Refund for Buyers In Case Of Delay in Project
Apr 07, 2017 Legal Guidance
After a long wait, the Real Estate Regulation and Development Act (RERA) has passed a law that if the project is delayed then the developer is bound to pay the refund to the buyer or the monthly interest of 10.5 percent in case the buyer does not want the refund.
The Act will come into force from 1st May 2017. The center notified the standard house purchase agreement that all the developers have to sign with the buyers. The Act states that, if the project is delayed then it will result in automatic termination of the agreement. In that case, the developer is supposed to repay the entire amount to the buyer within 45 days. If the buyer does not want to withdraw from the project then the developer is supposed to pay the buyer a monthly interest of 10.5 percent till the possession is handed over to the buyer.
However, if the project is delayed due to circumstances which are beyond the control of the developer like flood, earthquake, etc then the developer is not entitled to pay the buyer.
The guidelines from the center have provided the compensation for the ongoing projects but the new sale agreement will come into full force from 1st May 2017.
Not just for buyers, the Act has some provisions for the developers as well. In case of the buyer being a default and cannot pay the due amount in time than the developer is entitled to terminate the agreement. In case of delayed payments, the builders and buyers can have a mutual agreement. Developers will have the flexibility to deduct the booking amount and interest from the repayment made by the buyer. The sale agreement also states that the total prices of the property shall be escalation free and shall only increase when the cost of development increases.
The agreement also states that the developers will have to disclose the correct number of apartments, carpet area, number and the area of garage and parking, and the date of grant of commencement to the local authority. The agreement will also have to mention the correct breakup cost of the construction, including the cost of the property, the proportionate cost of the common area, preferred location charges and taxes, maintenance charges etc.
This has brought a huge relief to the buyers who have to wait long for the possession of their property, pay the EMI and rent together, denting their financial structure. This is expected to make developers finish the project on time and stop them from making fake promises to the buyers.
The Act will come into force from 1st May 2017. The center notified the standard house purchase agreement that all the developers have to sign with the buyers. The Act states that, if the project is delayed then it will result in automatic termination of the agreement. In that case, the developer is supposed to repay the entire amount to the buyer within 45 days. If the buyer does not want to withdraw from the project then the developer is supposed to pay the buyer a monthly interest of 10.5 percent till the possession is handed over to the buyer.
However, if the project is delayed due to circumstances which are beyond the control of the developer like flood, earthquake, etc then the developer is not entitled to pay the buyer.
The guidelines from the center have provided the compensation for the ongoing projects but the new sale agreement will come into full force from 1st May 2017.
Not just for buyers, the Act has some provisions for the developers as well. In case of the buyer being a default and cannot pay the due amount in time than the developer is entitled to terminate the agreement. In case of delayed payments, the builders and buyers can have a mutual agreement. Developers will have the flexibility to deduct the booking amount and interest from the repayment made by the buyer. The sale agreement also states that the total prices of the property shall be escalation free and shall only increase when the cost of development increases.
The agreement also states that the developers will have to disclose the correct number of apartments, carpet area, number and the area of garage and parking, and the date of grant of commencement to the local authority. The agreement will also have to mention the correct breakup cost of the construction, including the cost of the property, the proportionate cost of the common area, preferred location charges and taxes, maintenance charges etc.
This has brought a huge relief to the buyers who have to wait long for the possession of their property, pay the EMI and rent together, denting their financial structure. This is expected to make developers finish the project on time and stop them from making fake promises to the buyers.
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