Developers who collect payments from home buyers without entering into a construction or sale contract are in violation of the TNRERA Act, according to the state property regulator.
The Tamil Nadu Real Estate Regulatory Authority (TNRERA) recently noted that partial payments with an "expression of interest" and a promise of refund or repayment were misleading and intended to circumvent legal proceedings.
The case in question involves "The Goodwood Residence" in the Cenotaph Road area of Chennai, developed by Cenotaph Developers LLP and Olympia Tech Park Chennai Pvt. Ltd.
The complainant's documentation stated that Rs 3.63 crore had been paid to the developers as part of a "non-binding expression of interest" for the purchase of an apartment in a housing project in 2016. A year later, the complainant decided to withdraw from the project and demanded compensation from the developer.
The developer, after deducting almost Rs 12.8 lakh as service taxes, returned Rs 3.5 crore. However, the complainant filed a complaint with TNRERA and demanded a refund of the amount withheld.
In their statements, the developers rejected the allegations, claiming that the complaint was not maintainable for lack of jurisdiction.
Collected 80% amount without entering into a sales agreement
TNRERA, after considering the views of both parties, ruled that the developers charged about 80% of the cost without entering into a sales or construction agreement. This is a clear violation of Article 13 of the RERA Act. In 2016, the developers received two checks of Rs 95 lakh from the complainant as "expressions of interest". G. Saravanan, the TNRERA Judge, noted that the receipt of the payment with a promise of compensation was intended to circumvent the legal procedure.
Furthermore, the developers failed to show that they provided taxable services to the complainant, which were registered with the tax authorities for the implementation of the specified payment related to the project. The complainant is thus entitled to the deductible amount together with an interest rate of 10.2%, as per the order of the real estate regulator.
Also read: