The Maharashtra Real Estate Regulatory Authority (MahaRERA) has clarified that homebuyers can seek a refund if substantial disputes arise regarding changes to a property’s layout and design after booking, particularly when such changes lead to a complete breakdown of the contractual relationship between the parties.
MahaRERA found that the complainants were entitled to a refund of the whole sum paid to the developer, along with interest, excluding payments paid towards taxes, stamp duty, registration fees and other statutory costs paid to government bodies.
The authority directed the developer to repay the sum paid by the homebuyers, together with appropriate interest, within 60 days of the order.
In its order, MahaRERA stated that the contractual connection between the parties had “irretrievably broken down” and that neither side was willing to proceed with the transaction. It emphasized that compelling either party to continue with the agreement for sale would not serve the aims of justice nor achieve the objectives of the Real Estate (Regulation and Development) Act. Accordingly, it held that the complainants were entitled to seek remedies under Section 18 of the Act.
The situation
The MahaRERA verdict came in a case involving purchasers who had booked a bungalow in Mumbai in July 2021 for a total consideration of over ₹2 crore. The purchasers executed a registered agreement for sale in December 2021 and paid around ₹50 lakh towards the acquisition. The possession of the bungalow was scheduled for June 30, 2023.
However, arguments emerged between the parties concerning alleged alterations to the bungalow’s layout and design, a reduction in its built-up area, modifications to the parking configuration, and pledges supposedly given by the developer regarding compensation and restoration of parking access. “Design changes and other changes were disclosed only shortly before execution of the agreement for sale, and they proceeded with the registration of the agreement solely on the basis of assurances extended by the developer regarding restoration of parallel parking access and compensation for the reduction in area,” the homebuyers informed MahaRERA.
The homebuyers opted to cancel the agreement in August 2022 following difficulties relating to the project. According to the homeowners, the developer initially agreed to repay the entire amount within 90 days but subsequently presented a staggered payment schedule and delayed the refund. They further said that the developer issued forced demand notices and sought the signing of a cancellation deed, citing termination reasons they regarded false, and that they declined to sign it.
Developer’s defence
In their answer to MahaRERA, the developer alleged that the homebuyer had defaulted on payment commitments under the bungalow purchase agreement. “All changes were duly disclosed, were necessitated by statutory approvals, and the complainants voluntarily executed the agreement with full knowledge of the final specifications,” the developer told MahaRERA.
The developer maintained that the complainants were bound by the provisions of the registered agreement for sale and could not subsequently question the layout and specifications after having inked the agreement.
The developer also contended that the homebuyers’ dispute against the reduction in built-up size was untenable, as the agreement was based on the carpet area and plot area, with no contractual certainty regarding the built-up area. According to the developer, the homebuyers were attempting to raise issues beyond the scope of the agreement.
In its application to MahaRERA, the developer argued that all alterations to the layout and design were necessary by regulatory requirements and approvals issued by relevant authorities. It argued that the alterations were legitimate, adequately disclosed, and permissible under the terms of the agreement for sale. Accordingly, the developer maintained that no evidence of misrepresentation or breach of the RERA Act had been made out.
MahaRERA’s ruling
The MahaRERA, in its order, observed that the record reveals arguments had emerged between the parties regarding the amended layout, parking configuration, and related promises, which finally led in the dissolution of the contractual relationship.
“It is further evident that the respondent had itself agreed, in principle, to cancel the transaction and refund the amounts received from the complainants, however, the cancellation could not be concluded owing to disagreements regarding the terms and recitals of the proposed cancellation documents,” the MahaRERA said. “After considering the aforementioned observations, provisions of the Act, facts of the case, submissions of both the parties and the materials placed on record by both the parties, the Authority hereby concludes that the developer is in violation of the provisions of the Act and the complainants are entitled to claim refund along with interest on the total amount paid to the developer (excluding amounts paid towards taxes and other charges such as stamp duty, registration fees and such other amounts paid to statutory authorities),” the MahaRERA said in the order.
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