MahaRERA Directs Builder to Pay Interest for Delayed Possession

July 15, 2024

While directing the builder to pay interest to the homebuyer for delayed possession, the Maharashtra Real Estate Regulatory Authority (MahaRERA) bench, chaired by Ajoy Mehta, emphasized that builders must conduct due diligence before declaring possession dates, given their awareness of market conditions.

BACKGROUND FACTS

On September 7, 2019, the homebuyer (Complainant) entered into an agreement to purchase a flat in the builder’s (Respondent) project, Om Satyam Niwas CHS Ltd. The total cost of the flat was Rs. 1,34,00,000/-, with the homebuyer paying Rs. 1,24,62,000/- upfront. According to Clause 1(c) of the agreement, the remaining 7% of the total cost was to be paid at the time of possession.

Despite the homebuyer paying a substantial amount, the builder failed to deliver possession of the flat by the promised date of July 31, 2020. Frustrated by the delay, the homebuyer filed a complaint with the authority, seeking possession and interest for the delayed handover.

OBSERVATION AQND DIRECTION BY AUTHORITY

The authority observed that the project remains incomplete as the builder has not uploaded the Occupancy Certificate (OC) on the MahaRERA website. Consequently, the builder is responsible for the delay in handing over possession of the flat to the homebuyer, along with the required OC.

The Authority referred to Section 18(1) of the Real Estate Regulation and Development Act 2016, which states:

18. Return of amount and compensation.

(1) If the builder 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 homebuyers, 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

The provision states that if an allottee chooses not to withdraw from the project, the builder must pay interest for every month of delay until possession is handed over, at a rate prescribed by law.

The Authority observed that builders, being aware of market conditions, are expected to finalize the possession date of the project by conducting thorough due diligence. Section 18 of RERA, 2016, does not provide any waivers or exceptions to builders.

Consequently, the Authority directed the builder to pay interest to the homebuyer from the possession date stipulated in the agreement until the date the occupancy certificate is received.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

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