Builder demanding ₹5 lakh extra, threatening to cancel flat registration?

Question

I booked a flat in Bangalore two years ago and paid all installments on time. Now, just a month before registration, the builder is demanding an additional ₹5 lakh, citing increased construction costs. He says if I don't pay, he will cancel the booking and keep a portion of the already paid amount as cancellation fees. I have emails and receipts for all payments made. What can I do to stop this extortion? I feel trapped and don't want to lose my home.

Adv. Krishnaswamy Iyer · Accepted Answer

The situation you describe is unfortunately not uncommon in real estate transactions. However, you do have legal recourse to address this issue. Let us delve into the legal framework and precedents relevant to your case. The foundational case here is the Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan (2019), where the Supreme Court held that builders cannot unilaterally impose additional charges or alter terms significantly detrimental to the buyer after an agreement has been executed. This decision underscores the principle of fairness and transparency in builder-buyer agreements. Your situation also falls under the purview of the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA. As per this Act, builders are required to adhere to the terms of the agreement for sale. Any unilateral demand for additional payment without a valid contractual basis can be challenged before the Real Estate Regulatory Authority. Moreover, the Consumer Protection Act, 2019 is another statutory framework that can provide relief. Under this Act, you can file a complaint for unfair trade practices and deficiency in service. The builder's threat to cancel the booking and retain a portion of your payment could be construed as such. The Karnataka Real Estate Regulatory Authority (K-RERA) is the appropriate forum where you can file a complaint. You should gather all pertinent documents, including the original agreement, payment receipts, and correspondence with the builder. The procedure generally involves filing a complaint online or at the K-RERA office, after which the authority will issue a notice to the builder and conduct a hearing. What's interesting about your situation is that the courts have consistently emphasized the protection of consumer rights in real estate transactions. The case of Fortune Infrastructure v. Trevor D'Lima (2018) is another notable judgment where the Supreme Court reinforced the obligation of builders to adhere to their c

Adv. Lakshmi Venkat · Answer

I'm really sorry to hear about this stressful situation. It's unfair and frustrating when builders try to take advantage of homebuyers like this. Let's get you on the right path to protect your interests. The short answer is: The builder's demand for additional payment is not legally justified if it's not part of your original agreement. You have several options to challenge this. Here's how the law works in your favor: Under the Consumer Protection Act, 2019, builders cannot arbitrarily increase prices or impose additional charges unless clearly stipulated in the contract. Any such demand can be considered an unfair trade practice. Additionally, the Real Estate (Regulation and Development) Act, 2016 (RERA) mandates that builders adhere to the terms agreed upon at the time of booking. Here's what you can do next: Review your agreement: Check your sale agreement for any clauses that allow the builder to increase costs. If there's no such provision, the demand is likely unlawful. Send a legal notice: Draft a legal notice to the builder, demanding adherence to the original terms. Highlight that their actions constitute an unfair trade practice under the Consumer Protection Act. File a complaint with RERA: If the builder is registered under RERA, you can file a complaint with the RERA authority in Karnataka. They have the power to penalize builders for such practices. Approach the Consumer Forum: File a complaint at the District Consumer Forum for unfair trade practices and claim

Adv. Siddharth Rao · Answer

You're in a difficult situation, but there are strategic steps you can take to resolve this issue without immediately resorting to litigation. Let's break down your options: 1. Review Your Agreement: The first step is to carefully review the terms of your agreement with the builder. Look for clauses related to price escalation, cancellation, and the consequences of non-payment. Most agreements do not allow arbitrary escalation of prices unless specifically mentioned. 2. Legal Position: Under the Real Estate (Regulation and Development) Act, 2016, builders cannot unilaterally increase the price unless there is a clear clause in the agreement that permits such an increase. If your agreement does not have such a clause, the builder's demand is likely illegal. 3. Negotiation Strategy: Armed with the knowledge that the demand may be unlawful, approach the builder for a negotiation. Explain that you are aware of your rights under RERA and are prepared to take action if necessary. Builders often back down when they realize the buyer is informed and prepared to escalate the matter. 4. Legal Notice: If negotiation does not work, send a well-drafted legal notice to the builder. This notice should cite the relevant provisions of the RERA and the terms of your agreement, demanding compliance and threatening legal action if the demand is not withdrawn. A legal notice often achieves 80% of what a lawsuit would, and it’s faster and cheaper. 5. File a Complaint with RERA: If the builder rema

Adv. Abhijit Das · Answer

I understand the distressing situation you're in, and it's important to know that the law provides you with certain protections against such arbitrary demands by builders. Here's how you can approach this issue: The first step is to review your Builder-Buyer Agreement. This document should outline the payment schedule, the total cost of the flat, and any clauses related to escalation in costs. If there is no clause that allows the builder to demand additional payment due to increased construction costs, their demand is likely unjustifiable. Under the Real Estate (Regulation and Development) Act, 2016, builders are obligated to adhere to the terms agreed upon at the time of booking. Any unilateral change in cost is typically not permissible unless explicitly mentioned in the agreement. Here are the steps you can take: Communicate in Writing: Respond to the builder's demand formally via email or registered post, clearly stating that you have fulfilled all payment obligations as per the agreement and that their demand for additional payment is not supported by any clause in the agreement. File a Complaint with RERA: You can file a complaint with the Real Estate Regulatory Authority (RERA) of Karnataka. RERA was established to protect homebuyers and ensure accountability in the real estate sector. They have the authority to adjudicate disputes between buyers and builders. The complaint can be filed online through the RERA Karnataka website. Consumer Court: If RERA does not resolv

Builder demanding ₹5 lakh extra, threatening to cancel flat registration?

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