Last Updated on July 8, 2024 by Satish Mishra
Post is about forfeiture by builder of earnest amount while buying a unit in any project and what is the RERA rule regarding it. Let’s read.
There are many instances where Builders unilaterally cancel the allotment of unit and forfeit the money of home buyer.
The said practise of Builders has been done to cover up delay in possession and then they except home buyers to continue paying future payments.
Haryana Real Estate Regulatory Authority, Gurugram in notification dated 05.12.2018 clearly states that:
Also Read- Best of RERA Panchkula & RERA Punjab on LegalSeva
Forfeiture amount of the earnest money shall not exceed more than 10% of the consideration amount of the real estate: i.e. apartments/ plots / building as the case may be in all cases where the cancellation of the flat/unit/plot is made by the builder in a unilateral manner or the buyer intends to withdraw from the project and any agreement containing any clause contrary to the aforesaid regulations shall be void and not binding on the buyer.
Following view of the authority is based on various judgements reproduced below from the PDF:
Also Read- Decoding Haryana Rera Panckula Authority 2019
- The famous judgement quoted by various builders in forfeiture of amount is DLF Ltd. V/S Bhagwati Narula R.P No. 3860/2014 decided on 06.01.2015 by NCDRC.
“That only a reasonable amount can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him.”
- Another order of NCDRC is Kavita Sikka V/s Oasis Landmark LLP. and Anr. CC no. 2790 where 20% of sale consideration was deducted, upheld by S.C in order dated 05.2018 passed in Kavita Sikka V/s Oasis Landmark LLP. And Anr.
The law on forfeiture is if allottee/ complainant wishes to cancel/backout from an allotment, the developer/ respondent herein is entitled to forfeit the earnest money to an extent of ‘reasonable amount’ provided the developer/ respondent is to be show from evidence losses suffered by it.
Also Read- Rera Punjab Haryana Appeals at High Court Chandigarh
The respondent cannot forfeit in earnest money of more than 10%of total sale consideration of unit as per Regulation dated 05.12.2018
Same is upheld in complaint no. 1757 of 2018 vide order dated 10.04.2019 in Sh. Ankur Dhanuka V/s Godrej Projects Development Limited.
Further this view is confirmed in Mr. S.K Sharma V/S REO Realtech Pvt. Ltd. Complaint no. 90 of 2018 decided on 30.12.2019.
- Further in Shakti Singh V/s Bestech India Pvt. Ltd. Complaint no. 224 of 2018 decided on 19.03.2019, same view was upheld.
Also Read- Complaint in Rera for Cancellation of Unit
The RERA Act binds builder to return the money collected from the buyers within 45 days of such cancellation after deducting the booking amount.
Though the Act says promoter is liable to forfeit only the booking amount paid for the allotment.
Hence: Builder cannot keep more than 10% of Booking amount as per settled by HARYANA RERA Authority at Gurugram and Panchkula.
Also Read- Refund, Interest & Compensation in Rera
Rest for case specific advice call Top/ Best RERA Panchkula Lawyers. (More on 78883-56908)
