Cancelling a flat booking before the agreement is registered: what you get back and what can be kept

Rules as of 13 October 2026.

You paid a booking amount, got an allotment letter, and then changed your mind before the agreement for sale was signed and registered. What comes back? There is no section of RERA that says "full refund" or "forfeit 10%". The answer comes from three places: what RERA lets a builder take at this stage, what the allotment letter says, and how courts treat forfeiture. This is general information, not legal advice.

What RERA fixes: the ceiling on what he can take

Section 13(1) says a promoter shall not accept more than ten per cent of the cost of the apartment as an advance payment or application fee without first entering into a written agreement for sale with the buyer and registering it. So, before the registered agreement, the amount at stake should not exceed 10% of the cost. (A separate note on this site covers what happens when a builder takes more than that; I do not repeat it here.)

Section 11(5) deals with the other direction: a promoter may cancel the allotment only in terms of the agreement for sale, and an allottee aggrieved by a cancellation that is not in line with the agreement, is unilateral and without sufficient cause may approach the Authority.

What RERA does not say

Nothing in sections 13 or 11(5) states that the booking amount is refundable, or that it can be forfeited. That depends on the allotment letter and on contract law. If the builder kept a part, the question is whether the amount kept is reasonable.

What the Supreme Court said about forfeiture

In Godrej Projects Development v Anil Karlekar (3 February 2025, 2025 INSC 143), buyers cancelled a Gurgaon flat after possession was offered. The agreement allowed forfeiture of 20% of the basic sale price as earnest money. The Court held that forfeiture is permissible in principle, relying on Maula Bux (a reasonable earnest amount is not a penalty, but a penal forfeiture attracts section 74 of the Contract Act). It found 20% too high and treated 10% as reasonable, noting the agreement was tilted in the developer's favour. It also set aside the interest the commission had given on the refund, as the buyers cancelled when prices were falling.

Three cautions. First, that case involved a signed agreement, not a booking stage. Second, RERA was argued but not decided there. Third, the 10% is what that Court found reasonable on those facts; it is not a rule that any builder may keep 10%. Earlier, in Kailash Nath Associates v DDA (9 January 2015), the Court had stressed that where section 74 applies, compensation depends on loss, and that no windfall is allowed.

MahaREAT: reported position on a no-agreement cancellation

LiveLaw Biz reports that in Godrej Skyline Developers v Joy Salve (appeal AT005000000134212 of 2022) the Maharashtra Real Estate Appellate Tribunal held that a forfeiture clause cannot be enforced mechanically where the agreement for sale has not been executed and registered, and that forfeiture must be reasonable. The buyer had paid about 9.67% of the price; the report says the developer showed no evidence of actual loss. I could not read the order itself, and other reports of the lower authority's order differ on what the developer was allowed to retain, so treat the detail as unconfirmed.

Will you get interest on the refund?

Do not assume so. The interest rule in section 18 is built for a promoter's failure to give possession. In Godrej v Karlekar the Supreme Court removed interest on a refund to buyers who walked away for their own reasons. If you cancel because of the builder's fault, such as a false advertisement (section 12) or a missed date (section 18), interest is a legitimate demand. If you cancel because you changed your mind, plan for a refund of principal, less whatever reasonable amount the builder can justify.

The label on your receipt matters too. The MahaREAT report above says the payment was treated as part of the agreed price and not as earnest money. Check whether your allotment letter calls it "booking amount", "token" or "earnest money", and what it says happens on cancellation.

A worked example

Flat price Rs 90 lakh; you pay Rs 8.1 lakh (9%) on booking and cancel before any agreement.

Scenario	Builder keeps	You get back
Full refund (no loss shown)	Rs 0	Rs 8,10,000
Builder keeps 2% (illustrative)	Rs 1,80,000	Rs 6,30,000
Builder keeps the whole 9%	Rs 8,10,000	Rs 0

The 2% row is only to show arithmetic; I found no rule that sets 2%. What you can actually keep or lose depends on the allotment letter and on whether the builder can show real loss, for example that the flat could not be resold.

The picture changes if you are leaving because the builder misled you. Section 12 says that a person who paid on the basis of a false statement in an advertisement or prospectus and wants to withdraw "shall be returned his entire investment" with interest at the prescribed rate. At an assumed 11% simple, Rs 8.1 lakh held for two years adds about Rs 1.78 lakh.

Steps before you cancel

• Read the cancellation and refund clause in the allotment letter and the brochure terms.
• Cancel in writing by email and post, and keep proof. Ask for the refund date in the reply.
• Check that the project is registered with MahaRERA. If not, say so in your letter; selling or booking before registration is barred by section 3.
• If the builder refuses, a complaint can be filed with the Authority under section 31.

Mistakes to avoid

• Paying more than 10% before an agreement without asking why.
• Cancelling orally.
• Signing a "no claims" receipt for a lower amount without legal advice.
• Assuming 10% forfeiture is a legal right of the builder.