Flat Possession Delayed, Buyer Penalized: MahaRERA Fines Both Parties
The Real Estate (Regulation and Development) Act (RERA) has once again come into play, with MahaRERA fining both a Mumbai builder and a buyer for failing to meet their obligations. The builder was penalized for delayed possession, while the buyer faced a late payment penalty.
Real EstateReraMahareraHome BuyerBuilderReal Estate NewsOct 27, 2025
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.
Frequently Asked Questions
What is the Real Estate (Regulation and Development) Act (RERA)?
The Real Estate (Regulation and Development) Act (RERA) is a law in India aimed at protecting home buyers and promoting transparency in the real estate sector. It mandates the registration of real estate projects and regulates the sale of apartments, plots, and buildings.
What happens if a builder fails to deliver possession on time?
If a builder fails to deliver possession on time, they can be penalized under Section 18 of RERA. The penalties can include compensation to the buyer, interest on the amount paid, and other legal actions.
Can a buyer be penalized for delayed payment?
Yes, a buyer can be penalized for delayed payment under RERA. If the buyer fails to make the full payment on the agreed date, they may be required to pay interest as a penalty.
What is MahaRERA?
MahaRERA stands for the Maharashtra Real Estate Regulatory Authority. It is the regulatory body in Maharashtra responsible for implementing and enforcing the provisions of RERA.
How can home buyers protect themselves when booking a property?
Home buyers can protect themselves by thoroughly understanding the terms of the sale agreement, ensuring the builder is registered with RERA, and maintaining all documentation and payment records. It is also advisable to seek legal advice before finalizing any real estate transactions.
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