• Cancellation of booked flat

Hi, I booked a flat two months ago, during booking we had clearly communicated to the builder, we are opting for a Home loan, upon bank approval only we can proceed further, builder accepted and arranged for the home loan, signed the agreement sale deed – one copy, the original copy was shared to the bank along with all relevant documents, we donot have any of the documents shared with bank, but builder has sale deed agreement Xerox copy. Mean time the room size of the house was not as per the plan, builder agreed to change the room size, so we had modified the room as per the plan – only verbal communication given to builder, no written document or mail communication were shared.
This month – July 2015 - got home loan approval through phone from bank, but due to sudden family problem and lot of money spent on medical expenses which was reserved to buy the house, so this week I cancelled the booking. The builder asking us pay the damages to house – 2.5 lakhs + 2.5 lakhs for cancellation + interest ( 24% p.a ) of house value – 73 lakhs – total amount is around 8 lakhs. 
We communicated to the builder we cannot pay 8 lakhs.
Builder is having Xerox copies of sale deed agreement given to bank and our hand written document of when we will disburse the money to builder. We donot have any document except unsigned sale deed document.
Please guide us – we have to pay money as per the agreement or only damages to the house or any other solution.
Asked 1 year ago in Property Law from Pondicherry, Puducherry
Religion: Hindu
1) it is necessary to peruse agreement signed by you with the builder 

2) what basis damage s to the house of rs 2. 50 lakhshas been arrived at ? Is there clause for payment of interest at 24 per cent ? 

3) without going through the agreement we cannot say whether builder claim is justified or not 

4) contact a local lawyer . The claim made by builder appears to be exorbitant
Ajay Sethi
Advocate, Mumbai
23177 Answers
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Hello,
1) If you have received a legal notice with the demands from the builder you need to send a reply through your advocate. Need to see the copy of the Agreement you have to advise what would be your liability.

2) It is unfortunate you don't have the actual copy of the Agreement. You can get a copy from the bank by moving an application.

3) Engage a local lawyer to help you with sending an appropriate reply to the builder.
S J Mathew
Advocate, Mumbai
1950 Answers
65 Consultations
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1) you ought to have gone through the agreement in detail before signing the agreement . 

2) once you have signed the agreement you are bound by the terms of the contract 

3) clause cited by you is applicable in case agreement is terminated by builder on account of non payment of installments . in such a case LD of rs 2.5 lakhs would be payable with interest on over due amount 

4) in the present case you have cancelled the agreement . you have not reproduced the clause relating to cancellation of booking . in such  cases it is generally provided that booking amount would be for forfeited . 
Ajay Sethi
Advocate, Mumbai
23177 Answers
1217 Consultations
5.0 on 5.0
1. You have very valid reason to cancel the agreement and the builder in no circumstances can refuse to return the booking amount nor it can impose any penalty.
2. If the builder is adamant to its position you can file a case in the consumer forum asking for your money and the damages.
Devajyoti Barman
Advocate, Kolkata
5189 Answers
54 Consultations
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As of now you paid one lakh and wants to cancel the deal.
Intimate the builder  regarding the cancellation of the deal 
as per the clause you lose one lakh and other money which are not due cannot be sued by him for example interest. 
If you inform the builder the builder will be able to sell to any other person, there  is less or no chance he wll follow you for the 1.5 lakh.
If you do not want to ask the advance paid one lakh, just write him a letter intimating the deal cancelled.in case any further trouble from the builder, see any technical reasons against  him you can make to excuse .
 
If you cancel the booking, he will issue a cancellation receipt and a cheque for the deposit amount if anything returnable, if he is a professional builder. 
 from your part ask him to return the documents, copies  which you provided him if any. As such at this stage there are no documents made so other than cancellation receipt or a letter mentioning the deal cancelled nothing you have to get from the builder
Thresiamma G. Mathew
Advocate, Mumbai
1316 Answers
85 Consultations
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You have mentioned only the default o payment of installment clauses and not mentioned anything about the termination clause or cancellation of booking.
An unregistered sale agreement is not valid and the bank cannot grant housing loan on that basis until the builder and the bank manager are in hand and gloves with each other.  
You may issue communicate in writing to the builder about your decision to cancel the booking of the flat for the reason you would like to inform, send a copy to the bank and request him to not to disburse any amount towards the loan if already granted or not to grant the loan and you  request the bank to treat the loan application as cancelled. 
After this allow the builder to communicate to you in writing about the demands of cost towards the cancellation, see what rules has been quoted in his demand and then repudiate the irrelevant and illegal demands through your lawyer's notice.  Let him file a recovery suit and claim through court, the law will decide the course of action after that.  
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
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1. You have used 'sale deed' and 'agreement' conjunctively, but these are two separate terms carrying different legal import. If the agreement alone was entered into and the registration has not been done then all your rights including the right to cancel the booking flow out of the agreement alone.

2. Occurrence of unanticipated medical issues in the family is not a legal ground to cancel the booking. The booking has to be cancelled within the periphery of the agreement itself,

3. The builder can levy cancellation charges only and only if the agreement provides for it.
Ashish Davessar
Advocate, Jaipur
18088 Answers
447 Consultations
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In terms of the clause extracted by you, you are liable to pay 2.5 lacs towards liquidated damages to the builder. You are not liable to pay any other amount to him.
Ashish Davessar
Advocate, Jaipur
18088 Answers
447 Consultations
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1. have you paid any booking amount?

2. Is there any clause of paying penalty for cancelling the booking mentioned in the Agreement for Sale?

3. Collect the copy of the Agreement of Sale lying with the Bank. Send them a letter to this effect and lodge complaint to the Bank's ombudsman if the Bank refuses to send you a copy thereof. You can also take the RTI route,

4. Inform the Bank by speed post that you have cancelled the Agreement for Sale instructing them not to release any payment to the builder otherwise the Bank may release some payment,

5. You shall have to pay the amount you have agreed to pay as per the agreement,

6. Best thing will be for you to find out some fault with the builder for your cancelling the agreement and in that case you can refuse to pay any cancellation charge/penalty putting the blame on the builder for the cancellation. 
Krishna Kishore Ganguly
Advocate, Kolkata
12088 Answers
229 Consultations
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1.Find out some fault of the builder which will go against the agreed terms promting you to cancel the agreement for sale,

2. File a consumer complaint case before the local District Consumer Dispute redressal forum alleging deficiency  in service and unfair business practice claiming refund of your booking amount with interest, damage and cost,

3. The builder will be busy in defending himself,

4. In the instant matter offence will be your best defense.
Krishna Kishore Ganguly
Advocate, Kolkata
12088 Answers
229 Consultations
5.0 on 5.0

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