Cancellation and refund

The agreement for sale sets out what happens when a buyer cancels. Typically the developer forfeits an amount and refunds the rest. State RERA rules, model agreements and authority orders limit how much can be forfeited, so check your state's position before drafting.

Cancellations touch several systems. The unit must return to inventory, demand letters must stop, the ledger needs a refund entry, and if a loan is involved the refund goes to the lender under the tripartite agreement first.

Section 18 of the RERA Act is the reverse case. If the promoter fails to deliver as agreed, a buyer who withdraws is entitled to a refund with interest at the rate prescribed in state rules.