• Withdraw from buying a flat, 3 months after signing Sale Agreement

Hello Sir/Madam,

I wanted to buy a flat from a Builder in Hyderabad after selling my Bangalore plot (gifted by my parents).

I have paid Thirteen Lakhs (includes 1L booking amount) as the first installment to the builder as per the Sale Agreement at the time of signing.

I was hoping to sell my plot to obtain the rest of the funds for the flat. My parents are now very unhappy and do not want me to sell the plot. I have not been able to convince them otherwise and I have reluctantly decided to not go against their wishes.

Under these circumstances, I want to now cancel the agreement and withdraw from property buying.

1) As per the law is it possible for a buyer like me to withdraw ?

2) The builder's cancellation policy says that the entire money paid will not be refunded in case of cancellation.

I had not paid much attention to the cancellation policy at the time of signing.

Is it legal for the builder to have a no-refund cancellation policy ?

3) Do I lose my entire 13L ?

4) What are my options ?
Asked 30 days ago in Property Law
Religion: Hindu

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12 Answers

The RERA empowers the homebuyer to cancel an allotment of the apartment booked with a builder at any stage even if there is no default on the part of the developer. It binds the builder to return the money collected from the buyers within 45 days of such cancellation after deducting the booking amount.

2)forfeiture by the developer is not legal and proper as per provisions of RERA.

 

3)the promoter to forfeit only 2% of the consideration of a flat, if the booking is cancelled 61 days after issuance of the allotment letter.

 

4) if builder refuses to refund your money file complaint against builder before RERA and seek refund of money paid by you with interest 

Ajay Sethi
Advocate, Mumbai
94965 Answers
7576 Consultations

5.0 on 5.0

- As per rule, if the buyer backs out from the deal, the seller has the right to forfeit the token money paid. With respect to such forfeited token money,

- However, the Supreme Court has declared in the case of Fateh Chand , that a mere breach of contract by a buyer does not entitle the seller to forfeit the amount as received, unless, loss is proved to have been caused to the prospective sellers. 

- Hence, if you are cancelling the agreement entered with the builder , and if the builder has not suffered any loss from the same then he has not right to forfeit any amount paid amount by you. 

- You can claim full refund of the paid amount i.e. 13L from him .

Mohammed Shahzad
Advocate, Delhi
13377 Answers
199 Consultations

5.0 on 5.0

In case the builder refuses to give back the booking amount.

The buyer will have to move the state real estate regulatory authority or the consumer forum to seek relief, in case the developer refuses to pay the booking amount.

If there is any condition stating that he  will forfeit  then it is not maintainable because it is one sided agreement and not maintainable in law.

You first of all communicate your decision to cancel the booking in writing to the builder and demand refund of your booking amount after deducting the administrative charges.

If he is refusing to return the amount you can either make a complaint to the RERA or drag him to consumer forum for return of your booking amount and also for compensation for the mental harassment he caused. 

T Kalaiselvan
Advocate, Vellore
85166 Answers
2222 Consultations

5.0 on 5.0

1. The buyer of a sale agreement can always cancel the agreement. However in such cases the penalty like forfeiture of any amount would depend on the terms and conditions of the agreement.

2 . Ernest money means the booking amount and not the first installment. In most cases if the amount of earnest money is not huge forfeiture is held legal by the courts.

3. No

4. First talk tot him to know the deductions  if cancellation is opted by you. 

Devajyoti Barman
Advocate, Kolkata
22886 Answers
492 Consultations

5.0 on 5.0

1. You action of withdrawing from buying a flat three months after signing sale agreement is permitted in Law.

2.  The cancellation policy of the Builder is bad in law and only a part of the advance amount can only be forfeited against cancellation. It will not be legally correct for the builder to have no refund policy.

3.   You will not lose your entire 13 L.

4.    Send a legal notice to the builder to return your advance amount of Rs. 13 L forthwith.

5.    If there's no positive response, complain against the Builder to the jurisdictional RERA.

Shashidhar S. Sastry
Advocate, Bangalore
5164 Answers
314 Consultations

5.0 on 5.0

In every such agreement of sale, there is a clause specifying the amount of deduction the builder is entitled to while refund takes place owing to a cancellation by a prospective buyer. Check your agreement on this. 

Swaminathan Neelakantan
Advocate, Coimbatore
2823 Answers
20 Consultations

4.9 on 5.0

Dear Client,

Whether you can withdraw from the agreement depends on the terms outlined in the Sale Agreement you signed with the builder. Generally, most Sale Agreements include provisions for cancellation and withdrawal, but they often come with certain conditions and penalties. Regarding the builder's cancellation policy, it's not uncommon for builders to have clauses stating that the entire amount or a portion of it will not be refunded in case of cancellation. However, the legality of such clauses depends on the specific terms and local regulations governing property transactions in Hyderabad. It's advisable to consult with a legal expert or a real estate attorney who can review the agreement and provide guidance on the legality of the cancellation policy. If the builder's cancellation policy states that the entire amount paid will not be refunded, then there's a possibility that you may lose the entire 13 lakhs. Again, this would depend on the specific terms of the agreement and the applicable laws. Your options may include negotiating with the builder for a partial refund, seeking legal advice to understand your rights and options, or exploring alternative solutions such as finding another buyer for your Bangalore plot or finding alternative sources of funding for the flat purchase. It's essential to carefully review the terms of the Sale Agreement.

Anik Miu
Advocate, Bangalore
9028 Answers
110 Consultations

4.7 on 5.0

Booking form cannot over ride provision of RERA

 

cancel booking and seek refund 

 

if builder fails to refund file complaint against builder before RERA 

Ajay Sethi
Advocate, Mumbai
94965 Answers
7576 Consultations

5.0 on 5.0

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. 

The Haryana Real Estate Regulatory Authority (HRERA) has directed a Gurugram-based builder to refund the paid up amount to a homebuyer who defaulted in making timely payments, after forfeiting the predetermined earnest money

According to the government, in the event that a consumer needs to cancel their booking for a house, they would receive a refund for the GST they paid at the time of purchase. In the event that a booking is cancelled, builders will no longer be permitted to withhold GST money from the consumer due to the implementation of appropriate regulations. The client has two years after the agreement’s cancellation to withdraw their GST at any time.

T Kalaiselvan
Advocate, Vellore
85166 Answers
2222 Consultations

5.0 on 5.0

You can file a suit for specific performance and take action against the said person 

Prashant Nayak
Advocate, Mumbai
32093 Answers
183 Consultations

4.1 on 5.0

Dear client, if you have signed the booking form, which can be treated as an agreement then you have to abide by it. If you want backoff from buying the flat after sale agreeement then you have to pay the stipulated amount which has been mentioned in the Booking form.

Anik Miu
Advocate, Bangalore
9028 Answers
110 Consultations

4.7 on 5.0

- As per law, an agreement /contract which is one sided, unconscionable or unreasonable is not enforceable. 

- Hence, even if you have signed the said agreement then also the builder will have to prove that due to your cancellation he has suffered loss , and hence the 10% of the sale value will not applied and there may be a deduction of 2% only as per RERA. 

Mohammed Shahzad
Advocate, Delhi
13377 Answers
199 Consultations

5.0 on 5.0

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