Once sane agreement is executed it over tides booking allotment terms
2) kindly clarify what is clause in agreement for sale
3) you have to sue the builder to set aside cancellation of allotment
Cancellation of apartment allotment by builder
I booked an apartment with a tier2 builder in Bangalore. Project had been previously stalled for sometime and hence I was a bit circumspect at the time of booking. Sales team offered a deal of just paying the booking amount (2.15%) and making rest of the payment at the time of handover which I accepted. This was clearly captured in the booking form. But then they again started insisting on getting the sale agreement done by paying 20%. I relented and we mutually agreed on payment of 12.5% and proceeded with the sales agreement. But now within 2 weeks of that they sent a mail claiming that 20% of the payment was to be made within 21 days of booking and referred to Soma verbal follow-ups and needs to be done within next 10 days. I responded to the mail referring to the deal structure agreed at the time of booking and what's captured in the booking form. Instead of replying to my mail, builder has sent a mail intimating me about cancellation of the allotment. My question is whether this is legally tenable and what could be the available course of action.
Asked 2 years ago in Property Law
Religion: Hindu
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16 Answers
1. Send a legal notice to the builder quoting the details in the booking form and various deviations the builder has indulged in.
2. If it's not resolved, file a case against the builder for specific performance in the jurisdictional Court.
- This is clear case of cheating of total amount collected. File a criminal complaint in the Court of Magistrate under Section 420.
- Simultaneously, you can also file complaint under Consumer Protection Act, 2019 in District Consumer Commission where proceedings are very fast under new Act. You will get refund with interest, cost of complaint, lawyer's fee and compensation for mental harassment.
- If you intend to purchase property file suit for specific performance of agreement and in the alternative refund with interest.
- As per law, Unless an Agreement/ contract contains a specific rescission clause that grants the right for a party to cancel the agreement within a certain amount of time, or reasons for cancelling , then a party cannot back out of a contract once they have agreed and signed it.
- Further, as per Sub-Section 1 of Section 13 of The Real Estate (Regulation and Development Act, A builder will have to enter into an agreement to Sell with a home buyer, and then accept the booking amount which should not be more than 10%.
- Further, demanding more than 10% payment at the time of sale agreement and only after the booking is against the Law.
- Further, if you pay the amount demanded by the said builder against the Act , then you may face problem , specially when the builder could not get OC etc. from competent authority or delay in handing over the possession.,
- Hence, you can send a legal notice to the builder , and if no positive response, then file a complaint before the Consumer Forum against the builder and also claim compensation for harrassment.
According to the Real Estate (Regulation and Development) Act, 2016 (RERA), a builder can cancel the allotment of an apartment only in terms of the agreement for sale, and the buyer can approach the Real Estate Regulatory Authority for relief, if they are aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause. The builder is also bound by law to return the money collected from buyers within 45 days, after deducting the booking amount
In your case, it seems that the builder has violated the terms of the booking form and the sales agreement, which clearly stated the payment plan and the deal structure agreed by both parties. The builder cannot demand 20% of the payment within 21 days of booking, when you have already paid 12.5% as per the mutual agreement. The builder also cannot cancel the allotment without giving you a valid reason and a notice. The builder’s actions seem to be arbitrary and unfair, and may amount to deficiency of service and breach of contract.
You have the right to challenge the cancellation of the allotment and seek refund of your money with interest and compensation. You can send a legal notice to the builder, demanding them to honour the agreement and restore your allotment, or to refund your money with interest and compensation. If the builder does not respond or comply, you can file a complaint against them before the Karnataka Real Estate Regulatory Authority (KRERA) under Section 31 of RERA. You can also file a complaint before the consumer forum under the Consumer Protection Act, 2019 for redressal of your grievances.
You can make online complaint on the RERA site and in Consumer Forum against builder. And show all relative documents to RERA officer.
You can issue a legal notice to the builder demanding explanation for unilateral cancellation especially when you have already paid 12.5% of booking amount as per the mutually agreed terms.
If they still stick to their point alone then you may cancel the booking demand the entire booking amount along with the interest at prevailing market rate or banking rate.
If they do not comply with the demands made then you can resort to legal action through court for recovery of the booking amount along with interest from the date of payment made by you in this regard
Both parties are bound by the agreement. The promoter cannot unilaterally cancel the booking. Please engage a competent lawyer and reply suitably to the builder quoting the relevant agreement clauses. If the builder cancels the booking unilaterally, you may raise the issue with your State RERA authority and go to the consumer forum too for redress.
Dear client,
If the booking form and the sales agreement clearly state that you only need to pay a certain percentage and not the 20% mentioned by the builder, you might have a legal basis to contest the cancellation of the allotment.
Here are some steps you can consider taking:
Review Documents: Carefully review all the documents you have, including the booking form and sales agreement. Ensure they clearly state the payment terms you agreed upon.
Seek Legal Advice: It would be advisable to consult with a legal professional who specializes in property or real estate law. They can assess your situation and provide guidance based on the specific terms of your agreement.
Communication: Attempt to communicate with the builder to resolve the issue amicably. Mention the terms in your agreement and try to come to a resolution through negotiation.
You can approach consumer court or rera for the same
Is there a way for all the buyers to collectively reach an agreement with the developer to basically ensure that all the payments go into an escrow account between the builder and the buyers association? Funds from the escrow could be used to complete the project and once all parties sign off on the project completion, the developer is free to use the remaining funds for any other purpose.
Asked 2 years ago
You need to first need court orders for setting aside cancellation of allotment done by builder
2) As per the RERA Act, the promoter has to maintain a 'separate account' for every project undertaken wherein 70 percent of the money received from the buyers shall be deposited. Such funds can only be used for the purposes of construction and land cost.1
The builder has unilaterally cancelled the booking without any valid reason, hence he is liable either to set aside his decision to cancel the booking or to refund the entire booking amount with interest.
You can make a complaint in this regard with the RERA or approach civil court to set aside the cancellation of the booking provided you produce documentary evidences for this cancellation.
The promoter in addition to several other mandatory documents will have to submit a declaration, supported by an affidavit, stating that 70 percent of the amount realised for the real estate project from the buyers, from time to time, shall be deposited in a separate account to be maintained by a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.
RERA Act as it stands today, says, "The account has to be self-maintained and is not an escrow account requiring the approval of the Authority for withdrawal."
"In RERA, escrow and separate accounts mean one and the same thing"
The withdrawal from the separate account will have to be in proportion to the percentage of completion of the project after it is certified by an engineer, an architect and a chartered accountant that the withdrawal is in proportion to the percentage of completion of the project.
- The housing society can use the corpus fund amount for major repairs, reconstruction, structural addition or redevelopment.
- As per rule, the general body of the society can form its own rules and regulations with regards to the Corpus fund amount, its investment and its utilization.
- Yes, one person can take SPA from all the buyers to enter into an agreement with the builder for completion of project .
Yes it is possible as aforesaid
Yes, but such an escrow account agreement needs to be drafted by a competent lawyer, duly executed and registered.
Dear Client,
Together, buyers and developers can work out an escrow account for a real estate project. Escrow accounts can protect money needed to finish a project. A buyers' association must be established, terms must be negotiated with the developer, a legal agreement must be made, an escrow agent must be chosen, disbursement conditions must be specified, legal counsel must be consulted, regulatory compliance must be followed, and the project and escrow account must be actively monitored. In real estate development, an escrow account offers financial security and transparency; however, to safeguard the interests of buyers, a carefully drafted contract and expert advice are necessary.