Advance token price for flat not returned by House Broker in Mumbai
2 months ago
I paid a token of half month rent for a flat in Mumbai early this month. But due to an unforeseen circumstances, I refrained from quickly signing rental agreement and instead requested the broker to get postponed the lease agreement to be applied at the later half of that month when I can move into the flat. But 5 days after paying the token price, when I enquired the broker for signing of lease agreement with the homeowner, the broker said that the owner had turned down my request that the agreement be applied at the later half of the month and that the flat was given to someone else as the owner couldn't bear the loss of the intervening five days rent, and therefore had unilaterally canceled my token. This happened inspite of my repeated enquiries made to the broker as to whether the had owner agreed to my request and indoite of repeatedly getting no answer to my enquiries from him. I then asked my token amount to be paid back but that too the broker denied me by saying that the token amount is non-refundable, as it is the practice in the locality of the flat he said. Now within a span of ten days since the payment of token for flat, I have lost the flat and my token money for the flat as well. Should I go and file a complaint to the police? or how do i tackle the problem in any other way? Please advice me as i am in dire need of your help.
A.Dear Client,
Since the implementation of the Real Estate (Regulation and Development) Act, 2016, it is mandatory for all real estate agents to register under Section 9 of the Act. The activities of real estate agents are governed by Section 10. If your agent is registered under RERA, you can file a complaint for unfair trade practices with the Adjudication Officer of Maha RERA under Section 31, provided you have sufficient evidence of financial transactions. If the agent is not registered, serving a legal notice is the first step, followed by filing a complaint with the police and initiating a criminal suit for cheating under Section 415 of the IPC. Seeking guidance from a lawyer is recommended for the proper course of action.
Since the implementation of the Real Estate (Regulation and Development) Act, 2016, it is mandatory for all real estate agents to register under Section 9 of the Act. The activities of real estate agents are governed by Section 10. If your agent is registered under RERA, you can file a complaint for unfair trade practices with the Adjudication Officer of Maha RERA under Section 31, provided you have sufficient evidence of financial transactions. If the agent is not registered, serving a legal notice is the first step, followed by filing a complaint with the police and initiating a criminal suit for cheating under Section 415 of the IPC. Seeking guidance from a lawyer is recommended for the proper course of action.
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A.Dear Sir,
Builders and Developers – How to Recovery Advance paid to them
INTRODUCTION:
The concept of advance payment or deposit is part of a contractual relationship between a buyer and a seller in transferring immovable property. However, it differs from security money, which generally indicates a buyer's interest in said property. It is considered part of a 'purchase money', the due amount of which is supposed to be paid on a future date, complying with the agreement signed between the parties.
LEGAL RIGHTS OF PROSPECTIVE BUYER
Referring to the buyer's right under property law, a prospective buyer, under section 55(6)(b) of the Transfer of Property Act, 1882, is entitled to a charge on the property against the seller or anyone claiming it under him, for the amount of purchase money (advance deposit) paid by him as part of the sale agreement. Therefore, when the buyer has not defaulted or breached any terms of the contract thereof, he has all the rights to use legal remedies available to protect his rights against a seller, i.e., builder/contractor, to claim their money (advance payment) back or ask for specific performance if possible.
LEGAL RIGHT OF BUYER TO CLAIM COMPENSATION
In addition, as per section 21 of the Specific Relief Act, the party who suffers from a breach of a contract by any means is entitled to receive compensation for any loss incurred by the damages caused to him by the party who is at fault or broken a contract as a pecuniary compensation due to a breach or loss. In such instances where the seller or contractor refuses to fulfil contractual obligations, a buyer can also charge him for a penalty if a penalty clause is inserted in an agreement.
MODES OF MISUSING THE ADVANCE AMOUNTS BY THE BUILDERS OR DEVELPERS
The cases of payment fraud by the side of builders or developers are prevalent by several means, such as
● Delaying the possession of the property beyond a reasonable time.
● Using advance payment or deposit money for new projects or personal use.
● By misrepresentation, where the property does not meet promised specifications,etc.
