Flat Possession Delayed, Buyer Penalized: MahaRERA Fines Both Parties

The ongoing tug-of-war between home buyers and builders persists, even with the presence of the Real Estate (Regulation and Development) Act (RERA). Many buyers believe they can penalize builders for delayed possession, but misunderstandings of the RERA law can lead to fines for the buyers themselves. Thus, understanding this law is crucial when booking a house or any property.

In 2010, a builder in Mumbai initiated a housing project in Kurla-Andheri. Ram Kumar, an IT engineer, admired the project and booked flat number 401 in the D wing, measuring about 836 square feet. The builder committed to handing over possession by December 31, 2017, and accordingly made a sale agreement.

Under the agreement, a payment of Rs 1.66 crore (excluding stamp duty and registration charges) was agreed upon. Ram Kumar paid Rs 1.19 crore, with the balance due on possession.

According to Clause 2 of the possession agreement, the builder was required to hand over possession by December 31, 2017. However, the occupation certificate was obtained only on July 14, 2020, and the buyer was informed the next day. The builder then issued a demand letter for Rs 65,76,046, while the buyer sent a notice claiming interest as a penalty for the delay under Clause 9. With both sides seeking payment from each other, the dispute was brought before the MahaRERA.

When the matter reached MahaRERA, it found that the builder had delayed possession, attracting a penalty under Section 18. However, it also observed that the buyer had not made the full payment on time, warranting a late payment penalty. MahaRERA concluded that both parties had failed to meet their obligations under the agreement.

MahaRERA directed the homebuyer to immediately clear the outstanding payment along with interest as a penalty. At the same time, the builder was ordered to pay compensation for the delay in possession. The builder challenged this decision before the RERA Appellate Tribunal but lost the case there as well on October 17, 2025.

As per RERA’s order, both the builder and the buyer owe penalties amounting to several lakhs of rupees. With SBI’s MCLR currently at 8.1%, the homebuyer is entitled to interest at this rate. Since the buyer had paid Rs 1.19 crore, which remained with the builder for two years and six months, the interest amounts to Rs 24,22,305. In other words, the builder must pay Rs 24.22 lakh in interest to the buyer.