Flat booking amount and cancellation charges: what RERA allows

8.1.1 What is a flat booking amount?

A flat booking amount is the first payment that reserves a specific flat for you in a project. The builder sets the amount, and often issues a booking form or an allotment letter in return. The RERA Act, 2016 caps how much the builder can take at this stage. Section 13(1) says a builder cannot accept more than 10 percent of the cost of the flat as an advance payment or an application fee. A written agreement for sale must be signed and registered first. So on a flat of ₹1 crore, the builder cannot take more than ₹10 lakh before the registered agreement. Some builders ask for a smaller token first and the rest of the booking amount later. Add every payment together, because the 10 percent cap covers all of them. If the builder asks for more before the agreement, ask for the registered agreement first. The flat cost sheet chapter explains how to work out the full cost of the flat.

Stage	What you pay	The rule
Token or application	A small amount to hold the flat	Counts towards the 10 percent cap
Booking amount	Up to 10 percent of the cost, with the token	Section 13(1) of the RERA Act
After the registered agreement	Instalments as per the payment schedule	Section 19(6) of the RERA Act

8.1.2 What can the builder deduct if you cancel?

If you cancel without any fault of the builder, the cancellation clause in your agreement for sale sets what the builder can deduct. The RERA Act does not fix one deduction for every project, so read this clause before you pay the booking amount. Ask three questions. First, what is deducted: a fixed amount, a percentage, or the booking amount? Second, are taxes, brokerage or other charges also kept? Third, how many days does the builder take to refund the rest? Section 4(2)(g) of the RERA Act makes the builder file a proforma of the agreement for sale with the K-RERA registration. Compare your draft’s cancellation clause with that proforma. If the two differ, ask the builder to explain in writing. Section 19(6) also binds you to pay as per the agreement, so missing payments can let the builder cancel under the agreement’s terms. Keep your payments on time, or agree a change in writing.

Question	Where to find the answer
How much is deducted if I cancel?	Cancellation clause in the agreement for sale
Are taxes or other charges kept?	Cancellation clause and the cost sheet
When is the rest refunded?	Cancellation clause
Does the draft match the filed format?	Proforma agreement on the K-RERA page (Section 4(2)(g))

8.1.3 What if the builder cancels or fails to deliver?

If the builder cancels your booking, or fails to deliver, the RERA Act protects your money. Section 11(5) says the builder can cancel an allotment only in terms of the agreement for sale. If you feel the cancellation is not in line with those terms, and is unilateral and without sufficient cause, you can approach K-RERA for relief. If the builder fails to complete the flat or give possession by the date in the agreement, Section 18(1) applies. You can withdraw and get back the amount you paid, with interest and compensation. Or you can stay in the project and get interest for every month of delay until possession. Rule 16 of the Karnataka RERA Rules, 2017 sets the interest rate at SBI’s highest marginal cost of lending rate (MCLR) plus 2 percent. Rule 17 says a refund that the builder owes under the Act must be paid within sixty days from the date it becomes due.

Event	Your right	Source
Builder cancels outside the agreement’s terms	Approach K-RERA for relief	Section 11(5)
Builder misses the possession date	Refund with interest and compensation, or monthly interest if you stay	Section 18(1)
Interest rate	SBI’s highest MCLR plus 2 percent	Rule 16
Refund deadline	Sixty days from the date the refund becomes due	Rule 17

8.1.4 How do you pay a booking amount safely?

Pay the booking amount only by a traceable method, and only to the account that the project’s documents name. Section 4(2)(l)(D) of the RERA Act requires a separate account in a scheduled bank. Seventy percent of the money from buyers goes there. The K-RERA project page shows the project’s bank account details. Check that the account on your booking form or demand letter matches it. If the builder asks you to pay a different company or a person, ask why in writing. Do not pay in cash. Get a receipt for every payment, with the date, the amount, the flat number and the builder’s name. Keep the booking form, the cost sheet and every receipt together. These are your proof if you later cancel, claim a refund or file a complaint. Before you pay, also check that the project is registered on K-RERA, and that your flat is in the registered phase.

1. Check the project’s K-RERA registration and the phase of your flat.
2. Match the payee account with the account on the K-RERA page.
3. Pay by bank transfer or cheque, not cash.
4. Get a dated receipt with the flat number.
5. Keep the booking form, cost sheet and receipts together.

8.1.5 What should you check before you sign the booking form?

Before you sign the booking form, check that it matches the cost sheet and does not commit you to more than the law allows. A booking form is often a short document, but it can contain terms that bind you. Read it fully, and look for the cancellation terms, the price and the flat details. Check the flat number, the tower, the floor, the carpet area and the total price against the cost sheet. Check that the form does not ask for more than 10 percent of the cost before the agreement for sale. Check whether the form says the price or the area can change later. Ask how long the builder will take to give you the draft agreement for sale. Do not sign a blank or partly filled form. If any promise from the sales team is not on the form, ask for it in writing. The agreement for sale chapter explains the clauses to read next.

Check on the booking form	Compare with
Flat number, tower, floor, carpet area	Cost sheet and the K-RERA page
Total price and charges	Cost sheet
Amount asked before the agreement	10 percent cap in Section 13(1)
Cancellation terms	Proforma agreement on K-RERA
Date for the draft agreement for sale	A written date from the builder

Sachi reads K-RERA filings for Bangalore projects, including the proforma agreement and the project account. To check a project before you pay a booking amount, Ask Sachi.