The purview of applicable laws is explained hereunder:
RELEVANT ACTS
The Indian Contract Act, 1872
The primary provisions of law regulating advance deposit or earnest money are sections 73 & 74 of the Contract Act. As per the general rule of the contract, if a party infringes the terms of a contract by any means, the buyer has the right to cancel the contract and obtain a refund of the advance deposit along with interest and compensation for any loss incurred. Hence, a buyer of the property under a valid contract is safeguarded under this Act.
The Specific Relief Act, 1963
Under section 20 of the Specific Relief Act, a defaulting party under the terms of a contract can be held liable to perform precisely what has been mentioned in the contract. Therefore, in the instances where a buyer is cheated by a builder/developer of a property and if a builder takes an unfair advantage by which the buyer has extreme hardship, the Court in such cases may exercise discretion in granting specific performance as a relief to a defendant/buyer.
The Consumer Protection Act, 1986 and the Indian Penal Code, 1860
Consumer courts have imposed huge penalties in various matters and assured that the possession of the flat or property is handed to a prospective buyer at the earliest or the entire amount is refunded along with interest and compensation. In cases where the builder has cheated, or the developer has made false promises, the buyer can file a criminal case under the Indian Penal Code, 1860, for cheating, breach of contract, or delivery of poor-quality construction. He can also file a consumer complaint regarding deficiency of services, delay in possession, or non-delivery of property/flat.
The Real Estate (Regulation and Development) Act, 2016, and RERA (Real Estate Regulatory Authority)
The interest of home/property buyers is protected under this Act regarding safeguarding their rights where they can file a complaint against the builder or a developer. Under the RERA Act, a minimum of 70% of the buyer's money will be kept in a separate escrow account that will ensure that the fundscollected for a particular real estate project arenot diverted to other projects undertaken by the builder/developer. However, builders cannot ask for more than 10% of the property's value as an advance payment before the sale agreement is signed. It also states that claiming a refund of the payment or an advance deposit is an exclusive right of a buyer. Thus, in instances where a builder or developer has cheated or violated the terms of a contract causing any loss or inconvenience to a buyer, a buyer is eligible to claim an advance deposit made by him with interest or a full refund with interest post the due date for up to 10% every month until handing over the property. The methods you can use as buyers as a remedy to take legal action against a seller or a builder are mentioned below.
LEGAL METHODS FOR RECOVERY OF ADVANCE PAID
Send a legal notice
Sending a legal notice to a seller or builder is theforemost step in any property dispute,whether for payment recovery or for a specific performance where alegal breach of a contractual relationship has occurred. A lawyer or an attorney dealing with a property dispute or contract lawyer can assist in drafting a proper legal notice describing the appropriate grounds and reasons for it. If the builder refuses or doesn't respond within the stipulated time of sending such notice, he can take the next legal step in the procedure.
File a complaint under RERA
First, a buyer must check if the builder is registered under RERA. If yes, he can easily file a complaint online on the registered portal of RERA to raise a complaint against the seller to obtain relief and to claim a refund or advance payment.
Moving to a Consumer Forum
A buyer can also approach a consumer court to file a complaint against the seller for a criminal breach of trust or fraud. In addition, Consumer courts have ordered exemplary compensation like 65 lakhs and 18% interest compensation. In the matter of Unitech, Jaypee group was penalized with a 12% annual penalty for its NOIDA project.
Court Precedent
Videocon Properties Ltd. v. Dr Bhalchandra Laboratories and Others [(2004) 3 SCC 711]
In this case, the Supreme Court examined the nature of the advance deposit. The Court took the view that the words used in the agreement alone would not be determinative of the character of the "earnest money", but the intention of the parties and the surrounding circumstances must be considered to know whether an initial payment is an essential advance deposit.
