Earnest Money Refund Pending on a Property Booking

Reviewed on: 2026-06-12.

You paid a booking amount or token to hold a flat or plot. The deal fell through, you cancelled within the cooling window, or the builder delayed possession, and now your earnest money is stuck. Here is how to get it back.

A typical case: Meera pays Rs 2,00,000 as a booking amount on a Rs 60 lakh flat. The builder keeps delaying the allotment letter and the registered agreement. After three months she decides to withdraw and asks for her money back. The sales team says the booking amount is “non-refundable”. That single line is where most buyers give up. They should not. Whether the builder can keep the money, and how much, depends on the written terms, on whether a registered agreement exists, and on whether the builder was itself in default.

Earnest money in a property deal is a genuine deposit to show you are serious, not an automatic penalty the seller can pocket in full. Indian courts have long held that a seller can forfeit only a reasonable amount as earnest money, and cannot keep a sum that works out to a penalty unless real loss is shown. A common reference point is around 10% of the sale price, but this is not a fixed entitlement, and a smaller token is usually refundable in larger part. If the builder or seller is the one in default, for example by delaying possession or failing to give clear title, you are generally entitled to your money back, often with interest.

• If your project is registered under RERA and the builder caused the delay or breach, Section 18 of the Real Estate (Regulation and Development) Act, 2016 lets the buyer withdraw and claim a refund of the amount paid with interest, plus compensation. This is the strongest route for a registered project.
• If you are cancelling a booking on your own choice with no builder default, the builder may forfeit a reasonable earnest amount per the booking terms, but a blanket “non-refundable” clause on the whole sum is open to challenge.
• If this is a resale or private sale between two individuals (not a builder project), RERA usually does not apply, and the dispute turns on the agreement to sell and the law on earnest money and forfeiture.

1. Pull out the booking form, payment receipt, allotment letter (if any), the agreement to sell or builder-buyer agreement, and every brochure or email that promised a date or a refund.
2. Note who defaulted and why, with dates. A builder's delay in possession or in executing the registered agreement is your strongest point.
3. Send the builder or seller a dated written cancellation and refund demand by email and registered post. Do not rely on the sales desk's verbal “non-refundable”.

To,
[Name of builder / developer / seller]
[Project name and address]

Date: [DD/MM/YYYY]

Subject: Refund of earnest money / booking amount of Rs [amount] for
Unit [number], Project [name] - Booking ref [number]

Sir/Madam,

I booked Unit [number] in your project [name] and paid Rs [amount] as
booking amount / earnest money on [date] vide receipt [number].

[Choose: The agreement / allotment has not been executed despite my
follow-ups dated ___ / Possession was promised by ___ and has not been
given / I am withdrawing the booking as permitted.]

I request a full refund of Rs [amount] [with interest, if a registered
RERA project and you are in default] within 15 days. A forfeiture of the
entire amount is not justified and I do not accept it.

Please confirm the refund and the mode of payment. Documents enclosed:
booking receipt, allotment letter, agreement, and prior correspondence.

Yours faithfully,
[Name, address, mobile, email]

A private builder and a private seller are not public authorities, so you cannot RTI them to order a refund. RTI does help on the public records around the project. You can ask the development authority or municipal office for the project's sanctioned plan and completion or occupancy certificate status, and the RERA authority's public records show the registered project details and any complaints. Proof that the project lacked a key approval, obtained through RTI, strengthens your refund and deficiency case. For the refund itself, your forums are RERA and the consumer commission, not RTI.

• Accepting “non-refundable” on the whole booking amount without challenge.
• Cancelling verbally and never sending a dated written demand.
• Missing the RERA route on a registered project where the builder, not you, defaulted.
• Letting limitation run. Do not sit for years on a refund claim.

Usually not the entire amount. A seller can forfeit only a reasonable earnest sum, and a blanket non-refundable clause on the whole amount can be challenged, especially for a small token or where the builder also defaulted.

For a RERA-registered project where the builder delayed possession or breached the agreement, Section 18 lets you withdraw and claim a refund of what you paid, with interest and compensation, by filing a complaint with your State RERA Authority.

Generally no. RERA covers builder or promoter projects. A private resale dispute is decided under the agreement to sell and the general law on earnest money, through civil court or, where there is a service element, the consumer route.

There is no fixed figure. Courts treat around 10% of the price as the outer end of a reasonable earnest forfeiture, and require the seller to justify keeping more by showing real loss. A small token is largely refundable.

On a RERA-registered project where the builder is in default, yes, the refund carries interest at the prescribed rate. On a buyer-initiated cancellation with no default, interest is unlikely.

For a registered real-estate project, RERA is the specialist forum. The consumer commission is an option for service deficiency, including resale or unregistered situations. Pick one main forum and avoid filing the same claim in two places at once.

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Download the earnest money refund checklist (PDF).