RERA says Home Buyers can Quit Project Anytime. However...
Aug 22, 2018 Legal Guidance
Home buyers may have several reasons to cancel their booked property under construction. They can quite a project at any point of construction. However, there is some clause. Some monetary dent will be applicable in all means.
According to the Real Estate (Regulation & Development) Act, 2016, an allottee has the right to leave/cancel the allotment in a project. However, if the promoter is not at fault and the allottee leaves/cancels the project, then the developer is entitled to forfeit the booking amount paid for the allotment. In short, if you have cancelled the contract because of your emergency, then you would lose 10 per cent of the property expenses. It may seem difficult for home buyers to quite a project, however, all this is to retain a healthy market balance. Huge costs are involved in construction, and a home buyer is leaving a project halfway means a tremendous loss to the developer.
According to the Real Estate (Regulation & Development) Act, 2016, an allottee has the right to leave/cancel the allotment in a project. However, if the promoter is not at fault and the allottee leaves/cancels the project, then the developer is entitled to forfeit the booking amount paid for the allotment. In short, if you have cancelled the contract because of your emergency, then you would lose 10 per cent of the property expenses. It may seem difficult for home buyers to quite a project, however, all this is to retain a healthy market balance. Huge costs are involved in construction, and a home buyer is leaving a project halfway means a tremendous loss to the developer.
Refund Process
Earlier, there was no compulsion or set time period to refund money to the home buyer if cancelled/withdrawn. Now, with new regulation Developer needs to repay the amount after deducting the booking amount within 45 days. On this, developers have raised concerns about the repayment within that timeframe as the amount paid by home buyers are actually used in the construction. Besides, if there are multiple cancellations, then the situation could be worse for the developers. Moreover, developers do not have any provision to withdraw money from the escrow account. A developer, too, can also exit a project.
“The promoter may cancel the allotment only regarding the agreement for sale. However the allottee may approach the authority for relief if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause,” says the law.
Also, note that a developer may cancel your contract if the agreement empowers him in any way. He could do so in case of non-payment or delayed payments by the homebuyer. The cancellation, however, does not mean that the developer gets to forfeit the amount paid by the homebuyer. Only the booking amount may be forfeited, and the remaining has to be refunded. The cancellation has to be communicated 30 days in advance.
“The promoter may cancel the allotment only regarding the agreement for sale. However the allottee may approach the authority for relief if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause,” says the law.
Also, note that a developer may cancel your contract if the agreement empowers him in any way. He could do so in case of non-payment or delayed payments by the homebuyer. The cancellation, however, does not mean that the developer gets to forfeit the amount paid by the homebuyer. Only the booking amount may be forfeited, and the remaining has to be refunded. The cancellation has to be communicated 30 days in advance.
Can Developer Exit Project?
According to the law, the promoter can cancel an allotment as per the terms of the sales agreement. This could be the case if any home buyer delays payment or if it is non-repayment. The developer is allowed to deduct the booking amount and is liable to refund the rest. Such cancellation needs to be notified 30 days in advance.
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