Section 18 of the RERA Act 2016 mandates that if a promoter fails to hand over a property on the promised date, they must pay interest to the buyer. This is not a penalty. It is compensation for the buyer's loss of use and the cost of alternative accommodation.
The rate is fixed: SBI Marginal Cost of Lending Rate (MCLR) plus 2 percent per annum. This compounds on the delayed portion of the purchase price from the promised possession date until actual handover. The calculation applies whether the delay is 10 days or 10 years.
As a real estate agent, your exposure here is direct. If you promise a possession date to a buyer and that date passes without handover, you have created a liability trail that leads back to your credibility and, in some cases, your license. Understanding exactly how this interest accrues protects both your clients and yourself.
SBI updates its MCLR monthly. You cannot calculate Section 18 interest accurately without the precise MCLR rate applicable on the possession date that was promised to the buyer.
Visit the State Bank of India official website (sbi.co.in) and look for the lending rates page. The MCLR is published for tenors of overnight, one month, three months, six months, and one year. For RERA calculations, use the one-year MCLR unless the property agreement specifies otherwise. As of recent updates, one-year MCLR has ranged between 7.5% and 8.5%, so the combined rate (MCLR + 2%) typically falls between 9.5% and 10.5%.
Make a habit of noting the MCLR rate at the time you quote a possession date to a buyer. Keep this documented in your file. When disputes arise, tribunals will verify the exact rate that applied on the promised possession date, not the rate on the day the complaint was filed.
Let us say a property agreement promises possession on 31 March 2024. The buyer has paid 90 lakh rupees. Actual handover occurs on 30 September 2024. The SBI one-year MCLR on 31 March 2024 was 8.15%, so the applicable rate is 10.15% per annum.
Delayed period: 183 days (6 months). Interest accrues on 90 lakh rupees at 10.15% annually. The formula is (Principal × Rate × Time) / 100. For this example: (90,00,000 × 10.15 × 183/365) / 100 = 4,54,567 rupees approximately.
If the buyer had paid in instalments, you calculate interest separately on each instalment from its respective due date, not from the promised possession date. If 45 lakh was paid by March 2023 and 45 lakh by March 2024, the first tranche accrues interest for a longer period. This is where agents make errors. Always track payment dates against delayed possession separately for each amount paid.
Your liability crystallises the moment you represent a possession date to a buyer that you know or reasonably should know the promoter cannot meet. The MahaRERA has consistently held that agents cannot hide behind the excuse that "the developer promised it, not me." Your role includes duty of care regarding timelines.
Specific liability triggers include: misrepresenting an agreed possession date, omitting known delays from earlier projects, quoting possession dates not mentioned in the registered agreement, or assuring buyers that delays "never happen" with that promoter. If a buyer later files a complaint citing your verbal promises and the actual handover is delayed, the tribunal will ask for your communications and your project history.
Documentation is your only defence. Email confirmations to buyers must state that possession dates are subject to force majeure and as per the registered agreement. If you promise a specific date verbally, ensure the buyer receives written confirmation with caveats. Many agent complaints stem from promises made in site visits or informal calls that have no record.
Partial possession complicates Section 18 calculations. If a promoter hands over part of a property (say, the flat but not the common areas) and retains another part, the delayed portion continues accruing interest until full possession is given. The Paranjape tribunal order of March 2026 clarified that partial possession does not reset the clock on the promised date. If possession was promised on 31 December 2024 and common areas were incomplete until June 2025, interest accrues for the full six-month delay on the portion retained, even if 80% was handed over.
Force majeure clauses in agreements may excuse delay but do not necessarily cancel the buyer's right to interest under Section 18. Courts have repeatedly ruled that force majeure exempts the promoter from legal penalties but not from compensatory interest. An agent advising a buyer that "the pandemic excuse means you get no interest" is giving incorrect legal guidance. The buyer still has a claim; the question is whether the specific delay falls within the force majeure definition in the agreement.
Before a buyer signs an agreement, you should explain Section 18 interest in plain terms. State that if possession is delayed, the promoter is liable to pay interest calculated at SBI MCLR plus 2% from the promised date to actual handover. Provide the current MCLR rate and show them an approximate calculation based on their purchase price.
Many buyers assume interest is a small penalty. When they see a calculation showing four or five lakh rupees owed for a two-year delay on a 50-lakh purchase, they realise the commercial weight of the promised date. This clarity reduces disputes later and also encourages buyers to hold promoters accountable for timelines.
Include in your buyer education: the interest is paid by the promoter, not deducted from the buyer's final payment; interest accrues even during phases of construction; and if the agreement allows the buyer to terminate due to delay, that option does not waive the right to interest already accrued up to the termination date.
The exam tests Section 18 interest calculation in scenario-based questions. You will encounter variations like: "A 60-lakh property was promised on 30 June 2023. The buyer paid in two tranches: 30 lakh on 30 June 2022 and 30 lakh on 30 June 2023. Handover was on 31 December 2024. MCLR on 30 June 2023 was 7.9%. Calculate interest owed." These require you to apply the formula correctly and handle multiple payment dates.
Other questions test liability scenarios: an agent tells a buyer "possession is confirmed for March 2024" but the agreement says "on or before December 2024." When a complaint is filed after a June 2024 delay, is the agent liable for breach of promise? The answer depends on what the registered agreement states versus what was verbally assured.
Revise Section 18 mechanics alongside Sections 11 and 12 of the RERA Act. Understand the interaction between these sections and how tribunals interpret interest liability in real disputes. Use case law references from recent MahaRERA orders to strengthen your conceptual foundation.
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