Conclusion
When the contract contains a clause as to what is to be done with the advance deposit in the event of a breach of contract, the Court must be guided by the terms of the contract. Hence, the advance deposit will be refunded in case of non-compliance with the contract by the seller or builder. Additionally, when a buyer invests in a project approved by RERA, their rights as a buyer are secured. RERA ensures legal compliance and possession timings. Also, a buyer can claim an advance payment made to a builder as a booking amount if his loan application is dishonoured for any reason. One must know that the government lays out no rules or conditions regarding the cancellation of the house or refund the booking amount. It is subjective to your understanding of your builder or developer. So, the advance payment can be recovered in such cases, but a buyer might have to pay a cancellation fee, as mentioned by a builder in the agreement. If a buyer has not maintained the documents or documented the property purchase, he may not be able to get the refund. In this case, one can consider taking legal advice.
*****
Builders and Developers – How to Recovery Advance paid to them
INTRODUCTION:
The concept of advance payment or deposit is part of a contractual relationship between a buyer and a seller in transferring immovable property. However, it differs from security money, which generally indicates a buyer's interest in said property. It is considered part of a 'purchase money', the due amount of which is supposed to be paid on a future date, complying with the agreement signed between the parties.
LEGAL RIGHTS OF PROSPECTIVE BUYER
Referring to the buyer's right under property law, a prospective buyer, under section 55(6)(b) of the Transfer of Property Act, 1882, is entitled to a charge on the property against the seller or anyone claiming it under him, for the amount of purchase money (advance deposit) paid by him as part of the sale agreement. Therefore, when the buyer has not defaulted or breached any terms of the contract thereof, he has all the rights to use legal remedies available to protect his rights against a seller, i.e., builder/contractor, to claim their money (advance payment) back or ask for specific performance if possible.
LEGAL RIGHT OF BUYER TO CLAIM COMPENSATION
In addition, as per section 21 of the Specific Relief Act, the party who suffers from a breach of a contract by any means is entitled to receive compensation for any loss incurred by the damages caused to him by the party who is at fault or broken a contract as a pecuniary compensation due to a breach or loss. In such instances where the seller or contractor refuses to fulfil contractual obligations, a buyer can also charge him for a penalty if a penalty clause is inserted in an agreement.
MODES OF MISUSING THE ADVANCE AMOUNTS BY THE BUILDERS OR DEVELPERS
The cases of payment fraud by the side of builders or developers are prevalent by several means, such as
● Delaying the possession of the property beyond a reasonable time.
● Using advance payment or deposit money for new projects or personal use.
● By misrepresentation, where the property does not meet promised specifications,etc.
The purview of applicable laws is explained hereunder:
RELEVANT ACTS
The Indian Contract Act, 1872
The primary provisions of law regulating advance deposit or earnest money are sections 73 & 74 of the Contract Act. As per the general rule of the contract, if a party infringes the terms of a contract by any means, the buyer has the right to cancel the contract and obtain a refund of the advance deposit along with interest and compensation for any loss incurred. Hence, a buyer of the property under a valid contract is safeguarded under this Act.
The Specific Relief Act, 1963
Under section 20 of the Specific Relief Act, a defaulting party under the terms of a contract can be held liable to perform precisely what has been mentioned in the contract. Therefore, in the instances where a buyer is cheated by a builder/developer of a property and if a builder takes an unfair advantage by which the buyer has extreme hardship, the Court in such cases may exercise discretion in granting specific performance as a relief to a defendant/buyer.
The Consumer Protection Act, 1986 and the Indian Penal Code, 1860
Consumer courts have imposed huge penalties in various matters and assured that the possession of the flat or property is handed to a prospective buyer at the earliest or the entire amount is refunded along with interest and compensation. In cases where the builder has cheated, or the developer has made false promises, the buyer can file a criminal case under the Indian Penal Code, 1860, for cheating, breach of contract, or delivery of poor-quality construction. He can also file a consumer complaint regarding deficiency of services, delay in possession, or non-delivery of property/flat.
The Real Estate (Regulation and Development) Act, 2016, and RERA (Real Estate Regulatory Authority)
The interest of home/property buyers is protected under this Act regarding safeguarding their rights where they can file a complaint against the builder or a developer. Under the RERA Act, a minimum of 70% of the buyer's money will be kept in a separate escrow account that will ensure that the fundscollected for a particular real estate project arenot diverted to other projects undertaken by the builder/developer. However, builders cannot ask for more than 10% of the property's value as an advance payment before the sale agreement is signed. It also states that claiming a refund of the payment or an advance deposit is an exclusive right of a buyer. Thus, in instances where a builder or developer has cheated or violated the terms of a contract causing any loss or inconvenience to a buyer, a buyer is eligible to claim an advance deposit made by him with interest or a full refund with interest post the due date for up to 10% every month until handing over the property. The methods you can use as buyers as a remedy to take legal action against a seller or a builder are mentioned below.
