Yes, you have to insist the builder to give it in writing that he will not be able to handover the original apartment and if your father in law agrees he will allot a different apartment as an alternative, if he does not agree then he can choose to cancel the agreement and the advance amount shall be refunded with interest within three months (or q time period agreed by both), with clauses that the builder will be liable for legal consequences if he do not honor the agreement conditions, get this agreement / communication notarised in order to make it legally valid especially when your father in law would prefer to escalate the matter through court of law.
Cancellation of agreement of property
Hi all, I am posting this question on behalf of my in-laws who are senior citizens. In June 2016 my father-in-law entered into an agreement for an under construction apartment in Kolkata. The initial agreement was to complete the construction and deliver the apartment along with all the amenities applicable by June 2017. My father-in=law paid 50 lakhs out of the total agreed amount of 65 lakhs in 2 separate installments. However the developer continued to defer the handing of the property citing various excuses like delay in procurement of raw material, shortage of labour, legal complications and later COVID from 2020. The developer also in the meantime asked for payment of balance amount promising quicky handover, but seeing the slow progress in construction my father-in-law refused to make any further payment which is not in line with the payment milestones mentioned in the agreement. In March this year, my in-laws provided a final ultimatum verbally regarding their exhaustion of patience in this matter and the continuous delay from the developer side. The developer asked for time for final 2 months to sort all the matter, however in early June, he informed that due to legal complications of erstwhile owners of the land, he is unable to provide the apartment as per the agreement and he suggested another apartment in the same complex instead. This was unacceptable to my in-laws and they asked for cancellation of the original agreement and refund of money with interest. The developer apparently agreed without committing to the timeline of the refund along with the actual interest amount he will actually pay. Now my question is, whether we need to have a paperwork in place to cancel the original agreement along with the amount (principal + interest) to be payable by him along with timeline. Given by his track record of adhering to deadlines, what is our legal option if he fails in honoring the timeline? Thanks
Asked 5 months ago in Property Law
Religion: Hindu
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9 Answers
Yes the agreement can be cancelled and he can demand principal and interest along with compensation from him. He can approach consumer court or civil court in the said matter. He can also file complaint for cheating to police if the intention of developer was to cheat him since inception
File complaint against builder before RERA on account of failure to complete construction of flat within stipulated period mentioned in agreement
seek orders to direct builder to refund your money with interest
Yes, if the Developer agrees then the terms of the refund must be put into writing.
Since in such refund agreement there are several issues of law including the time line and the consensualness of failure, it is wise to get such agreement drafted by an advocate.
Therefore, get in touch if you so want.
Dear Sir/Madam,
You are suggested to give a well drafted notice for cancellation of the agreement and refund of amount along with interest, compensation for damages, mental agony and harassment. If the same is not complied with by the builder, you may file a case before RERA or other competent authority as application.
Dear Client,
Your solution to the query is divided into two parts:
A. Part I
Essential Clauses to Include- You are right in framing a substituted agreement. The contract should be a tight-knit contract without any loopholes. Otherwise, the builder will seek an opportunity to take an undue advantage of the clause and delay the refund.
Following are the essential clauses:
1. Refund Amount and interest
State the total principal paid (₹50 lakhs) and the actual interest amount. As per Section 18 of Real Estate (Regulation and Development) Act, 2016, if a builder fails to deliver possession of a property within the agreed timeline, the buyer has the right to withdraw from the project. The buyer can claim a full refund of the amount paid, along with interest.
2. Compensation for defective title
In accordance with Section 18 of RERA, the promoter shall compensate the allottees in case of any loss caused to them due to a defective title of the land, on which the project is being developed or has been developed.The compensation rates range from 8 to 12 percent.
3. Timeline for Refund
Specify a clear deadline (e.g., “within 45 days from the date of agreement/cancellation”). It is the usual timeline as per the RERA Act.
4. Interest for Delay
If the developer fails to refund within the stipulated period, specify a higher penal interest rate for every day of delay. The interest to be paid for the delay (as per Real Estate (Regulation and Development) Act, 2016) is usually SBI’ Marginal Cost of Funds based Lending Rate + 2%. However, you can agree on enhanced rate in the contract.
5. Indemnity Clause
The developer indemnifies buyers against any further claims or liabilities related to the property.
6. Dispute Resolution
State that any disputes will be resolved under the jurisdiction of the local RERA authority or consumer court. I will not suggest arbitration here as it will take longer time and expenses. Courts generally adopt a lenient approach towards homebuyers.
7. Stamp Duty Refund
If stamp duty was paid, mention that you will apply for a refund as per government rules, attaching the cancellation deed.
8. NOC Clause
Mention that your in-laws do not waive any rights unless the full refund is made, and no NOC for the property will be issued until full settlement is complete.
B. Part II
In case, the builder fails to adhere to the renewed contract, you have the following legal recourse:
1. RERA Tribunal
According to Section 31 of RERA, homebuyers can file complaints against builders or real estate agents for delays or other violations. They may be penalized with a fine of up to 5% of the estimated project cost. If the builder continues to ignore RERA’s order, the matter is escalated to the Real Estate Appellate Tribunal (REAT).Failure to comply with these provisions may lead to severe penalties for the builder, including imprisonment for up to three years or a fine of up to 10% of the project cost. As per Section 29 of the RERA Act, 2016, the RERA Authority is required to dispose of complaints within 60 days from the date of filing.
2. Consumer Protection Act recourse
According to rulings by the National Consumer Disputes Redressal Commission (NCDRC), buyers can file for a refund if the possession of their property is delayed by more than one year (Narne Construction P. Ltd. etc. v. Union of India & Ors. AIR 2012 SC 2369- SC Case). Since the case is of more than 50 lakhs, you will need to file a complaint before the State Dispute Redressal Commission. The court is required to dispose of the case within 5 months.
Conclusion:
At this stage, I will suggest that you frame a contract for amicable resolution and speedy redressal. Please contact me for further queries or for framing a contract or filing the case.
- Since, your father-in-law has entered into an agreement with the said builder for the construction
- Further, if this agreement is registered then there must be a registered Cancellation deed
- Further, as there is fault on behalf of the builder , then your father-in-law can also claim compensation as well.
- He can issue a legal notice to the said builder for cancellation of the agreement and to refund the entire paid amount with interest and compensation for delay.
- As per the RERA Act, if the builder is delaying in construction & delay in possession, then the builder will have to pay 10% interest on the value of the property for delayed possession of flats.
