I have booked a flat with a builder under subvention scheme (charged extra for subvention scheme) 4 months ago. Builder has paid interest part to bank in advance for 18 month on behalf and rest of the interest part after 18 months will reimburse to me till possession of flat. Loan amount what builder took from bank is 80% of flat and rest of 20% we have to pay at possession. Now due to sum unavoidable circumstances I wont be able to retain that booking and wanted to surrender the same. Can I do that if yes, what I have to do now and is any financial burden will come on me either by the builder or bank. Please guide me fully all pros and cons of the action I wanted to take.
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what are the additional suggestions to safeguard my interest?
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What are terms and conditions of your agreement ?
2) there must be a clause regarding cancellation of booking
3) in case booking is cancelled you will have to pay builder interest amount paid by builder to the bank
4) financial burden will come to you
1. Cancellation of agreement depends on the terms of the agreement itself.
2.Though no agreement can restrain a party fro cancelling it but it may put penal clause to stop wanton cancellation of agreement.
3.So wthout seeing the agreement it is difficult to comment on your escape route. however it can be said for sure that you have to pay penalty for it.
1. You can surrender the booking but the cancellation would be governed by the cancellation clause. If there is any clause in the agreement or booking form which allows the builder to forfeit a part of the booking amount in the event of cancellation, he can invoke it with full vigour against you.
2. Consult a lawyer with a copy of the agreement or booking form, as the case may be, to obtain a concrete opinion.
In most of the Subvention Schemes there is a lock in period. During Lock in period buyer cannot sell the property. Though it is anti-competitive practice but being a special scheme builder justify the same. Risk is if you would like to exit during lock in period then you cannot exit thus your money is locked. Even if there is no lock in period, penalty of exit is very steep. In some cases, it is as high as 5 Lakhs.
The lock in period includes cancellation also.
You must see for the cancellation classes in the agreement under the said scheme and confirm if you are eligible even if it is under some deduction or payment of extra amount
what are the additional suggestions to safeguard my interest?
Under the subvention scheme;
Till the customer gets possession of the house, it is the builder who pays the EMIs on behalf of the customer. The advantage for the builder is that he gets the entire funds up-front, instead of the bank disbursing funds at every stage of construction as is the case with a normal loan. Once the customer gets possession, his EMIs kick in. For this developers enter into three-way agreements with banks and customers.
While this may sound like a win-win for both the developer and the customer, there are several catches that customers must be aware of.
If there is a delay in delivery, then the customer stands to lose more. As soon as the subvention period is over, the EMI based on the 80 per cent loan will begin, irrespective of the construction status. In case the house is not ready by then, and if the customer is staying on rent, he will have to pay both the rent as well as EMIs.
If the developer delays the EMIs he is supposed to pay on behalf of the buyer, credit information bureaus will not hold the developer responsible, because in the bank's records it is the customer who is the borrower. This means the customer's credit score will suffer.
You can now think abut the safeguard measures to be taken by you