- RERA rules allow home buyers and developers to terminate a sales agreement in case of a default. They may also amend the agreement with written consent from both parties.
- In case of project delays, the buyer can cancel the agreement and claim a refund along with interest. Or only interest, if they choose to stay invested.
- The rules also mandate that the total price of the apartment/plot shall be escalation free except when development charges are increased by the competent authorities
DELHI: Under the Centre’s Real Estate (Regulation & Development) Act 2016, home buyers and real estate developers can choose to terminate the sales agreement in case of a default by the other party.
Under the rules for Union Territories, which were notified on 31st October, 2016 – the sales agreement will mandatorily have to specify the date of delivery of possession to buyer and a schedule of payment as agreed upon by both parties. Violation of either of these commitments can be treated as default. The agreement can, however, be amended with the written consent of both the home buyer and the developer.
If a homebuyer repeatedly defaults on the mandated payments or has defaulted on payments for a specified number of months, the real estate developer can terminate the agreement and cancel the allotment made to the buyer. The booking amount and any interest liabilities can then be recouped by the developer from the amount due to the buyer.
On the other hand, if the developer fails to give ready-to-move in possession of the apartment on time, the buyer can terminate the agreement and claim a refund of the paid amount, along with interest, within 45 days of terminating the agreement. In case the home buyer chooses to remain invested in the project, he will be entitled to interest until the project is completed.
This will not apply if the development of project is delayed by Acts of God, like war, floods, cyclone, drought, etc. which are beyond the control of promoter
The rules also mandate that the total price of the apartment/plot shall be escalation free except when development charges are increased by the competent authorities. This will come as a major relief for homebuyers who have often complained about developers unilaterally increasing the price of an apartment, beyond the agreed upon price.
But developers also have a lot to cheer about, with the RERA rules containing provisions of timely payment as per the payment schedule, interest in case of delay in payments by buyer and additional payments for increase in carpet area up to 3% of the area originally offered to buyer.
The ministry of Urban Development is working on notifying RERA rules for the National Capital Region of Delhi while the state governments are required to notify the rules for application in their respective states. The states of Gujarat and Uttar Pradesh have already notified the rules, with the others expected to follow suit by the end of November.