Consumer Connect: 'Builder Cannot Deduct More Than 2% If Booking Is Cancelled,' Says Expert

Consumer Connect: 'Builder Cannot Deduct More Than 2% If Booking Is Cancelled,' Says Expert

The questions are answered by Adv. Shirish V. Deshpande, Chairman – Mumbai Grahak Panchayat.

FPJ News ServiceUpdated: Monday, January 15, 2024, 02:25 PM IST
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I had booked a 2BHK flat in Andheri with a builder in August 2023 by paying ₹15.75 lakh as advance. The total price of the flat was ₹1.75 crore. However, soon thereafter, I was transferred to Gurgaon on a promotion, where I will be staying for a long time. Hence, I cancelled my flat booking and sought a refund of the amount I had paid. However, the builder is pointing out to the condition in the allotment letter, which states that in the event of cancellation at any time, the entire amount I have paid shall be forfeited and there shall be no refund due. This is grossly unfair. Are there no rules governing cancellation and refund under RERA? 

Anand Gandhi, Andheri (West) 

I can very well understand your concern. There are many builders who try to unilaterally impose such unfair terms on the homebuyers through their allotment leters. However, MahaRERA has regulated this important issue of cancellation and refund vide its order 35 dated August 12, 2022. According to this order, if the homebuyer cancels the booking within 15 days of the date of booking, the builder is mandated to refund the entire amount to the buyer without any cancellation charges. If the booking is cancelled beyond 15 days but within a period of 30 days of the booking, the builder can deduct 1 per cent of the flat price. If the booking is cancelled beyond 30 days but before 60 days, the builder is entitled to deduct 1.5 per cent of the flat price and if it is cancelled beyond 60 days the maximum the builder can deduct is 2 per cent of the flat price. 

Since you have not indicated the actual date of booking and the actual date of cancellation, I am unable to say what percentage is required to be deducted in your case. That you can work out on your own. But surely the builder cannot ask you to forfeit the entire amount you have paid and is bound to make refund strictly in accordance with the time lidicated here. Furthermore, as per this order, the builder is required to refund this amount within 45 days from the date of cancellation, failing which the builder is liable to pay interest @MCLR plus 2 per cent for the delayed period. 

You may, therefore, write to your builder pointing out this provision made by MahaRERA and demand the refund accordingly, along with interest. Of course, if he still refuses to comply, then you will have to file a formal complaint before MahaRERA. In such a case you can also claim compensation for the hardships caused to you for such wrongful forfeiture. 

I had booked a 1BHK flat in Jogeshwari in 2018, which is a re-development project and the promised date of possession was in December 2019. Over a period of time I have paid almost 60 per cent of the total price. However, the project is standstill since April 2019 with only 50 per cent work completed. The developer had serious financial problems and eventually he expired in September 2023. The project has lapsed on MahaRERA record since December 2019 and the developer had not taken any steps to renew the registration. The tenants in the old demolished building are also not paid transit rent for last more than three years. I have filed case in MahaRERA and the matter is listed for hearing next week. In such circumstances what is your advice for reviving such project? 

Ashish Desai, Jogeshwari 

Your case is complicated on account of death of the developer who was already under financial stress. However, in such scenario, there is a provision under RERA to take over such stuck project by the home buyers and complete the same on their own. Section 7 of RERA empowers MahaRERA to revoke the registration of the project in case of default of the developer. In your case there are several defaults by your developer including non-renewal of the project registration itself. 

In such case MahaRERA will have no option but to revoke the registration of the project. Section 8 of RERA has cast an obligation on MahaRERA to complete the remaining development work in consultation with the state government. In case of lapse of or revocation of the project, the allottees in such project can also take the initiative to come forward for completing the remaining work of the project. Such allottees can form Association of allottees and approach MahaRERA for take over of this project and complete the balance work. 

I remember a case where homebuyers from a Talegaon took such an initiative and successfully completed the project with the help of MahaRERA. You may, therefore, take the initiative in organising the buyers and also the tenants in this project and jointly explore the feasibility of completing this stuck project by selling unsold flats, if any, in this project and by putting in some extra money. It's no doubt difficult but not impossible. In such cases, MahaRERA is empowered to help and assist the homebuyers and facilitate the completion of the project. Clarification: In my last column I had mentioned that for selection of a developer for re-development, majority of no less than 51 per cent of the members present and voting is required. However, it should be read as majority of no less than 51 per cent of the total members of the society is required. 

(The author is the chairman of the Mumbai Grahak Panchayat)

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