Builder demanding extra ₹3 lakh before handing over apartment keys?

Question

I bought an apartment in Pune, and the builder is now demanding an additional ₹3 lakh, claiming increased construction costs, before handing over the keys. I have already paid the full amount as per the agreement. I'm supposed to get possession next month. This feels like extortion since I've budgeted everything and don't have spare funds. What legal action can I take against the builder? Can he cancel my booking if I refuse to pay?

Adv. Shreya Bose · Accepted Answer

I completely understand how stressful this situation must be for you. You've planned everything according to your budget, and now this unexpected demand is throwing a wrench in your plans. The short answer is: No, the builder cannot legally demand extra money beyond what was agreed upon in your contract, nor can he cancel your booking unilaterally if you refuse to pay. Under the Real Estate (Regulation and Development) Act, 2016 (RERA), builders are prohibited from demanding any additional charges that are not specified in the agreement. Section 13 of RERA mandates that the builder cannot accept more than 10% of the cost of the apartment as an advance payment without entering into a written agreement for sale. Here's what you should do next: Review your agreement: Check the sale agreement for any clause that might allow the builder to charge extra. Typically, such clauses are not enforceable if they are unfair or not specifically agreed upon. Send a legal notice: Draft a legal notice to the builder, stating that their demand is unjustified and violates the terms of your agreement and RERA provisions. You can mention that you are prepared to take legal action if necessary. File a complaint with RERA: If the builder persists, file a complaint with the RERA authority in Maharashtra. They are responsible for addressing grievances against builders for such issues. Document everything: Keep all communication with the builder documented, including emails, messages, and notices. In a similar case, the Karnataka Real Estate Regulatory Authority vs. Nitesh Estates Limited (2020 Karnataka High Court), the court ruled in favor of the buyer, emphasizing that any arbitrary demand beyond the contractual terms is not permissible. Time is of the essence here. Ensure you act quickly, especially if possession is due next month. Missing deadlines for filing complaints can affect your case. Feel free to share more details or the specific wording of your agreement if you need further ass

Adv. Siddharth Rao · Answer

You've found yourself in a tough spot, but there are strategic ways to handle this situation without immediately resorting to litigation. Let's break this down. Legal Position: Under the Real Estate (Regulation and Development) Act, 2016, also known as RERA, builders are bound by the terms of the agreement for sale. Any demand for additional payments that were not agreed upon is typically not enforceable. Section 13 of RERA specifically prohibits developers from demanding any advance or additional payment without a prior written agreement. Moreover, the builder cannot unilaterally cancel your booking unless there is a specific clause in your agreement that supports such an action. Even then, such clauses may be deemed unfair and could be challenged. Strategic Steps to Resolve This: Direct Negotiation: First, communicate with the builder and request a written explanation for the additional charges. Make it clear that you have fulfilled all your financial obligations as per the original agreement. Often, a firm but polite stance can lead to a resolution. Legal Notice: If negotiation fails, consider sending a well-drafted legal notice. This notice should cite your rights under RERA and the agreement. The threat of legal action can often compel the builder to reconsider their stance. File a Complaint with RERA: If the issue persists, you can file a complaint with the Maharashtra RERA authority. They have the power to hear disputes and provide relief. The process is generally fast

Adv. Kavya Reddy · Answer

Hi there! I looked into this carefully, and here's what I found regarding your situation. It sounds like you're dealing with a common issue in real estate transactions, and there are legal remedies available to you under Indian law. 1. Contractual Obligations: First and foremost, your rights and obligations, as well as those of the builder, are governed by the Indian Contract Act, 1872. If you've already paid the full amount as per the agreement, the builder is legally bound to honor the terms of the contract. Any additional demand not stipulated in the contract could be considered a breach of contract. 2. Real Estate (Regulation and Development) Act, 2016: The RERA, 2016 is particularly relevant here. It mandates that builders cannot charge more than the agreed amount without prior consent from the buyer. The builder's demand for an additional ₹3 lakh, if not part of the original agreement, could be challenged under this Act. You can approach the Maharashtra Real Estate Regulatory Authority to file a complaint against the builder. 3. Consumer Protection: You can also consider filing a complaint under the Consumer Protection Act, 2019. Builders demanding extra money without justification is considered an unfair trade practice. The National Consumer Disputes Redressal Commission (NCDRC) has addressed similar issues in the past. There are actually a few important cases on this point: Fortune Infrastructure v. Treasure Developers (2016): In this case, the Supreme Court held that

Adv. Priya Mehta · Answer

I understand how stressful and unfair this situation must feel, especially when you've budgeted everything carefully. Let's see how you can approach this legally.

Short Answer: The builder cannot demand additional payment beyond what is stipulated in the agreement, and you have strong legal grounds to challenge this demand.

Explanation of the Law: Under the Real Estate (Regulation and Development) Act, 2016 (RERA), builders are bound by the terms of the sale agreement. Section 13 of RERA prohibits a promoter from accepting any payment beyond 10% of the cost of the apartment without first entering into a written agreement for sale. Any demand for additional payment without a contractual basis is not legally enforceable.

Practical Next Steps:

Review your agreement: Ensure there are no clauses that permit the builder to demand additional charges under the guise of increased construction costs.
Send a formal notice: Draft a written notice to the builder via registered post, stating that their demand is not supported by the agreement and is in violation of RERA.
File a complaint with RERA: If the builder persists, file a complaint with the Maharashtra RERA authority. You can do this online, and they are known to take swift action in such matters.
Document everything: Keep records of all communications with the builder, including emails, messages, and notices. This documentation will be crucial if the matter escalates.

Real-World Context: Builders often attempt to leverage their position by making such demands, hoping buyers will comply to avoid delays. However, RERA has been effective in curbing such practices, and most builders back down once a formal complaint is filed. In Kamal Kumar vs M/s DLF Universal Ltd (2018 SC), the Supreme Court emphasized that builders must adhere strictly to the terms of the agreement and RERA provisions.

Time Limits & Risks: It's crucial to act promptly. File your complaint with RERA before the possession date passes, as delays can complicate your case.

Stay strong and don't hesitate to reach out if you need help drafting your notice or further guidance on filing a complaint. Feel free to share specific clauses from your agreement if you need more tailored advice.

📚 References

Builder demanding extra ₹3 lakh before handing over apartment keys?

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