MahaRERA Orders Refund to Homebuyer, Cites RERA Violation
Experts suggest that an increasing number of real estate developers might face circumstances akin to the recent ruling, particularly concerning forfeited amounts exceeding legal limits due to booking cancellations.
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has instructed Godrej Greenview Housing Private Limited, a subsidiary of Godrej Properties, to reimburse a homebuyer after they cancelled booking for a property valued at Rs 92 lakh in the Godrej Emerald project, located in Thane near Mumbai. MahaRERA stipulated a deduction of only 2% instead of the initially forfeited 5%.
Case Background
In June 2019, Ajit Dabhade, the buyer, made an initial payment of Rs 5 lakh as earnest money for a flat priced at Rs 92.17 lakh. However, Dabhade chose to cancel the reservation because of difficulties in securing the promised loan to cover registration and stamp duty expenses. Consequently, Godrej Properties forfeited the entire amount paid by Dabhade.
In response to Dabhade's complaint, MahaRERA directed the developer to deduct merely 2% of the flat's overall consideration value; as a result, the homebuyer would receive a refund of the remaining funds.
Dabhade stated that his inability to obtain the full loan amount as initially assured made it challenging for him to proceed with the purchase. Consequently, Dabhade opted to cancel, leading to the forfeiture by Godrej Properties, despite the developer presenting an amnesty program in 2021 intended to alleviate the interest payable.
MahaRERA's Ruling
MahaRERA, in its ruling dated March 11, 2024, deemed the developer's forfeiture of the entire amount as unlawful, referencing provisions outlined in the Real Estate (Regulation and Development) Act, 2016 (RERA).
While the booking application form allowed forfeiture of up to 5%, the authority clarified that Godrej Properties' actions exceeded legal boundaries.
"Upon cancellation of the booking, the developer forfeited all the funds remitted by the buyer, exceeding 5% of the flat’s total consideration value. As per the booking application form dated June 22, 2019, the developer forfeited this amount. Nevertheless, according to the RERA’s provisions, the developer’s forfeiture of this amount– exceeding 5% of the flat’s total consideration – is not justified," the MahaRERA order stated.
MahaRERA reinforced its prior order from August 2022, permitting a maximum forfeiture of 2% for homebuyers opting to cancel. The authority clarified that Godrej Emerald, along with other registered projects, are subject to its directives retroactively.
As a result, Godrej Greenview Housing Private Limited has been granted 45 days from the receipt of the order to reimburse Dabhade, deducting no more than 2% of the flat’s total value.
Godrej Properties did not provide a response to an email requesting their comments on the matter.