When a real estate project comes to a standstill because the builder fails to complete it, homebuyers are often left with a difficult question:
Should they continue waiting for possession or seek a refund?
To address this issue, the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has issued a new Standard Operating Procedure (SOP) dated 20 June 2026, replacing its earlier office order of 20 June 2023. The new SOP brings significant changes in how refund complaints will be handled for projects being completed under Section 8 of the Real Estate (Regulation and Development) Act, 2016 (RERA).
The revised policy attempts to strike a balance between protecting the financial viability of stalled projects and preserving the legal rights of homebuyers.
In this article, we explain the new SOP in simple language and discuss its legal implications for allottees, promoters, Associations of Allottees (AoAs), and ongoing Section 8 projects.
Understanding Section 8 of the RERA Act
Before understanding the SOP, it is important to understand Section 8 of RERA.
Section 8 comes into operation when:
-
- The promoter’s registration is cancelled;
-
- The promoter fails to complete the project;
-
- The registration expires without completion; or
-
- The promoter becomes incapable of completing the project.
In such situations, the Regulatory Authority may take appropriate steps to ensure completion of the remaining development work.
The Authority may:
-
- Authorise the Association of Allottees (AoA) to complete the project;
-
- Appoint another developer;
-
- Permit the original promoter to continue under specific conditions; or
-
- Adopt any other legally permissible mechanism to complete construction.
The primary objective is simple:
Complete the project instead of allowing it to remain permanently stalled.
Why Was a New SOP Required?
In June 2023, UP RERA had issued an office order providing that refund-related complaints in projects taken over under Section 8 would generally remain in abeyance.
This meant that:
-
- Refund complaints were not decided.
-
- Homebuyers had to wait until completion of the project.
-
- Even deserving refund claims remained pending for years.
Although the intention behind the policy was to protect project funds from being diverted towards refunds, the practice created hardship for many homebuyers.
The issue eventually came before the U.P. Real Estate Appellate Tribunal in proceedings relating to Antriksh Realtech Pvt. Ltd., where the Tribunal observed that keeping complaints indefinitely in abeyance was legally unsustainable. Consequently, UP RERA reconsidered its policy and withdrew the earlier office order, issuing a revised SOP on 20 June 2026.
What Is the Objective of the New SOP?
The new SOP seeks to balance two competing interests:
1. Completion of the Project
The project should not fail merely because multiple refund claims consume the funds required for construction.
2. Protection of Homebuyers’ Legal Rights
Homebuyers should not lose their statutory right to seek refund merely because the project is being completed under Section 8.
The revised SOP therefore adopts a balanced approach:
-
- Refund complaints will be decided.
-
- Project funds will continue to remain protected.
Major Changes Introduced by the New SOP
1. Refund Complaints Will No Longer Remain in Abeyance
This is the biggest change introduced by the SOP.
Under the previous policy, refund complaints were generally kept pending.
Under the new SOP:
-
- Complaints will be heard.
-
- Evidence will be considered.
-
- The Authority will decide the complaint on its merits.
Therefore, the allottee no longer loses the opportunity of obtaining a legal determination of his rights.
2. Association of Allottees (AoA) Is Not Liable to Pay Refunds
Many stalled projects are now being completed by the Association of Allottees after cancellation of the promoter’s registration.
The SOP clarifies the following:
-
- AoA is merely completing construction.
-
- AoA never collected the original sale consideration.
-
- Therefore, AoA cannot be directed to refund the buyer’s money.
The refund liability continues to remain with the original promoter.
This clarification protects resident associations from financial liabilities created by the defaulting builder.
3. Recovery Certificate Can Still Be Issued Against the Original Promoter
If the Authority passes a refund order against the original promoter,
the allottee may still seek issuance of a Recovery Certificate (RC).
However,
the recovery proceedings cannot be directed against:
-
- project funds,
-
- project bank accounts,
-
- construction assets, or
-
- project property presently being utilised for completion of construction.
Instead,
the recovery must proceed only against the original promoter.
This distinction is crucial because project resources are required exclusively for completing construction.
4. Execution of Refund Orders May Be Deferred
The SOP introduces a significant procedural distinction.
The Authority will first advise the allottee regarding the consequences of insisting upon refund during ongoing construction.
If the allottee still wishes to proceed,
the complaint shall be decided on merits.
However,
if refund is granted,
the execution of that refund order may remain stayed until completion of the project.
This represents a substantial policy shift.
Earlier:
Complaint itself remained pending.
Now:
Complaint is decided immediately, but execution may wait.
This approach preserves both legal rights and construction progress.
5. What Happens When the Original Promoter Is Allowed to Continue?
Not every failed project is handed over to the Association of Allottees.
Sometimes,
the majority of allottees agree that the original promoter should complete the remaining work.
In such situations,
the Authority may permit the original promoter to continue under Sections 6, 8 and 37 of RERA.
For these projects,
the SOP provides that:
-
- complaints shall be decided according to the normal legal process;
-
- every complaint shall be decided on its individual merits; and
-
- no special restriction applies merely because the project falls within Section 8.
6. Treatment for SWAMIH-Funded Projects
Many stalled projects are now financed through the SWAMIH Investment Fund-I or similar investment funds.
The Authority has recognised that such projects often contain separate financial arrangements regarding compliance with RERA orders.
Accordingly,
complaints relating to these projects will also be decided on merits.
This provides greater certainty for both homebuyers and financial institutions involved in project revival.
Practical Impact on Homebuyers
The revised SOP provides several important benefits:
-
- Refund complaints will not remain indefinitely pending.
-
- Buyers receive a reasoned legal decision.
-
- Project completion remains protected.
-
- Associations of Allottees receive protection from liabilities they never incurred.
-
- Recovery continues against the actual wrongdoer—the original promoter.
-
- Financial discipline in revived projects is maintained.
Impact on Builders
For promoters,
the SOP reinforces that liability does not disappear merely because the project has been taken over under Section 8.
Refund obligations continue against the original promoter.
The promoter cannot shift that liability upon:
-
- the Association of Allottees,
-
- the new developer, or
-
- the Authority completing the project.
Legal Significance of the SOP
The 2026 SOP represents a mature evolution in UP RERA’s regulatory approach.
Instead of forcing homebuyers to choose between refund rights and project completion, the Authority now protects both.
The revised framework recognises that:
-
- construction requires financial stability;
-
- buyers possess statutory rights under RERA; and
-
- procedural fairness requires that complaints be decided without unnecessary delay.
The new policy therefore replaces an approach of “suspending legal remedies” with one of “granting legal remedies while safeguarding project completion.”
Conclusion
The UP RERA SOP dated 20 June 2026 marks an important shift in the regulation of stalled real estate projects.
While the Authority continues to prioritise completion of projects under Section 8, it has also restored the statutory rights of homebuyers by ensuring that refund complaints are heard and decided.