Builder Delay Compensation in India: How to Claim the Full Amount

By Advocate Ganta Surya Kiran | 19 Law Chambers, Visakhapatnam | Property Law

Builder delays are the most common grievance of homebuyers across Andhra Pradesh and across India. Furthermore, many buyers wait years beyond the promised possession date, paying both EMI on their home loan and rent simultaneously a severe financial double burden. However, the Real Estate (Regulation and Development) Act, 2016 (RERA) gives buyers the right to claim compensation for every day of delay at a rate higher than most bank FD returns. Advocate Ganta Surya Kiran at 19 Law Chambers has secured significant delay compensation for flat buyers across Andhra Pradesh through both RERA proceedings and consumer court cases.

What Delay Compensation Are You Entitled To?

RERA Interest for Delay: Under Section 18 of the RERA Act if a builder fails to complete the project and give possession by the agreed date, the builder must pay interest to the buyer at SBI Marginal Cost of Lending Rate (MCLR) + 2% per annum on the total amount paid. Specifically, this interest accrues from the agreed possession date until the actual possession date. Furthermore, for a buyer who paid Rs 50 lakh at current MCLR + 2% this translates to approximately Rs 4.5 to 5 lakh per year of delay. Consequently, buyers who waited 3 to 5 years can claim Rs 15 to 25 lakh in compensation on a Rs 50 lakh property.

Right to Full Refund: You also have the alternative right to withdraw from the project entirely and claim: full refund of all amounts paid, plus interest at MCLR + 2% from the date of each payment. Moreover, this right to refund exists regardless of the reason for delay  builder’s financial difficulties are not your problem. Consequently, choose between continuing in the project with delay compensation or withdrawing with full refund based on your specific circumstances.

Consumer Court Compensation: Additionally, file a consumer court complaint for compensation beyond what RERA provides. Specifically, consumer courts award: mental agony compensation (typically Rs 50,000 to Rs 5 lakh), consequential losses extra rent paid during delay period, EMI paid without possession, and career losses if relocation was delayed — and litigation costs. Read: Consumer Court Complaint India.

How to Calculate Your Builder Delay Compensation

Use this simple calculation. Specifically:

Total Amount Paid to Builder: Rs [X] lakh Agreed Possession Date: [Date from Sale Agreement] Actual/Expected Possession Date: [Current Date] Delay Period: [Number of months] Applicable Interest Rate: SBI MCLR + 2% per annum (check current SBI MCLR) Annual Compensation: Rs X lakh × (MCLR + 2%) / 100 Monthly Compensation: Annual Compensation ÷ 12 Total Delay Compensation: Monthly Compensation × Number of months delay

Consequently, use this calculation to determine whether claiming delay compensation while continuing in the project or taking a full refund is more financially beneficial for your specific situation.

Step-by-Step Process to Claim Builder Delay Compensation

Step 1 — Review Your Sale Agreement Carefully Specifically identify: the exact possession date promised in the agreement, the force majeure clause its scope and the events it covers, the dispute resolution clause — RERA, arbitration, or civil court, and the compensation clause if any in the agreement itself. Furthermore, photograph or scan every page of the sale agreement and all payment receipts before filing any complaint.

Step 2 — Send Legal Notice to Builder Before filing RERA send a formal legal notice demanding: delayed possession compensation for the period of delay, or full refund with interest if you wish to withdraw. Furthermore, give the builder 30 days to respond. Moreover, this notice serves as evidence that you formally demanded compensation before escalating. Read: Legal Notice How to Send India.

Step 3 — File RERA Complaint File your complaint at rera.ap.gov.in. Specifically attach: sale agreement, payment receipts showing all amounts paid, builder’s communication about delay, your legal notice and builder’s response or silence, and calculation of delay compensation claimed. Furthermore, state clearly whether you want to continue in the project with compensation or want a full refund. Read: RERA Complaint Andhra Pradesh Builder.

Step 4 — Attend RERA Hearing RERA Adjudicating Officers schedule hearings within 60 days. Moreover, 19 Law Chambers represents buyers before AP RERA effectively presenting strong arguments on interest calculation, builder delay causes, and force majeure inapplicability. Consequently, well-prepared RERA cases result in full compensation orders within 60 to 90 days.

Step 5 — File Consumer Court Simultaneously File a consumer court complaint alongside the RERA complaint for mental agony and consequential loss compensation. Moreover, RERA and consumer court remedies are cumulative — you can pursue both simultaneously for different categories of relief. File online at edaakhil.nic.in.

Step 6 — Enforce the Order If the builder ignores the RERA order file an execution petition immediately. Specifically, non-compliance with RERA orders attracts daily penalties and can result in the builder’s RERA registration being cancelled. Consequently, enforcement of RERA orders is increasingly effective as RERA authorities use their powers more assertively.

Frequently Asked Questions

Q: My builder says COVID caused the delay and force majeure applies. Is this correct? Partially — while COVID was recognised as a force majeure event by RERA, the extension of time given was typically 6 months to 1 year. Consequently, delays beyond this extended period are still compensable. Furthermore, builders cannot use COVID as a blanket excuse for delays that started before COVID or continued well after restrictions lifted. Specifically challenge force majeure claims that extend beyond reasonable periods.

Q: The builder says the sale agreement specifies arbitration, not RERA. What should I do? The Supreme Court in Imperia Structures v. Aditya Trigunayat (2020) specifically held that RERA remedies are available to buyers regardless of arbitration clauses in sale agreements. Furthermore, choosing RERA over arbitration is your right as a buyer. Consequently, do not let builders use arbitration clauses to steer you away from the more buyer-friendly RERA forum.

Q: Can I claim compensation if I never took possession because the builder abandoned the project? Yes — file RERA complaint immediately for full refund with interest from date of each payment. Moreover, if the builder is insolvent — file before the NCLT (National Company Law Tribunal) as a creditor. Additionally, file a criminal complaint for cheating under Section 420 IPC against the builder’s directors. Free legal aid: NALSA — nalsa.gov.in | Free Legal Aid in AP.

Also read: Flat Apartment Buyers Rights India | Property Fraud India How to Protect | Best Property Lawyers Vizag

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