LEGAL METHODS FOR RECOVERY OF ADVANCE PAID
Send a legal notice
Sending a legal notice to a seller or builder is theforemost step in any property dispute,whether for payment recovery or for a specific performance where alegal breach of a contractual relationship has occurred. A lawyer or an attorney dealing with a property dispute or contract lawyer can assist in drafting a proper legal notice describing the appropriate grounds and reasons for it. If the builder refuses or doesn't respond within the stipulated time of sending such notice, he can take the next legal step in the procedure.
File a complaint under RERA
First, a buyer must check if the builder is registered under RERA. If yes, he can easily file a complaint online on the registered portal of RERA to raise a complaint against the seller to obtain relief and to claim a refund or advance payment.
Moving to a Consumer Forum
A buyer can also approach a consumer court to file a complaint against the seller for a criminal breach of trust or fraud. In addition, Consumer courts have ordered exemplary compensation like 65 lakhs and 18% interest compensation. In the matter of Unitech, Jaypee group was penalized with a 12% annual penalty for its NOIDA project.
Court Precedent
Videocon Properties Ltd. v. Dr Bhalchandra Laboratories and Others [(2004) 3 SCC 711]
In this case, the Supreme Court examined the nature of the advance deposit. The Court took the view that the words used in the agreement alone would not be determinative of the character of the "earnest money", but the intention of the parties and the surrounding circumstances must be considered to know whether an initial payment is an essential advance deposit.
Conclusion
When the contract contains a clause as to what is to be done with the advance deposit in the event of a breach of contract, the Court must be guided by the terms of the contract. Hence, the advance deposit will be refunded in case of non-compliance with the contract by the seller or builder. Additionally, when a buyer invests in a project approved by RERA, their rights as a buyer are secured. RERA ensures legal compliance and possession timings. Also, a buyer can claim an advance payment made to a builder as a booking amount if his loan application is dishonoured for any reason. One must know that the government lays out no rules or conditions regarding the cancellation of the house or refund the booking amount. It is subjective to your understanding of your builder or developer. So, the advance payment can be recovered in such cases, but a buyer might have to pay a cancellation fee, as mentioned by a builder in the agreement. If a buyer has not maintained the documents or documented the property purchase, he may not be able to get the refund. In this case, one can consider taking legal advice.
*****
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Helpful
Share
A.Dear Client,
After the enactment of the Real Estate (Regulation and Development) Act, 2016, all real estate agents are mandatorily required to register themselves with the RERA under Section 9 of the Act and the functions or activities in the real estate business are regulated under Sec.10 of the said Act. If your so-called agent is a registered agent under RERA, then you can lodge a complaint against him for unfair trade practice before the Adjudication Officer of Maha RERA under Section 31 of the Act for a resolution in the matter provided you possess sufficient evidence of financial transactions made with him. Otherwise, serving a legal notice to the agent, you have to lodge a complaint against him with the police and file a criminal suit against him for cheating under Sec.415 of IPC. Reach out to an Advocate for guidance and steps.
After the enactment of the Real Estate (Regulation and Development) Act, 2016, all real estate agents are mandatorily required to register themselves with the RERA under Section 9 of the Act and the functions or activities in the real estate business are regulated under Sec.10 of the said Act. If your so-called agent is a registered agent under RERA, then you can lodge a complaint against him for unfair trade practice before the Adjudication Officer of Maha RERA under Section 31 of the Act for a resolution in the matter provided you possess sufficient evidence of financial transactions made with him. Otherwise, serving a legal notice to the agent, you have to lodge a complaint against him with the police and file a criminal suit against him for cheating under Sec.415 of IPC. Reach out to an Advocate for guidance and steps.
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Helpful
Share
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