• Buyer wants to cancel property bought from builder due to medical issues

D/Sir - we had bought a under construction property from a builder 2.5yrs. Registration was done 2yrs back... we paid few installments as well however for last 1yr we are chasing the builder to cancel the deal as we have medical complications at home (parents) and it is not wise to invest any further in the property. Builder was earlier not agreeing to cancel and now that they have agreed, the charges levied for cancelation are very high.. is there a way out to deal with this situation
Asked 1 month ago in Property Law
Religion: Hindu

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21 Answers

What are cancellation charges demanded by builder kindly clarify 

 

has construction been completed and OC issued 

 

has builder completed project on time ?

Ajay Sethi
Advocate, Mumbai
79719 Answers
4806 Consultations

5.0 on 5.0

Registration was done 2yrs back ? What registration ? Sale deed/agreement to sell/allotment ? 
Buyer can cancel the booking at any time subject to forfeiture of 10% of total amount if cancellation is not due to builder fault. Rest amount is refundable within 45 days.
Send notice of cancellation and refund without deduction.
Otherwise you will be constrain to file FIR along with RERA and consumer complaint.

Yogendra Singh Rajawat
Advocate, Jaipur
21407 Answers
31 Consultations

4.4 on 5.0

unfortunately whatever is agreed by you in the registered agreement with the builder as regards cancellation of allotment by the buyer, will be binding on you

it is not the case of the buyer that there is default or breach by the builder due to which the buyer is seeking cancellation of the allotment and refund of his money

so i am afraid that the contract with the builder will bind you and there is no escape from it

Yusuf Rampurawala
Advocate, Mumbai
5800 Answers
36 Consultations

5.0 on 5.0

Dear sir,

We will have to look into the agreement and the conversations that have taken place between you and the builder in order to give you an accurate legal opinion. 

The details provided by you are incomplete. What was the total agreed sale consideration amount? How much have you paid already? How much is the builder demanding?  Please provide a clarification on these aspects. 

The charges in cases of breach of contract cannot be exorbitant and the builder is entitled to deduct only reasonable damages. There are ways out but we will be in a better position to answer once we have all the details. 

 

 

Agam Sharma
Advocate, New Delhi
585 Answers
4 Consultations

5.0 on 5.0

As per RERA rules builder is liable to charge forfeiture amount only 10% of earnest money and not more than that.

 

You can make complaint in the RERA and Consumer Forum online.

 

Below are few citations for your reference.

 

To seek redressal under RERA, one has to register a complaint online (only) through it’s website either to a three member Commission or to the Adjudicating Officer. Necessary fees have to be paid which may vary from state to state.

Section 13 reads “(1) A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force.”

The section has changed the advanced deposit from the usual 30 percent of the sale price to now 10 percent and mandated the registration of the sale deed. The RERA, in section 18, also provides that if the seller is unable to grant possession as per the terms of contract or due to discontinuation of his business and there was no fault on part of the buyer, the seller is obligated to return the entire earnest money along with accrued interest and compensation.

The point is further justified from the case of M/s DLF V/s Bhagwati Narula dated 6.1.2015 decided by the Hon’ble National Consumer Disputes Redressal Commission in Revision Petition No.3860 of 2014 where it was categorically held “That only a reasonable amount can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him.”

 

In Maula Bux V/s Union of India, the Hon’ble Supreme Court of India quoted the following observations made by the judicial committee in a previous case Kunwar Chiranjit Singh V/s Har Swarup: “that earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee. Further, contracts with unjust and one sided clauses can also held to be unconscionable contract.”

It has also been held that a seller cannot be allowed to forfeit an amount for which he neither entered into a contract nor provided any service to the buyer. Clearly, the Hon’ble Supreme Court and other courts & tribunals are also making efforts to minimize such unfair practices.

Ganesh Kadam
Advocate, Pune
11745 Answers
114 Consultations

4.9 on 5.0

1. What document you had registered? 

 

2. Was it an agreement for sale?

 

3. Since the agreement hs already been registered and you have paid the amount, it is the discretion of the builder to accommodate your request.

Krishna Kishore Ganguly
Advocate, Kolkata
24902 Answers
707 Consultations

5.0 on 5.0

If you yourself cancel the same without the fault of builder the booking amount will be forfeited

Prashant Nayak
Advocate, Mumbai
22633 Answers
49 Consultations

4.4 on 5.0

If it is RERRA registered property, you can approach RERA for seeking the refund as per rules and regulations stipulated by RERA.

The stipulation by RERA is just 10% of the booking amount and not beyond that.

The builder cannot charge exorbitantly at his will.

If it is not RERA registered, you can drag him to consumer forum seeking the said relief.

 

T Kalaiselvan
Advocate, Vellore
69750 Answers
951 Consultations

5.0 on 5.0

If there is no forfeiture clause in the Agreement, you can issue notice cancelling the same in line with the Agreement and demand the balance amount .

