Last reviewed: 16 September 2026. A booking cancellation should be a paperwork formality. In practice it turns into the most disputed moment in a builder-buyer relationship, because both sides read the same clause differently — the buyer expects most of the money back, the builder's application form says "amount forfeited." MahaRERA has now ruled on this often enough that the legal position is no longer a grey area, and it cuts sharply against the standard builder clause.
Two very different situations, one confused clause
Every application form and allotment letter carries a cancellation clause. But the law treats a cancellation very differently depending on where you are in the transaction:
| Stage | What the promoter can legally hold | Basis |
|---|---|---|
| Booking / application, no registered Agreement for Sale (AFS) yet | Advance capped at 10% of consideration; forfeiture within that 10% typically limited to around 2% on MahaRERA's reasoning | RERA S.13, MOFA S.4, MahaRERA Order 35/2022 |
| Registered Agreement for Sale executed, buyer cancels | Whatever the AFS's cancellation clause genuinely provides for — but still subject to being reasonable and not punitive | Terms of the registered AFS, RERA S.13 proviso |
| Promoter cancels the allotment | Full refund with interest; forfeiture not available unless allottee is in default and due process (notice, sufficient cause) was followed | RERA S.11(5) |
| Cancellation follows promoter's own delay in possession | Full refund with interest, or continued interest till handover, allottee's choice | RERA S.18 |
Section 13 — the 10% ceiling almost every buyer has never heard of
Section 13 of the RERA Act carries forward a rule that pre-dates RERA itself: under the Maharashtra Ownership of Flats Act, 1963, a promoter cannot accept more than 10% of the apartment's sale price as an advance payment or application fee before a written, registered Agreement for Sale is executed. RERA retained this ceiling and made the registered-agreement requirement a national standard. Two consequences follow directly:
- Anything a promoter collects up to that 10% is, in principle, a legitimate advance against the flat.
- Anything collected beyond 10% without a registered AFS is not a valid advance at all — it is money the promoter had no statutory basis to demand, whatever the payment schedule in the application form says.
This second point decided Vaibhav Singh v. Accord Builders (MahaRERA order dated 18 December 2025), where the promoter had retained close to 20% of the flat price from as far back as 2013 without ever registering an Agreement for Sale, and later resold the unit to a third party. MahaRERA ordered a refund of ₹42.45 lakh, holding that the allotment letter's own cancellation clause (which permitted only interest recovery on delayed instalments, not forfeiture) could not be stretched into a licence to retain the buyer's money — especially once the promoter had already created a competing interest in the same flat by reselling it.
The 2% precedent: why the "we'll deduct 10%" clause doesn't survive scrutiny
Even within the 10% a promoter is allowed to collect, MahaRERA has not treated the whole amount as automatically forfeitable on a buyer-initiated cancellation. In Rahul Naresh Bari v. Godrej Properties Ltd. (MahaRERA Order No. 35/2022, 12 August 2022), the buyer had paid a booking amount of ₹6.80 lakh against a flat valued at ₹68 lakh — exactly the 10% ceiling — and cancelled before signing the Agreement for Sale. Godrej Properties invoked the application form's forfeiture clause to retain the full amount, citing costs incurred and opportunity loss. MahaRERA rejected that: absent a filed deviation report or proof of actual loss tied to the specific unit, retaining the full 10% was "neither legal nor justified," and the authority directed a refund of the booking amount less 2%, within 45 days.
That 2% figure is not written into the RERA Act as a statutory number — it turned on the facts of that order — but it is the benchmark MahaRERA has since applied in comparable pre-AFS cancellation disputes, and promoters drafting or defending a forfeiture clause today should treat it as the working ceiling rather than the 10% headline figure most application forms still quote.
Worked example 1: booking cancelled before the Agreement for Sale
Flat value ₹68,00,000. Buyer paid a booking amount of ₹6,80,000 (10%) and cancels before the AFS is registered, citing a change in financial circumstances.
| Approach | Amount builder keeps | Amount refunded to buyer |
|---|---|---|
| Builder's standard clause (100% forfeiture) | ₹6,80,000 | ₹0 |
| MahaRERA-consistent position (2% of consideration) | ₹1,36,000 | ₹5,44,000 |
The gap — ₹5.44 lakh in this example — is exactly the amount a buyer forfeits by accepting the builder's clause at face value instead of testing it against the Godrej precedent.
Worked example 2: payments collected beyond the 10% ceiling
Flat value ₹2,10,00,000. Buyer paid ₹42,00,000 (20%) in instalments against an allotment letter; no Agreement for Sale was ever registered. Buyer cancels and the builder proposes to forfeit ₹10,00,000 citing the payment schedule.
- Amount collectible as a valid advance without a registered AFS: 10% = ₹21,00,000.
- Amount collected beyond that ceiling: ₹21,00,000 — not a valid advance, and not available for forfeiture under any clause, per the reasoning in Vaibhav Singh v. Accord Builders.
- Forfeiture, if any, can only be tested against the ₹21,00,000 portion that was validly collected — and even there, the 2% benchmark from the Godrej order applies unless the promoter can show genuine, quantified loss.
If you are the promoter: drafting a cancellation clause that survives a MahaRERA complaint
- Never structure the payment schedule to collect more than 10% of the sale price before the Agreement for Sale is registered — treat this as a hard cap, not a target.
