Claiming Refund if Property Handover Date is Delayed

Real estate developers often fail to handover the possession of properties to buyers, even though the buyers have paid the required amount. This may be due to various reasons like incomplete work, registration issues, legal issues, etc. However, all this has nothing to do with the buyer, who just wanted to buy a home and trusted the promoter with their money.

Besides, some individuals also get loans to make the payments requested by such promoters and developers. When they do not get the possession of the property as promised, they are simply stuck with huge debts and no property.

The question that arises in such scenarios where the promoter fails to hand over the possession is – whether the buyer can claim a refund of the money invested or not.

Well, we will be answering this query in this article for you; so, keep reading.

Need for RERA Act

The Real Estate (Regulation and Development) Act, 2016, commonly referred to as the ‘RERA Act’, was passed to boost the efficiency and transparency in the real estate sector and safeguard the interests of buyers.

Prior to the RERA Act being drafted, it was observed that builders often failed to deliver the possession on the promised date. While there were provisions to deal with such situations, they were not exactly efficient and could potentially lead to long-drawn cases, which led to even more expenses for buyers.

One of the key goals of the RERA Act is to provide a method of quick resolution of such disputes. As per Section 18 of RERA Act, the promoter shall be liable to return the amount paid by the buyer if the former fails to deliver possession on time or if they fail to fulfill any responsibilities stated in the Act or any of the rules and regulations mentioned thereunder.

When can Buyers Claim Refund?

Under Section 18 (1) of RERA Act, buyers are eligible to get a refund of the entire amount that they have paid for the property along with the apt interest and compensation if the promoter fails to:

• Provide possession as per the terms and conditions defined in the Agreement to Sell.
• Complete the project in the due time mentioned in the agreement.
• Deliver possession as a result of discontinuance of their business due to revocation of their project under this Act or any other reason.

Note: It is vital to note that Section 18 (1) gives the buyer two kinds of rights: Right to get a Refund with Interest, and Right to get Compensation.

Right to Refund under Section 18, RERA Act

Seeking a refund along with interest is a non-arguable, absolute right of the buyers. Section 18 grants buyers an unqualified right to receive a complete refund of the amount paid to the promoter along with interest at the predetermined rate if the promoter:

• Fails to complete the project.
• Fails to deliver possession as per the date specified in the sale agreement.

Before, when authorities dealt with refund cases, they used to link it with the property’s stage of construction and would usually refrain from passing a refund order taking the following into consideration: If the promoter had gotten the occupancy certificate, or If the construction had reached an advanced stage. However, it has now been legally deemed that the right of an allottee to seek a refund is simply unqualified and absolute. It has been clarified that this right is completely independent of contingencies and stipulations.

This has also been clarified by the Supreme Court in the case of Newtech Promoters and Developers Pvt. Ltd. vs the State of Uttar Pradesh, where the Court noted that the legislative intention and mandate is clear that Section 18 (1) is an indefeasible right of the allottee to get a return of the amount on demand, if the promoter is unable to handover possession in terms of the agreement for sale or fails to complete the project on the date specified in the agreement and the justification which the promoter wants to tender as his defense as to why the withdrawal of the amount under the scheme of the Act may not be justified appears to be insignificant and the regulatory authority with summary nature of scrutiny of undisputed facts may determine the refund of the amount that the allottee has deposited, while seeking withdrawal from the project, with interest, that too has been prescribed under the Act.

Interest for Delay in Delivering Possession

Under Section 18 (1), if the allottee is unwilling to withdraw from the project, they are eligible to receive interest for every month of delay till the promoter delivers the possession.

• The interest for the delay in delivering possession of the property cannot be denied on the grounds that no agreement to sell has been registered.
• In an order dated 17 June 2022, the Maharashtra Real Estate Appellate Tribunal stated that simply because the builder and buyer do not have a registered agreement, interest relief for delayed possession under Section 18 cannot be denied.
• If a formal agreement is not available, any document such as allotment letter, brochure, template, or email communication where the date of possession is mentioned can be used to calculate the delay in possession.

Right to Compensation under Section 18, RERA Act

In addition to the above-mentioned conditions of delayed delivery of possession, buyers are also eligible to seek compensation under Section 18 (2) and Section 18 (3) of the RERA Act.

The promoter shall be liable to pay the buyer compensation if:

• The buyer faces a loss due to defective title of land.
• The promoter fails to fulfill any of their obligations under the RERA Act or the rules and regulations stated thereunder.
• Promoter fails to fulfill the terms and conditions of the Agreement to Sell.

Note: The adjudicating officer, who shall be appointed by the Real Estate Regulation Authority in consultation with the government, has the right to determine the compensation amount. The buyer must file an application separately before the adjudicating officer as the authority cannot play a decisive role in matters of compensation.

Note: When handling compensation complaints, the adjudicating officer has the power to conduct an enquiry and direct the payment compensation and interest, as the case may be and such complaints are to be statutorily disposed of within 60 days, failing which the reasons are to be recorded.

Conclusion

Usually when buying a property, people invest all of their life’s savings in making that purchase. However, being stuck with neither the property nor the money, because the promoter failed to deliver the possession by the agreed upon date, leaves such buyers in despair.

The provisions stated in the RERA Act, especially Section 18, provide for quick redressal of such cases and provide the buyer with a refund and adequate compensation. Besides, it helps to ensure that buyers aren’t left with nothing and nowhere to go just because a promoter/builder failed to deliver the possession of their purchased property on time.