Delayed Possession by Developers: How to Protect Yourself Before and After Signing.

Real Estate Series

Series 1 | Article 1

Buying a home is a major milestone—but for many, that dream turns sour when developers fail to hand over possession on time. Developers in major cities have earned the reputation of being high-handed and unfair to buyers in such situations, often leaving buyers feeling helpless. Additionally, apartment buyer agreements—formally titled Agreements for Sale—are usually one-sided in favour of the developer.

Delays in possession can have several consequences: continued rent for temporary housing, ongoing loan EMIs, opportunity costs, and a potential decline in the property’s market value if the sector slows down. Our experience suggests that during periods of market growth, most home buyers overlook the possibility of long-term delays—particularly when projects run into trouble during economic slowdowns.

It's also important to acknowledge that purchasing a home is rarely an instantaneous transaction. It takes place over several weeks and requires not just an emotional and practical assessment, but a careful legal review. The most leverage a home buyer has is before signing the Agreement for Sale, and critically, before parting with any money towards booking or purchase.

While negotiating contract changes is not always easy, being well-informed—especially about what developers typically agree to or resist—can help buyers make better decisions.

India’s legal framework, particularly through the Real Estate (Regulation and Development) Act, 2016 (RERA), has evolved to provide concrete remedies in cases of delay. This article explores those remedies but places greater emphasis on the precautionary steps buyers can take before entering the Agreement for Sale. While this article primarily addresses residential home buyers, it applies equally to purchasers of commercial units. We have also referenced key judicial decisions to clarify legal positions, while avoiding excessive legalese.

Before Signing the Booking Form

Developers often ask prospective buyers to sign a Booking Form and pay a token amount toward the property. This payment—often running into tens of thousands or even lakhs—is typically non-refundable.

Under RERA, developers are allowed to accept up to 10% of the total sale price before entering into a formal Agreement for Sale. However, once a buyer makes this initial payment, they significantly weaken their bargaining position.

Although the Booking Form may mention some commercial terms (price, unit details), it is the Agreement for Sale that governs the actual rights and obligations of the parties. Therefore, buyers should insist on reviewing the draft Agreement for Sale before signing any Booking Form or making any payment.

• Ask the developer—or broker, if you are dealing through one—for a copy of the draft Agreement.

• Alternatively, check the project listing on the State RERA website; the draft agreement should be uploaded there.

• Ensure that the promises made in promotional material, booking forms, and sales conversations are reflected in the draft Agreement.

• It is strongly advisable to engage a lawyer at this stage to review the terms.

Before You Sign: What to Look for in the Agreement for Sale

a. Possession Timelines and Completion Dates

• Ensure that the Agreement for Sale clearly specifies a fixed possession date. Avoid vague language such as “subject to availability” or “expected to be completed,” which can give developers undue flexibility.

• Understand that possession is legally meaningful only when the buyer is given actual, physical possession of the unit—not merely when the developer obtains an Occupancy Certificate (OC). The possession date should be tied to the buyer receiving keys and lawful access to the property.

• A grace period of no more than 3–6 months may be reasonable, but it must be explicitly defined and not open-ended.

• Cross-verify the possession date with the RERA-registered completion date listed on the project’s profile on the State RERA website. While developers sometimes register a later completion date to shield themselves from regulatory consequences, courts have held that the date mentioned in the Agreement for Sale generally takes precedence when determining buyer remedies.

  
  

Judicial Insight: Imperia Structures Ltd. v. Anil Patni & Anr. (2020) 10 SCC 783

The Supreme Court clarified that the date specified in the contractual agreement governs the builder’s obligation under Section 18 of RERA—not the date registered on the RERA portal.

b. Compensation and Interest Clauses

• Check the interest rate payable by the developer for delays. It should match the rate payable by the buyer for delayed payments.

• Ensure the agreement provides for a refund with interest in the event of prolonged delay or withdrawal.

• Refer to Rule 18 of the Maharashtra RERA Rules, 2017, which pegs the interest rate at SBI’s highest MCLR + 2%.