- Register the Agreement for Sale promptly once 10% is collected; delay here is what turned the Accord Builders case from a contract dispute into a statutory violation.
- Set the forfeiture percentage in the application form at a defensible level — 2% of consideration is the number MahaRERA has actually endorsed; a 100% or even 10% forfeiture clause invites a complaint and a near-certain adverse order.
- If a higher deduction is genuinely warranted (documented marketing or holding cost tied to that specific unit), file the supporting basis contemporaneously — the absence of a "deviation report" was decisive against the promoter in the Godrej order.
- Process refunds within 45 days of a valid cancellation to avoid an additional interest exposure on top of the principal.
If you are the buyer: getting your refund without a fight
- Put the cancellation request in writing (email or letter) and keep proof of every payment made.
- Ask for a refund computed on the 2% forfeiture benchmark, citing the Godrej Properties order, rather than accepting the application form's clause at face value.
- If any part of your payment took the total beyond 10% of the flat price and no Agreement for Sale was registered, flag that amount separately — it sits outside the forfeiture debate entirely.
- If the promoter refuses or goes silent, a MahaRERA complaint (with the payment trail and cancellation letter annexed) is usually resolved faster than a civil suit, and interest runs on the delayed refund.
For the mirror-image situation — where the builder is the one delaying possession and you want out — see our note on RERA Section 18 refund and interest on delayed possession. And if the registration stage itself (500 sq m / 8-unit trigger, the 70% escrow account, timelines) is still ahead of you, our guide to MahaRERA project registration walks through it end to end.
Frequently asked questions
Can a builder forfeit the entire booking amount if I cancel my flat?
No. If you paid before a registered Agreement for Sale was executed, RERA and Maharashtra's Ownership of Flats Act cap the promoter's collection at 10% of the sale consideration, so nothing beyond that 10% can lawfully be treated as a genuine advance in the first place. Within that 10%, MahaRERA has repeatedly held that a blanket clause forfeiting the full amount is not automatically enforceable — the promoter must show actual loss, and orders such as MahaRERA Order No. 35/2022 (Rahul Bari v. Godrej Properties Ltd.) capped forfeiture at 2% of the total consideration on facts where the promoter had not filed any deviation report justifying a higher deduction.
What is the 10% rule on advance payment before booking a flat?
Section 13 of the RERA Act, read with the Maharashtra Ownership of Flats Act, 1963 (MOFA), bars a promoter from accepting more than 10% of the apartment's cost as an advance or application fee before a registered Agreement for Sale is signed. Amounts collected beyond that 10% without a registered agreement are treated as unauthorised collection, not a valid forfeitable advance — this was the basis for the ₹42.45 lakh refund MahaRERA ordered against Accord Builders in Vaibhav Singh v. Accord Builders (order dated 18 December 2025).
What did MahaRERA rule in the Godrej Properties cancellation case?
In Rahul Naresh Bari v. Godrej Properties Ltd. (MahaRERA Order No. 35/2022, 12 August 2022), the developer sought to forfeit the entire booking amount of ₹6.80 lakh — roughly 10% of the ₹68 lakh flat value — on an allottee-initiated, pre-Agreement cancellation. MahaRERA held the forfeiture disproportionate and directed a refund of the booking amount less 2%, within 45 days, reasoning that a blanket 10% deduction without a registered agreement or proven loss was neither legal nor justified.
Can a promoter cancel my allotment and keep my money?
A promoter can cancel an allotment only for sufficient cause and after due notice under Section 11(5) of the RERA Act — it cannot be arbitrary or used to reallot at a higher price. If the cancellation follows the promoter's own default (delay in possession, for instance), the allottee's remedy runs through Section 18 (refund with interest or continued interest till handover) rather than a forfeiture clause; see our companion note on RERA Section 18 refunds for that route.
How long does a refund take after a valid flat cancellation?
MahaRERA orders in this space have consistently directed refunds within 45 days of the order (or of the cancellation request where the entitlement is not disputed). Where the promoter contests the refund or the forfeiture amount, the allottee typically has to file a complaint before MahaRERA (Form conciliation/adjudication route) to get a binding direction and interest for the delay.
I paid more than 10% of the flat price without signing a registered Agreement for Sale. What now?
Document every payment (receipts, bank transfers, the builder's own acknowledgement or allotment letter), send a written cancellation-cum-refund demand citing Section 13 of the RERA Act, and if the promoter refuses or delays, file a complaint with MahaRERA. Orders such as Vaibhav Singh v. Accord Builders confirm that MahaRERA treats collection beyond 10% without a registered agreement as recoverable in full, independent of any forfeiture clause the builder may cite.
We assist with MahaRERA registration, cancellation-clause drafting and complaint responses. Reach out via RERA Registration and Compliance or if you've already received a notice, see how builders should respond to RERA complaints and notices, or contact us to discuss your specific facts.
This article explains the general legal position under the RERA Act, 2016, the Maharashtra Ownership of Flats Act, 1963, and specific MahaRERA orders as reported, for general information only. Forfeiture, refund and interest outcomes depend on the exact clause, payment history and facts of each case — please have your documents reviewed before relying on this as a basis for negotiation or complaint drafting.