Can a homebuyer seek full refund of booking amount in case of job loss?

Representational image.

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has allowed a homebuyer, who cited loss of his job to exit from a real estate project, to claim refund from the developer.

The homebuyer had paid close to 10 per cent of the booking amount for a flat that cost Rs 40.87 lakh. He expressed his inability to complete the purchase citing job loss.

Also read: Top 5 Maharashtra Real Estate Regulatory Authority orders in 2022

The case

The complainant homebuyer had booked an apartment in the Godrej Park Greens project of Godrej Properties being constructed under the name of Godrej Skyline Developers in Pune. The apartment was allotted in April 2019 and the homebuyer had paid close to 10 per cent of the total cost of Rs 40.87 lakh.
In August 2019, the homebuyer lost his job and faced a serious financial crisis. He informed the developer of his inability to pay the stamp duty, and registration fee, but the developer continued to emphasise that his allotment would be terminated, said the MahaRERA order in this context.

According to the order, in November 2019, the homebuyer received a pre-termination letter from the developer, to which he replied and requested a refund of the money paid by him towards the said booking. However, the developer informed him that the said allotment is terminated and that the money paid would be forfeited in accordance with the terms of the booking.

Related stories

Mehul R Thakkar

Special Correspondent|Moneycontrol

• 
  New players have entered Mumbai real estate market and we welcome their presence: Abhishek Lodha
• 
  Mumbai real estate market records 9% rise in property registrations this month
• 
  MahaRERA tells developers to declare parking space details to homebuyers

Then, the homebuyer approached MahaRERA citing loss of job. In December that year, the COVID-19 broke out, and his financial situation deteriorated. In fact, he has not been able to land a job till now, said the order.

Also read: Maharashtra tribunal orders developer to pay interest to homebuyers for 32-month delay

MahaRERA arguments

The homebuyer approached MahaRERA for refund of the entire booking amount paid by him under the provisions of RERA. The homebuyer, in the complaint, said he is seeking withdrawal from the project due personal reasons (viz. loss of his job ) and did not cite any violation of RERA provisions by the developer.

The developer, at the MahaRERA, pointed out that despite sufficient time being given to the homebuyer, neither did he pay the remaining amount nor the government dues needed for registration of the agreement for sale. The developer alleged that the complainant wanted a higher configuration than the allotted configuration.

Therefore, it is incorrect to say that he is unable to pay. Hence, the developer cancelled the allotment and forfeited the amount paid by the complainant as per the terms of the application form read with the allotment letter, said MahaRERA in the order citing arguments from both parties.

MahaRERA order

MahaRERA, in its order, allowed the homebuyer to exit the project along with partial refund. MahaRERA allowed the developer to forfeit 2 per cent of the amount.

In the order, MahaRERA said, "MahaRERA is of the view that the forfeiture clauses mentioned in the said booking application form/allotment letter provide that upon cancellation of the said flat, the promoter is entitled to forfeit the entire booking amount (i.e. 5 percent) amount of the total consideration of the said flat. Such forfeiture clause as mentioned in the booking application form/allotment letter appears to be unreasonable, after commencement of RERA and even it does not seem to be in consonance with the recent MahaRERA order."

The order added, "The respondent (developer) is directed to refund the money paid by the complainant (homebuyer) towards the consideration of the said flat, i.e. Rs 4.27 lakh (by deducting the tax/statutory dues/brokerage, if any) by forfeiting 2 per cent of the total consideration amount of the said flat booked by the complainant."

In an email response to Moneycontrol, Godrej Properties spokesperson said, "The MahaRERA held that Joy Salve (homebuyer) has not alleged any violation of the RERA by us and in the absence of any violation, if the allottee wants to withdraw from the project then the withdrawal/cancellation shall be governed by the booking application form/allotment letter. Despite the same, the MahaRERA relied upon the MahaRERA’s subsequent office order dated 12th August, 2022 as per which the developer can forfeit only up to 2% of the total consideration."

The spokesperson added, "The MahaRERA has not appreciated that the termination of the allotment on 12th December, 2019 is clearly prior to the said MahaRERA’s office order. We have filed appeal challenging the said order dated 27th October, 2022 , and the matter is sub judice before the Appellate Tribunal, we are confident of our merits in the matter.”

Also read: MahaRERA directs homebuyers of delayed Mumbai project to exit only after completion

Job loss cannot be a reason for full refund

Suhail Ahmed Khilji, a property lawyer based out of Mumbai, told Moneycontrol, "The order passed by MahaRERA is well within the law, as personal reasons (loss of job or any other similar reason) cannot be a ground to refund the entire amount and carving out an exception to MahaRERA Order No. 35/2022. "

He added, "If such an exception is made for job loss today, then tomorrow there will be someone else asking for a similar exception and there will be no end to such things. Also, carving out such an exception will be beyond the realm of RERA and beyond the scope and power of the MahaRERA Authority."