• Booking Cancellation - Builder not refunding the booking amount

Hi - I had booked a property in Mulund with a reputed builder in Sep 2021. I paid 10% as Earnest money and signed the booking form which had a cancellation clause that builder will deduct the entire earnest money. I somehow did not pay attention to this clause which was my mistake and went with Builder's verbal assurance. I have not registered the property yet even after a year. The builder has not given me any allotment letter. What can I do to get my earnest money back? As per the latest proforma Allotment letter, the cancellation charges are only 2% of the total cost. But with no Allotment letter, how can I approach the builder?
Asked 4 months ago in Property Law
Religion: Hindu

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13 Answers

Hi, The Builder can't deduct the entire amount. If the amount is paid through by way of cheque/ online transfer or having paid the amount through cash and there is a documents  for proof having paid the same based on the same you can file a consumer complaint for the refund of the earnest money.  

Pradeep Bharathipura
Advocate, Bangalore
5454 Answers
311 Consultations

4.5 on 5.0

The booking amount is normally not refundable if you cancel from your side unless there is a issue from builder

Prashant Nayak
Advocate, Mumbai
28106 Answers
93 Consultations

4.4 on 5.0

Clause that builder will deduct the entire earnest money on cancellation is invalid under Section 2 (6) (i) of new Consumer Protection Act, 2019, being unfair contract. Builder cannot refuse to refund earnest money under the said clause. Issue lawyer’s notice seeking refund with interest after that file a complaint in District Consumer Commission, proceedings are very fast under Consumer Protection Act, 2019. You will get refund with interest, compensation for mental harassment, cost of complaint and lawyer’s fee.

Ravi Shinde
Advocate, Hyderabad
3153 Answers
42 Consultations

5.0 on 5.0

You would not get refund as under terms and conditions of booking earnest money would be forfeited on cancellation of booking 

Ajay Sethi
Advocate, Mumbai
89092 Answers
6362 Consultations

5.0 on 5.0

Hello,

  1. It would be advisable to initiate a conversation with the builder and ask him to refund 8% after deducting 2% just like those who have received allotment letters.
  2. In case the builder is not agreeable and refuses to refund any amount, you can get a legal Notice issued to him for refund pointing out his failure to issue Allotment Letter or have the Agreement registered.

S J Mathew
Advocate, Mumbai
3415 Answers
175 Consultations

5.0 on 5.0

Please lodge a written complaint with your State RERA Authority with all available documentary evidence, for appropriate redress. Also, send them a legal notice demanding immediate registration of the flat in your name. 

Swaminathan Neelakantan
Advocate, Coimbatore
2152 Answers
20 Consultations

4.9 on 5.0

You should insist on allotment letter

ask builder to execute agreement for sale 

 

insist on builder signature on allotment letter 

Ajay Sethi
Advocate, Mumbai
89092 Answers
6362 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
10324 Answers
124 Consultations

5.0 on 5.0

There is a new judgement from Maharera recently that booking amount cannot be forfeited by builder. You can send a legal notice on that basis to the builder. 

Prashant Nayak
Advocate, Mumbai
28106 Answers
93 Consultations

4.4 on 5.0

1) You must have received sales brochure of that project and in that termination clause may mentioned.

 

2) As you said in booking form it's mentioned termination clause that 10% earnest money of total cost which you have paid it initially.

 

3) If any where you can find on his website or any documentation that only 2% amount will be deducted from total cost. Than you can file online case on consumer forum and RERA site against builder.

Ganesh Kadam
Advocate, Pune
12423 Answers
193 Consultations

4.9 on 5.0

The builder cannot deduct 10%of the value of property. 

In fact he has not even entered into a sale agreement so far so he cannot dictate such terms. 

You communicate your decision to cancel the booking for the reasons you rely upon in writing by sending a legal notice by registered post and demand refund of your booking amount. 

If he's refusing to comply with the demand made,  you may drag him to consumer forum for relief and remedy. 

The  one sided conditions of any agreement is not valid in law as per latest supreme court judgment in this regard. 

Hence you can take proper legal action against the builder for relief through Maha RERA or consumer forum. 

 

 

 

T Kalaiselvan
Advocate, Vellore
79250 Answers
1618 Consultations

5.0 on 5.0

1. In case you are buying a brand new unit in an under-construction project from a builder, by the time the builder-buyer agreement is created, the buyer has to arrange another trance of the advance payment, which is typically 10% of the property’s value, after which the document is registered to attain a legal validity. As long as the agreement is not registered, the seller cannot deduct any money from the advance amount. If the buyer is able to negotiate well, he may be able to get his entire money refunded.

2.  Once the builder-buyer agreement is registered, the seller is legally empowered to forfeit a certain portion of this amount. 

If the buyer is not happy with the developer’s conduct, vis-à-vis the refunding of money, they can approach the Real Estate Regulatory Authority in their state. This can be done, if the seller is a developer and the unit purchased is an under-construction property. 

3. Unless a buyer is willfully trying to sabotage the deal, developers are open to refunding the booking amount, as long as the reason behind the cancellation is genuine and legitimate

T Kalaiselvan
Advocate, Vellore
79250 Answers
1618 Consultations

5.0 on 5.0

Approach the builder through a lawyer, who will send   a legal notice on your behalf to the Builder seeking refund of the money which you have paid to him.

 

The documents which you have are sufficient to take the above suggested Legal recourse.

 

Consumer Court can be later approached if the matter is not resolved despite the legal notice.  \

Vibhanshu Srivastava
Advocate, New Delhi
9441 Answers
251 Consultations

5.0 on 5.0

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