TNRERA rules builders cannot deny refund to buyers on cancellations

October 5, 2020: The Tamil Nadu Real Estate Regulatory Authority has ruled that developers cannot deny refund to homebuyers, if the latter cancel booking on their own since the builder failed to handover the apartment within the scheduled deadline. The realty regulator also observed that consumers cannot be expected to follow payment schedules in the event of poor progress in construction. The move is slated to help home-buyers.

In a recent order related to a housing project executed by Marg Properties Limited at Pondur in Sriperumpudur taluk on the outskirts of the city, the developer contended that allottees cannot claim interest or compensation had the homebuyers defaulted on making timely payment, according to the terms and conditions of construction agreement.

As per the agreement, the developer can terminate the agreement at his discretion, in the event of delay or default in payment of dues by the buyer. Further, the promoter has not issued any notice for termination of the agreement for delay or default in payment.

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The promoter is not liable to pay refund if homebuyers cancel booking on their own citing two orders of the MahaRERA and Supreme Court, the developer contended.

However, the TNRERA said that the respective homebuyer in the MahaRERA case withdrew from the project over lack of funds, while another developer did not commence construction in the case filed with the Supreme Court.

"The complainants (in this case) sought to cancel the booking only after the expiry of the due date for delivery of the flat. Nowhere, it is stated that there was lack of funds for which the complainants (homebuyers) sought to cancel the booking," TNRERA adjudicating officer G Saravanan said in the order. As far as the housing project titled 'Marg Brindavan' was concerned, the developer was able to raise the construction, but was unable to handover the flat as per the agreement of the contract. Therefore, the two cases were not relevant to facts of this case, the adjudicating officer added.

Further, the TNRERA pointed out that the two homebuyers were not withdrawing from the contract on their own, but for want of progress of the project. Under such circumstances, the argument of the promoter on the right of claiming interest or compensation by the purchaser was not acceptable, it added.

The state real estate regulator directed the developer to refund payment totalling Rs9 lakh with interest to the two complainants and slapped Rs 50,000 fine for causing mental agony and inconvenience to each of the complainant.

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