Punjab RERA Rules: Builder Cannot Unilaterally Charge Extra for Super Area

In a significant legal ruling, the Punjab Real Estate Regulatory Authority (RERA) has stated that builders cannot unilaterally charge homebuyers extra for any increase in carpet area or super area unless both parties have clearly agreed to it in the contract. This decision stems from a legal dispute between homebuyers from Rani Ka Bagh, Amritsar, and a builder based in Kalkaji, Delhi.

The homebuyers and the builder had initially signed an agreement specifying a carpet area of 139.17 square meters (1498 square feet), which was registered with the RERA Authority. However, when the flat was handed over, the builder charged for the super area (2570 square feet) instead of the carpet area. The homebuyers claimed that the builder had manipulated the RERA Model Agreement, increasing the rate from Rs 6,190 per square foot to Rs 7,056 per square foot, resulting in an overcharge of Rs 75 lakh (Rs 75,64,032) through misrepresentation and without legal authority.

Despite the builder's actions, the homebuyers ultimately lost the case in Punjab RERA. The RERA authority ruled that the builder could not have unilaterally charged for any increase in carpet area or super area unless those charges were agreed upon in the buyer's agreement. The homebuyers had neither adjusted the excess amount paid nor refunded the money for the extra 1072 square feet up until the date they took legal action.

The Punjab RERA authority emphasized that the homebuyers should have carefully read the terms and conditions before signing the agreement. In the builder-buyer agreement they executed, the total area to be sold, along with its rate and price per square foot and per square meter, was clearly and categorically mentioned. Punjab RERA stated that the homebuyers failed to show if the referred demand or charges were in derogation of the terms and conditions mentioned in the Form prescribed.

Punjab RERA also applied the principle of 'Caveat Emptor,' which means 'let the buyer beware.' They stated that the complainants (homebuyers) should have been vigilant about the terms and conditions duly mentioned in the agreement. The authority further noted that the homebuyers failed to demonstrate that the charges imposed by the builder were contrary to the prescribed rules and framework.

Under the RERA model agreement, there is no concept of 'super area,' nor can anything be charged based on super area or super structure. The RERA authority clarified that the model agreement provided in the Rules does not seek to take away the freedom of contract by putting restraints on it. Instead, it highlights the important and necessary contents of an agreement between the buyer and builder, ensuring clarity and transparency in a sale transaction.

The Punjab RERA authority also stated that the 'Form Q,' which is the model agreement for sale provided under the rules, requires that the total price for the apartment or plot based on the carpet area be clearly and distinctly mentioned. This includes a breakdown and clear description to clarify the breakdown of the consideration charged separately for the different areas to be sold.

The RERA authority further clarified that if there are any conflicting terms in the builder-buyer agreement compared to the Form Q of the model agreement, it does not violate RERA law. They emphasized that nothing can be charged for a unilateral increase in carpet area or super area if not agreed upon by the parties in the buyer's agreement, which must be in the form prescribed in accordance with Section 13(2) of the RERA Act.

RERA rules, 2017, providing the model agreement, seek to supplement Section 13(2) of the RERA Act, which requires the agreement to be in the form as may be prescribed. The builder-buyer agreement must specify the particulars of the project's development, including the construction of the building and apartments, specifications, internal and external development works, payment schedules, possession dates, and interest rates in case of default.

In their order, Punjab RERA partly allowed the homebuyers' complaint on the ground of delayed possession. They ordered the builder to pay interest from July 31, 2023, to January 18, 2024, using the State Bank of India's (SBI) highest Marginal Cost of Funds based Lending Rate (MCLR) plus 2%, after adjusting for any pending dues payable by the buyers.