Understanding Section 18 of the RERA Act: Rights of Homebuyers

The Real Estate (Regulation and Development) Act, 2016, or RERA, was introduced to bring transparency and accountability to the real estate sector. One key provision of RERA is Section 18, which aims to protect the interests of homebuyers. This section focuses on the rights of buyers if there are delays in delivering the property or if the builder fails to meet specific commitments.

In this article, we will explore what Section 18 of the RERA Act is, how it impacts builders and homebuyers, and why it is essential for you as a property buyer.

What is Section 18 of the RERA Act?

Section 18 of the RERA Act allows homebuyers to demand compensation or even cancel their booking if the builder fails to deliver the property on time or does not fulfill the promises made in the agreement.

The law was designed to hold builders accountable for delays in the construction and delivery of properties. It also ensures that the builders meet the commitments made during the sale, such as specifications, amenities, and the overall quality of construction.

Under Section 18, builders are required to compensate homebuyers for any delay in possession or defects in the project. This compensation could include the return of the money paid by the buyer along with an interest for the delay.

Key provisions of Section 18

There are several important aspects to Section 18 of the RERA Act that every homebuyer should know:

• Right to compensation for delay: If a builder delays possession of the property beyond the agreed-upon date, the buyer has the right to ask for compensation. The compensation includes the cost of the delay, which could be interest or a refund of the amount paid.
• Builder’s responsibility for defects: If there is any defect in the construction or if the property does not meet the promised specifications, the buyer can ask the builder to fix it. If the builder fails to do so within 30 days, the buyer can seek compensation.
• Right to withdraw from the agreement: If the builder does not deliver the property on time or does not fulfill the contractual obligations, the buyer can cancel the agreement and seek a refund of the amount paid. This is a crucial right because it allows buyers to protect their investment.
• Builder's liability for delays: If the builder is responsible for delays, they will have to compensate the homebuyer. The compensation is typically paid as an interest on the amount already paid by the buyer. The interest rate is decided by the Real Estate Regulatory Authority (RERA).
• Notice of delay: Builders are required to inform buyers about any delay in possession. If the possession is delayed, the builder must notify the buyer with the reason for the delay and provide a new expected date of possession.

How does Section 18 protect homebuyers?

Section 18 of the RERA Act offers significant protection to homebuyers. Without this provision, buyers were often left vulnerable to builders who delayed possession or failed to meet promises made at the time of sale. Builders used to delay construction without any accountability, and buyers had limited options to claim compensation.

With Section 18, homebuyers are assured that they have a legal right to demand compensation for delays. This provision ensures that builders are held accountable for their actions and that they cannot take advantage of homebuyers.

What happens if the builder defaults?

If the builder defaults under the terms of Section 18, they are required to pay interest or compensation for the delay in possession. This interest is calculated at a rate specified by RERA, which is usually linked to the prevailing bank interest rates.

For example, if the builder delays the possession of your flat by six months, and you have paid Rs. 20 lakh for the property, the builder must pay interest on the amount to compensate for the delay. In some cases, builders may even be required to refund the entire amount if the property is not delivered within a specified period.

How Section 18 affects home loan borrowers

If you have taken a home loan to finance the purchase of the property, Section 18 of the RERA Act becomes even more important. The delay in possession can affect your home loan repayment schedule.

Typically, when you take a home loan, the EMI (Equated Monthly Instalments) starts as soon as the loan is disbursed. If the builder delays the possession of the property, you may not be able to move into your home as planned, but your loan repayments continue. In such cases, Section 18 ensures that the builder compensates you for the delay, and you can claim an interest refund.

Additionally, if the builder does not deliver the property as promised, you may be entitled to a full refund. This could provide relief from your home loan obligations until you find a suitable alternative property. Therefore, Section 18 plays a vital role in safeguarding the interests of home loan borrowers.

How to exercise your rights under Section 18?

If you believe that the builder is delaying the possession or failing to meet commitments, here are the steps you can follow to exercise your rights:

• Document the agreement: Ensure that all the terms and conditions of the sale are documented. This includes the possession date, specifications, and any promises made by the builder.
• Send a written notice: If the builder delays the possession or does not meet the specifications, send a formal written notice to the builder, stating your concerns and asking for compensation or a refund.
• File a complaint with RERA: If the builder does not respond to your notice, you can file a complaint with the RERA authority. They will investigate the issue and may order compensation or refund.
• Legal action: If RERA does not provide relief, you can also seek legal recourse in consumer courts.

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