Many agreements use vague language such as “as per applicable laws.” Insist on specific rates and symmetry in obligations.

c. Force Majeure and Exit Clauses

• Force majeure should be narrowly defined to cover events like natural disasters, war, fires, or other calamities caused by nature—not routine construction or labour issues.

• Insert a clause that allows the buyer to withdraw and claim a full refund with interest if possession is delayed beyond a defined period, whatever may be the reason.

  
  

d. Dispute Resolution

• Prefer forums such as RERA Authorities or Consumer Commissions.

• Avoid exclusive arbitration clauses, which may restrict access to quicker and more transparent forums.

Can Home Buyers Negotiate These Terms?

Although most builder agreements are presented as non-negotiable, buyers—especially in early-phase sales—can attempt to push for more balanced terms. Consider the following:

• Document all representations and commitments in writing before making any payment.

• Request changes that align the developer’s delay penalties with buyer liabilities.

• Cap the grace period, and include clear remedies if delays exceed a threshold.

If the developer refuses to modify the terms, buyers should at least record their objections via email or letter. This creates a written trail and can later support claims of unfair trade practices.

Judicial Insight: Pioneer Urban Land & Infrastructure Ltd. v. Govind Raghavan (2019) 5 SCC 725

The Supreme Court held that one-sided, unfair, and unreasonable contracts framed by developers are an unfair trade practice under the Consumer Protection Act, 1986, and not binding if buyers had no real choice.

If Delay Still Happens: Remedies Under Law

Even with careful planning, delays may still occur. Indian law offers the following options:

Despite all precautions, delays may still occur. The legal framework offers the following remedies:

a. RERA (Primary Remedy)

Under Section 18 of RERA, a buyer may:

• Withdraw from the project and claim a refund with interest, or

• Stay invested and claim monthly interest for each month of delay.

Judicial Insight:

Newtech Promoters & Developers Pvt. Ltd. v. State of UP & Ors. (2021) 18 SCC 1 

The Supreme Court affirmed that buyers have the right to either withdraw with a refund or continue and claim interest for the delay.

b. Consumer Protection Act, 2019

Buyers can also file complaints before consumer commissions for:

• Deficiency in service,

• Refund or possession,

• Compensation for mental agony and hardship.

c. Insolvency Proceedings under IBC

In extreme cases of widespread default, buyers may:

• Act collectively to initiate Corporate Insolvency Resolution Process (CIRP),

• Be recognised as financial creditors under Section 5(8)(f) of the IBC.

Important Note: We advise caution in exercising this remedy. Once a petition is admitted, the consequences may be severe and result in the project being halted, at least till the proceedings are resolved in the manner set out under the IBC. This remedy also risks the possibility of the flat buyer not receiving a refund of their investment, let alone any interest or compensation. This is usually a last resort.   

Judicial Insight:Pioneer Urban Land & Infrastructure Limited & Anr. v. Union of India & Anr., (2019) 8 SCC 416 

The Supreme Court upheld the classification of home buyers as financial creditors.

Conclusion: Awareness Is Your Strongest Tool

The most meaningful legal protection doesn’t lie in the courtroom—it lies at the negotiation stage. Buyers must be prepared to walk away from agreements that are unclear, unbalanced, or unfair.

RERA, consumer law, and insolvency proceedings offer multiple avenues for recourse, but a proactive approach—insisting on clear terms, reviewing the agreement thoroughly, and recording representations—can help buyers avoid legal trouble altogether.

About the Author

Pranay Mangharam is a founding member of MZD Legal Consultancy.  He leads the firm's private client; technology; and transaction advisory practices. Pranay advises high-net-worth individuals, closely held businesses, and family offices on a range of private matters including their investments, succession planning, transborder holdings, etc. He can be contacted at pranay@mzdlegal.in and +91-9960066868.

About MZD Legal Consultancy

MZD Legal Consultancy is a boutique law firm in Mumbai, India. The firm was established in 2011 and comprises professionally qualified lawyers with varied levels of experience and expertise in specific practice areas. To know more, click here www.mzdlegal.in