How to get compensation from builder under RERA act?


Posted On : June 30, 2020
How to get compensation from builder under RERA act?
When there is a default on the part of builder and does not comply with agreement terms then the Home buyer can seek for compensation for defaults of Builder/Developer under sec.18 of Rera Act.
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Under sec.18 of the RERA act, If the Builder fails to complete and handover the possession of an apartment, plot or building on an agreed date under the terms of agreement, as the case may be and on such default of the builder the allottee/s have the right either to continue with the project and seek for delay compensation from the builder for the number of days delayed by the builder in handing over the possession of the apartment plot or building. (Handing over means & includes completion and occupancy certificate for the building/project). Or in the alternative to seek for cancellation and refund of the amount with interest at the rate of SBI Highest Marginal rate of lending plus 2% on the amount paid by the allottee/s till the date of payment.

(When the payments are made on different dates the calculation will be from the date of payment and on the amount paid.)

Karnataka Rera Rules, 2017 prescribes that the builder/developer is liable to oblige the order passed under sec.18 within a period of 60 days from the date of order.

Further Rule 25 & 26 prescribes that if the builder/developer has failed to make the payment under sec.18 read with rule 15 &16 of the execution of the order passed by the Adjudicating officer & Real Estate Appellate tribunal shall be executed as per the procedure of law.

If the allottee/s does not intend to withdraw from the project, allottee/s shall be entitled for interest for every month of delay till the date of handing over of possession.

The allottee/s shall be entitled for the above reliefs whenever there is a default of builder may be for the reasons like discontinuance of the business as developer due to suspension or revocation of registration under the act or for any other reasons (Except FORCE MAJEURE EVENTS)

The allottee/s are entitled for compensation in case where the project lan suffers defective land title. Whenever there is a defect in the land title then also the project allottee/s or home buyers in the project are entitled for compensation from the builder/developer of the project.

If the promoter fails to perform his part of obligations under the provisions, rules & regulations of this act or fails to perform his obligations under the terms of agreement entered between the builder/developer & allottee/s then the allottee/s shall be entitled for the relief of compensation.

Sec.18 of RERA act is compensatory in nature & not a penalty imposed on the builder/developer. As a measure of protection an allottee/s can have compensation only from the builder for the defaults.


For seeking the compensation from the builder under this provision of the act, allottee/s will have to file a complaint before the RERA Adjudicating officer as per FORM ‘O’ [See sub-rule (1) of rule 30] APPLICATION TO ADJUDICATING OFFICER- Claim for compensation under section 31 read with section 71. If the allottee/s fails to get the proper & reasoned order from Adjudicating officer under the above mentioned provision. The allottee/s can appeal the order passed by the Adjudicating officer before the RERA Appellate Tribunal as per FORM-R [See sub-rule (2) of rule 33] APPEAL TO APPELLATE TRIBUNAL - Appeal under section 44 of the Act within 60 days from the date of order passed by the Adjudicating officer an seek for the reliefs in appeal.


Sec.18. reads as under -

(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,—

(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.

(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.


KARNATAKA RERA RULES WITH RESPECT TO SEC.18

RATE OF INTEREST PAYABLE BY PROMOTER AND ALLOTTEE AND TIMELINES FOR REFUND

16. Rate of interest payable by the promoter and the allottee.- The rate of

interest payable by the promoter to the allottee or by the allottee to the promoter, as the case may be, shall be the State Bank of India highest marginal cost of lending rate plus two percent.

17. Timelines for refund.- Any refund of money along with the applicable

interest and compensation, if any, payable by the promoter in terms of the Act or the rules and regulations made there under, shall be payable by the promoter to the allottee within sixty days from the date on which such refund along with applicable interest and compensation, if any, becomes due.

25. Manner of recovery of interest, penalty and compensation.- Subject to

the provisions of sub-section (1) of section 40, the recovery of the amounts due as arrears of land revenue shall be carried out in the manner provided in the Karnataka Land Revenue Act, 1964 and the rules made there under.

26. Manner of implementation of order, direction or decisions of the adjudicating officer, the Authority or the Appellate Tribunal.-

For the purpose of sub-section (2) of section 40, every order passed by the adjudicating officer, regulatory authority or Appellate Tribunal, as the case may be, under the Act or the rules and regulations made thereunder, shall be enforced by the adjudicating officer, regulatory authority or the Appellate Tribunal in the same manner as if it were a decree or order made by the principal civil court in a suit pending therein and it shall be lawful for the adjudicating officer, regulatory authority or Appellate Tribunal, as the case may be, in the event of its inability to execute the order, send such order to the principal civil court, to execute such order either within the local limits of whose jurisdiction the real estate project is located or in the principal civil court within the local limits of whose jurisdiction the person against whom the order is being issued, actually and voluntarily resides, or carries on business, or personally works for gain.

Written By:
Sharada H v

Sharada H v

Bangalore

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