MahaREAT: Builders Cannot Seize Homebuyer's Funds Without Proving Loss
The Maharashtra Real Estate Appellate Tribunal has ruled that builders cannot forfeit homebuyer's money without establishing a genuine loss due to cancellation.
MahareraMahareatHomebuyer ProtectionReal Estate RegulationRera 2016Real Estate MaharashtraOct 06, 2024
The case involves homebuyers who jointly booked a flat in the builder's project named 'Avant Heritage,' located in Jogeshwari (East), Mumbai. The flat, with a carpet area of 417 sq. ft., was priced at Rs. 1,15,00,110/-. The homebuyers paid Rs. 13,50,000/- to the builder, who issued an allotment letter on 28th May 2019.
To finance their purchase, the homebuyers applied for a home loan from HDFC Bank. However, the bank rejected the application due to a missing signature of one homebuyer on the allotment letter. This administrative issue led the homebuyers to inform the builder that they could not proceed with the project and requested a refund of their money. Unfortunately, the builder did not refund the amount.
Legal Action
Aggrieved by the builder's actions, the homebuyers filed a complaint with the Authority under Section 18(1) of RERA, 2016, seeking a refund of Rs. 13,50,000/- with interest. In its order dated 12.01.2021, the Authority directed both parties to execute a registered agreement for sale within one month. Dissatisfied with this decision, the homebuyers appealed to the Tribunal.
Tribunal's Observations and Directions
The Tribunal noted that the builder's failure to execute a sale agreement after receiving more than 10% of the total consideration and subsequently demanding an additional Rs. 6,50,000/- was a clear violation of Section 13 of RERA, 2016. The Tribunal further observed that RERA, 2016, does not explicitly permit builders to forfeit earnest money when a booking is canceled by either the homebuyer or the builder.
The Tribunal emphasized that there must be a reasonable justification for forfeiting the amount paid by the homebuyers. Since no evidence was provided to show that the builder suffered any damages or losses due to the cancellation, the Tribunal found that forfeiting the entire amount without a valid reason was against the spirit of RERA, 2016.
Decision
Consequently, the Tribunal set aside the Authority's order dated 12.01.2021 and directed the builder to refund the amount paid by the homebuyers (Rs. 13,50,000/-) with interest.
Case Details
- Case Title Rajeshwari Ramesh Pillai & anr Versus Aishwarya Avant Builders LLP
- Citation Appeal No. AT00600000053392/21
The Maharashtra Real Estate Regulatory Authority (MahaRERA) is a statutory body established under the Real Estate (Regulation and Development) Act, 2016, to regulate the real estate sector in Maharashtra. It aims to ensure the rights and interests of homebuyers are protected and to promote transparency and accountability in the real estate industry.
The Maharashtra Real Estate Appellate Tribunal (MahaREAT) is the appellate body that hears and decides appeals against the decisions of MahaRERA. It ensures that the provisions of the RERA Act are effectively implemented and that disputes are resolved fairly and efficiently.
FAQs
1. What is MahaRERA?
- Answer MahaRERA, or the Maharashtra Real Estate Regulatory Authority, is a statutory body established to regulate the real estate sector in Maharashtra, ensuring transparency and protection of homebuyer interests.
2. Can a builder forfeit a homebuyer's money without proving a loss?
- Answer No, according to the recent ruling by the Maharashtra Real Estate Appellate Tribunal, builders cannot forfeit a homebuyer's money without establishing a genuine loss due to the cancellation of the booking.
3. What is the role of MahaREAT?
- Answer MahaREAT, or the Maharashtra Real Estate Appellate Tribunal, hears and decides appeals against the decisions of MahaRERA, ensuring that the RERA Act is implemented effectively and disputes are resolved fairly.
4. What should homebuyers do if a builder does not refund their money?
- Answer Homebuyers can file a complaint with MahaRERA under Section 18(1) of RERA, 2016, seeking a refund of their money with interest if a builder fails to refund the amount paid.
5. What is the significance of the recent MahaREAT ruling?
- Answer The ruling is significant as it reinforces the protection of homebuyers' rights and ensures that builders cannot unjustly retain funds without proving a legitimate financial loss due to cancellation.
Frequently Asked Questions
What is MahaRERA?
MahaRERA, or the Maharashtra Real Estate Regulatory Authority, is a statutory body established to regulate the real estate sector in Maharashtra, ensuring transparency and protection of homebuyer interests.
Can a builder forfeit a homebuyer's money without proving a loss?
No, according to the recent ruling by the Maharashtra Real Estate Appellate Tribunal, builders cannot forfeit a homebuyer's money without establishing a genuine loss due to the cancellation of the booking.
What is the role of MahaREAT?
MahaREAT, or the Maharashtra Real Estate Appellate Tribunal, hears and decides appeals against the decisions of MahaRERA, ensuring that the RERA Act is implemented effectively and disputes are resolved fairly.
What should homebuyers do if a builder does not refund their money?
Homebuyers can file a complaint with MahaRERA under Section 18(1) of RERA, 2016, seeking a refund of their money with interest if a builder fails to refund the amount paid.
What is the significance of the recent MahaREAT ruling?
The ruling is significant as it reinforces the protection of homebuyers' rights and ensures that builders cannot unjustly retain funds without proving a legitimate financial loss due to cancellation.
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