Law and justice explained
Can a Builder Collect More Than 10% as a Booking Amount Before the Agreement?
Where Section 13 of RERA applies, a promoter cannot collect more than 10% of the cost of an apartment, plot or building as an advance or application fee without first entering into a written agreement for sale and completing its required registration. The article outlines practical checks, documents to keep and factors that may affect a refund.
Written by
Advocate Amardeep Jaiswal
Advocate, High Court of Madhya Pradesh, Jabalpur
Key points
- Where Section 13 of RERA applies, a promoter cannot collect more than 10% of the cost of an apartment, plot or building as an advance or application fee without first entering into a written…
- Check the project’s eligibility and the property for which the payment is being made.
- Paying a large amount without checking the payment receipt and the terms of the agreement may make a refund dispute more difficult.What should you do now?Check the project registration and t…
Detailed analysis
Understanding law and procedure
Where Section 13 of RERA applies, a promoter cannot collect more than 10% of the cost of an apartment, plot or building as an advance or application fee without first entering into a written agreement for sale and completing its required registration.
The actual transaction matters even if the amount sought is described as a booking amount, expression of interest or by another name. Check the project’s eligibility and the property for which the payment is being made. Paying a large amount without checking the payment receipt and the terms of the agreement may make a refund dispute more difficult.
What should you do now?
- Check the project registration and the promoter’s name on the official portal.
- Obtain a written breakdown of the total amount sought and the cost.
- Before paying a large amount, check the agreement, cancellation and refund clauses.
Which documents should you keep?
The booking form, demand letter, receipts, cost sheet and draft agreement.
Avoid this mistake
Do not treat an assurance in a brochure or a salesperson’s WhatsApp message as the protection of a final contract.
A hypothetical example
For a property covered by the provision costing ₹50 lakh, the builder asks for ₹8 lakh before the agreement. This is more than 10%. Before making the payment, the buyer should check the requirements of Section 13 and the status of the actual agreement and its registration.
Will a refund always be given if 10% has been paid?
No. The refund will depend on the reason for cancellation, the agreement and the applicable law.
Legal basis and useful source
This is general legal information. Advice may differ depending on your facts, the applicable law and state rules.
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About the author
Advocate Amardeep Jaiswal
Advocate, High Court of Madhya Pradesh, Jabalpur।
Publishes informational articles on Indian law, judicial decisions and practical legal issues.
Editorial note: Analysis and commentary reflect the author’s understanding and opinion. Law, facts and judicial developments may change; check primary sources and your own circumstances before acting.