Can homebuyers be deprived of a refund under RERA?

While Section 18 of RERA Act clearly states that a homebuyer can seek refund and ought to be compensated for ‘undue’ delays in a project, experts said a withdrawal by a handful should not jeopardise completion of an entire project.

On January 9, MahaRERA set aside the plea of over 10 flat buyers who had wanted to exit from a project in Mumbai, stating that bulk withdrawal from the project may mean ‘jeopardising completion of the project’ and impact the remaining 500 home buyers.

The 13-odd buyers had booked units worth Rs 7.5 crore each in the 65-storey Island City Centre project in Dadar constructed Bombay Realty, an arm of The Bombay Dyeing & Manufacturing Company, way back in 2012. They had alleged that the builder had made ‘false assurances regarding amenities and made changes to the carpet area and overall layout of the project’.

"Keeping in mind the larger interest of approximately 520 allottees of the said project, allowing bulk withdrawal from the MahaRERA registered project to so many complainants at this stage would mean jeopardising the project completion. Money for the refund will have to be taken out from the separate account, which is meant specially for the completion of the project and would eventually slow down the progress of the project work especially at a stage where the project is nearing completion with more than 800 of the super structure work completed," the order said.

In October last year, the Haryana Real Estate Regulatory Authority (HRERA) had directed Supertech to refund the amount taken from the buyers of a housing project for cheating the buyers by accepting pre-launch booking before obtaining licences and not handing over the possession of the units on time.

The HRERA bench had ordered that the funds received by the respondent from the complainant by way of advance be refunded along with interest at the rate 10.45 percent per annum as 'he has cheated/defrauded the innocent buyers'.

Interestingly, Chairman of Gurugram Haryana Real Estate Regulatory Authority (HARERA) KK Khandelwal had also made it clear at a later date that in projects where construction is 40 percent complete, refund may not be allowed to ensure that the project is completed.

The purpose of RERA is to balance the interests and protect the rights of the key stakeholders: builders, buyers and agents. "But our first priority is to ensure that home buyers get possession of their homes."

While homebuyers are of the view that they are not responsible for pledging their money with the developer 'indefinitely' and that they have every right to seek a refund if the project has been ‘unreasonably’ delayed, builders are of the opinion that refund should not be ‘allowed’ to a few buyers, especially if construction is on, as that would harm the interests of other buyers and make the project ‘unviable’.

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