 

S Srinivasa Prasad
Advocate, Hyderabad
2864 Answers
9 Consultations

5.0 on 5.0

The contents of the builder buyer agreement executed between you and the builder while booking the property needs to be perused in order to advise you as to how to get out of this deal and terminate the builder buyer agreement with the builder, without exorbitant deductions due to such cancellation.

Also, if the cancellation is due to any fault or deficiency on part of the builder in performance of the agreement, then no cancellation fees can be charged from you. Also, you can claim compensation from the builder for his deficiency of services.a

Siddharth Jain
Advocate, New Delhi
5612 Answers
65 Consultations

5.0 on 5.0

- There is no guidelines laid down by the government to forfeit the booking amount for the cancellation, and the deduction is done at the builder’s discretion.

- Hence, legally, the builder cannot deduct any money out of the advance payment you have made for the booking till the time; a builder-buyer agreement is made and registered with the sub-registrar.

- Further, A builder-buyer agreement is not created until the buyer pays at least 10 per cent of the property value.

- Further, as per Real Estate Regulation Act (RERA), home-buyers can cancel allotment of the apartment booked with a builder at any stage even if there is no default on the part of the developer. The builder is bound by law to return the money collected from buyers within 45 days, after deducting the booking amount.

- Hence, if you have already paid 10 percent of the flat value, and the said agreement signed by you , is not registered in the office of the Registrar , then you are liable to get full amount refund paid by you ,even there is a clause present in the agreement for not refunding  , and if the said agreement is registered , then builder has right to deduct booking amount from the paid amount. 

- If, builder not refunding the same ,then you should lodge your complaint before the Consumer court , and thereby prayed for the refund of paid amount with interest.

Mohammed Shahzad
Advocate, Delhi
5666 Answers
55 Consultations

5.0 on 5.0

If unreasonable flat cancellation fee is being charged which is prohibitive, then file a complaint against the builder in the consumer forum for deficiency in services and unfair trade practices.

Rahul Mishra
Advocate, Lucknow
11628 Answers
20 Consultations

5.0 on 5.0

1. See the builder can deduct the amount as per the agreement and/or in case the project is RERA registered as per same the 10 per cent deduction of a total value can be done.

2. If the builder is not agreeing and deducting more amount you may file a complaint before the RERA authority or before the consumer court.

Shubham Jhajharia
Advocate, Ahmedabad
25521 Answers
115 Consultations

5.0 on 5.0

Hi, as per RERA ( REAL ESTATE REGULATORY AUTHORITY) provisions , if an allootte wishes to withdraw or cancel the booking ,without any default of the developer ,the booking amount shall be forfeited ..

Hemant Chaudhary
Advocate, Gurgaon
4599 Answers
42 Consultations

4.9 on 5.0

File a complaint against him in RERA for inappropriate demand of cancellation charges

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

4.8 on 5.0

Dear Client,

You may file a case in the RERA to withdraw from the project and may demand your money back.

Jaswant Singh
Advocate, Gurugram
891 Answers
2 Consultations

4.8 on 5.0

1. Sale the flat to third party it will save you from cancellation charges and you can also sell the flat at some premium. 

2. Execute a triparty agreement with buyer making builder as confirming party.

 

Mohit Kapoor
Advocate, Rohtak
10685 Answers
7 Consultations

5.0 on 5.0

Dear Sir/Madam,

You are suggested the builder is taking advantage of the situation and the ground reality that the court case will not give the early solution. So, it is personal suggestion to look for some other buyer as well and enter into deal with him. 

Ganesh Singh
Advocate, New Delhi
6542 Answers
13 Consultations

4.5 on 5.0

if you cancel the booking for a registered project, the promoter has to refund the amount collected after deducting any cancellation or forfeiture charges stipulated in the agreement to sale/allotment letter.

Mohammed Mujeeb
Advocate, Hyderabad
18986 Answers
13 Consultations

4.5 on 5.0

Dear Client

This is to inform you that

  • As per Section 18 sub-section (a), of the RERA Act 2016 (a) if buyer wishes to terminate / cancel, the promoter is required to return the money paid by the buyer along with interest (as provided in the RERA) including compensation as prescribed and therefore the builder cannot ask you to any amount as cancellation charges.
  • If the promoter refuses to accept the cancellation, the buyer’s recourse would be to make an application before the ‘adjudicating officer’ as contemplated under Section 31 of the RERA Act, to enforce his rights and seek refund of money paid to the promoter, along with interest and compensation.

Pulkit Prakash
Advocate, Delhi
309 Answers
7 Consultations

5.0 on 5.0

Builder can only forfeit initial money/booking amount paid at the time of booking this flat and has to refund the rest of the amount, since you have decided not top go ahead with this deal. 

Vibhanshu Srivastava
Advocate, New Delhi
9132 Answers
181 Consultations

5.0 on 5.0

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