ("in case the allottee wishes to withdraw") |
| When liability arises | On demand |
| What is returned | The amount received in respect of that unit |
| Interest | At the prescribed rate, which the State rules fix; it differs by State |
| Compensation | Included, "in the manner as provided under this Act" |
| Other remedies | Not affected ("without prejudice to any other remedy available") |
Points from the text:
- The right is at the allottee's option. "On demand" means the allottee must ask; the text gives no form or time for the demand.
- The interest rate is not in the Act. It is "prescribed", which means the State rules (section 2(zi), (zp)). The starting date of the interest follows section 2(za)(ii): from the date the promoter received the amount or part of it till the date the amount and interest are refunded. See our article on that definition.
Example. A promoter agreed to hand over Anita's flat by 31 March and has not. Anita has paid Rs 40,00,000 and can demand it back with interest at the State-prescribed rate, and compensation.
Path two: stay and receive monthly interest
"Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed."
| Choice | Result |
|---|---|
| Withdraw | Return of amount with interest and compensation |
| Stay | Interest for every month of delay until possession is handed over, at the prescribed rate |
The stay path gives interest only; the proviso does not mention compensation, while the withdraw path says "including compensation". The text does not say how a part-month is treated; the State rules may. The proviso does not say that the allottee loses other remedies.
Section 18(2): defective title
"The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this sub-section shall not be barred by limitation provided under any law for the time being in force."
Points to note:
- It covers a project "being developed or has been developed", so it applies before and after completion.
- The loss must be caused by the defective title.
- The limitation bar is lifted: the claim cannot be defeated by the period in any other law. The text does not say whether any period at all applies under this Act.
- Compare section 4(2)(l)(A), where the promoter declares legal title at registration, and section 16, which requires title insurance as notified.
Section 18(3): other obligations
"If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act."
This is a general clause. It reaches obligations under the Act, rules, regulations and the agreement for sale (for example the duties in section 11), apart from those that have their own remedy. The amount of compensation is not given; see section 71 on the adjudicating officer.
For the parallel refund right on a false advertisement, see section 12.
What section 18 does not say
Section 18 gives no percentage of interest (the State rules fix it), no forum (see RERA vs consumer forum and our complaint process guide), and no deductions from a refund. For delay claims, see delay in possession and compensation.
Need help with a refund or delay claim?
The choice between withdrawing and staying, the interest rate under your State's rules and the dates in your agreement all affect the outcome. Our legal dispute resolution team can calculate your claim, serve the demand and represent you before the Authority.
Key takeaways
- Failure to give possession by the agreed date, or discontinuance of business, makes the promoter liable.
- An allottee who withdraws gets the amount received, with interest at the prescribed rate and compensation, on demand.
- An allottee who stays gets interest for every month of delay till possession.
- Defective-title compensation is not barred by limitation under any law.
- Other obligation failures attract compensation under the Act.
Read next
- Section 17: transfer of title and conveyance deed
- Sections 20 and 21: the Real Estate Regulatory Authority
- Delay in possession: compensation under RERA
- Rights of the allottee under section 19
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.