I was recently having a chat with a friend who’s forte is real estate law. One of the most common cases she confronts is with people who are looking to cancel their apartment bookings and seeking refunds.
What makes things difficult in most cases is that there are no fixed guidelines on refunds or cancellation. Therefore, a consumer is bound to the clauses signed off in a sale agreement. It is only when the time to seek a refund comes that one tends to realize that the clauses are often more in the favour of the developer than the buyer.
As a prospective buyer, you may be sure of seeing the purchase of an apartment through. However, there may suddenly arise a situation where you may want to cancel the booking and seek a refund.
Here are certain things to bear in mind:
- Ensure that your sale agreement has a clause on cancellation included.
- If there is no clause in your agreement which mentions cancellation, you can still apply for one on various grounds such as delayed start on construction etc.
- Never pay a booking amount by cash and always ask for a receipt for the complete amount paid.
- Always ensure that your sale agreement clearly outlines what the charges are for cancellation and securing a refund.
- If there is no agreement as such between the developer and buyer, make sure that you obtain a receipt or an allotment letter stating the booking amount with a clear mention of cancellation charges and procedures. This can be provided in the court while asking for a refund.
Here’s What a Cancellation Clause Reads Like –
The Bangalore District Consumer Disputes Redressal Forum recently ruled that if there is a delay in construction of the project or you as the buyer see no progress, then you are entitled to a full refund. However, even here, the cause for delay may be justified by the builder and you may still see a delay in refund. All cases that go to a consumer court will have different outcomes.
In general, cancellation of booking and refund charges are deducted on basis of what is signed off on in a sale agreement. This may be Earnest Money or 10% of the total value of the project, when a refund is given. To forfeit this is at the discretion of the builder, however, whatever may be the deduction you are entitled to a clear break-up of the charges.
Here Are Some Options That You Can Look Into to Avoid Going to Court
No builder would want to be taken to court over failure to provide a refund. One of the most common reasons for delay in refund is because cash from the booking of one project is diverted to another that is closer to completion. Considering there are no fixed guidelines on how to get your refund, there are a few options that you may consider or place before your builder:
- Move your booking to another apartment by the builder, which suits your specifications and is closer to completion. This usually does not involve any deductions.
- If a full refund is not an option the builder is providing you, then you may consider bringing in another buyer, having the sale agreement transferred into his name and securing your booking amount from this new buyer.
- Use the power of numbers. Get more people, who may be in a similar situation dealing with delayed construction with the same project and force the builder to either complete the project or offer discounts.
In the end, you have to know that applying for a cancellation and securing a refund is based entirely on your dealing with your builder. Many cases work out in a mutually beneficial manner and quite a few take the legal route. Have your bases covered at the time of signing the sale agreement to ensure you have a stronger case.
- There are no guidelines governing cancellation and refund of an apartment booking
- Having the cancellation clause clearly spelt out will help to a large extent
- The issue may be resolved in multiple ways without seeking legal assistance
- Recourse may be sought in a consumer redressal forum and the outcome is on a per case basis
This is the first segment of a two blog series. In the next article we will talk of how you can cancel your booking and secure a refund. Stay tuned!
Hemalatha is part of the Property Care Department at Vakil Housing and she brings with her 14+ years of experience in customer services across various industries.
She has hands on experience of interacting with customer queries, up-keeping maintenance and providing after sale services. Her strong communication skills have assisted her to resolve numerous issues related to maintenance of projects.