MahaRERA Limits Developer Forfeiture to 2% for Pre-Agreement Cancellations

Pune, 17th June 2026: The Maharashtra Real Estate Regulatory Authority (MahaRERA) has ruled that developers cannot levy arbitrary or punitive forfeiture charges for pre-agreement cancellations. The authority reiterated that in the absence of a registered Agreement for Sale, developers can only deduct a maximum of 2% of the total unit cost as reasonable administrative expenses.

The ruling was delivered by Ravindra Deshpande, Member II of MahaRERA, in the case of Sanjay Ramesh Kadu v/s Gokhale Realty LLP (Complaint No. CC12400039). MahaRERA has directed the Pune-based developer, Gokhale Realty LLP, to refund the excess forfeited amount to the buyer within 30 days.

Background of the Dispute In October 2023, the complainant, Sanjay Ramesh Kadu, booked Flat No. 401 in Gokhale Realty’s residential project “Chandramapuri” located in Kothrud, Pune, for a total consideration of ₹1,60,00,000 (Rs. 1.60 crore). Kadu paid a booking amount of ₹40,00,000 (Rs. 40 lakh) via HDFC bank cheque. No formal Agreement for Sale was executed between the parties.

In December 2023, within the stipulated period, Kadu requested cancellation of the booking due to his wife’s dissatisfaction regarding sunlight, privacy, and proximity to an adjacent building. Under the developer’s booking terms, the firm claimed it was entitled to forfeit 10% of the booking amount (amounting to ₹4,00,000) and was obligated to refund the remaining 90% (₹36,00,000) within 60 days.

Delayed Refunds and Cheque Dishonour The complainant alleged that despite multiple follow-ups, the developer failed to adhere to the 60-day refund timeline. Instead, the developer refunded the ₹36,00,000 in five separate installments between June and August 2024. During this period, the complainant faced severe financial hardship, noting that one of the refund cheques issued by the developer was dishonoured and only cleared via RTGS after extensive follow-up.

Kadu subsequently filed a complaint with MahaRERA, seeking a refund of the forfeited ₹4,00,000 along with interest and compensation for the delayed refund and mental agony.

MahaRERA’s Verdict on Interest and Forfeiture In the final order dated June 16, 2026, MahaRERA addressed two critical aspects of the dispute: Statutory Interest Denied: MahaRERA declined the complainant’s request for statutory interest under Section 18 of the RERA Act. The Authority clarified that when an allottee voluntarily withdraws from a transaction prior to the execution of a registered Agreement for Sale, they cannot invoke Section 18 to claim interest or compensation.

The 2% Cancellation Cap Rule: The Authority focused heavily on the developer’s 10% booking-amount forfeiture clause. MahaRERA noted that under its established precedents (specifically Order No. 35/2022 and Order No. 60/2025), if a booking is cancelled at a pre-agreement stage, a developer may only retain a reasonable amount for administrative expenses, which is capped at 2% of the total unit cost.

The Mathematical Breakdown Total Flat Consideration: ₹1,60,00,000 (Rs. 1.60 Crore) Permissible 2% Deduction Capped by MahaRERA: ₹3,20,000 Amount Forfeited by Developer: ₹4,00,000 Excess Forfeiture Ordered to be Refunded: ₹80,000 (₹4,00,000 minus ₹3,20,000) MahaRERA ruled that Gokhale Realty LLP’s deduction of ₹4,00,000 was excessive. After adjusting the permissible 2% deduction (₹3,20,000), MahaRERA ordered the developer to refund the remaining ₹80,000 to Sanjay Kadu.

Final Directives MahaRERA has directed Gokhale Realty LLP to refund ₹80,000 to the complainant within 30 days of the order. Should the developer fail to pay within the stipulated time, they will be liable to pay interest on the amount at the State Bank of India’s Marginal Cost of Funds Based Lending Rate (SBI MCLR) plus 2% to the complainant from the date of the order until actual payment is made. No order was passed regarding litigation costs.