Builder demanding extra ₹3 lakh before registration, what can I do?

Question

I'm in Mumbai and booked a flat with a builder last year. Now, just before the registration, he's asking for an additional ₹3 lakh, claiming increased construction costs. I already paid the full amount as per the initial agreement. This sudden demand is financially straining and feels unfair. He threatened to cancel the booking if I don't pay. Is this legal? What can I do to protect my rights and stop this exploitation?

Adv. Anand Murthy · Accepted Answer

I'm sorry to hear about your situation. Let's break it down and see what you can do under Indian law to protect yourself.

First, let's consider the legal framework that applies here. The Real Estate (Regulation and Development) Act, 2016 — RERA, 2016 — is designed to protect home buyers like you. Under RERA, builders cannot demand more money than what was agreed upon in the contract unless there are specific provisions for such adjustments, which should be clearly mentioned in the agreement.

Here's what you can do:

Review Your Agreement: Check your sale agreement to see if there's a clause that allows the builder to increase the price due to increased construction costs. If there's no such clause, his demand is likely illegal.
File a Complaint with RERA: If the demand is not justified by the agreement, you can file a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA). They are equipped to handle such disputes and can order the builder to adhere to the original terms.
Send a Legal Notice: Consider sending a legal notice to the builder through a lawyer, stating that his demand is not supported by the agreement and that you are ready to take legal action if he does not comply with the original terms.
Consumer Court: If the builder still refuses to register the property without the extra payment, you can approach the Consumer Court for relief under the Consumer Protection Act, 2019. The court can direct the builder to complete the registration without the additional payment.

In the case of Ferani Hotels Pvt. Ltd. vs. Union of India (2020), the Supreme Court highlighted that developers must adhere to the terms of the contract, and any deviation without mutual consent is not permissible.

Additionally, the Fortune Infrastructure vs. Trevor D'Lima (2018) case reiterated the importance of consumer rights in real estate transactions, emphasizing that unfair trade practices by builders are not tolerated.

Remember, if you decide to approach RERA or the Consumer Court, there are limitation periods. For Consumer Court, the limitation period is 2 years from the date of cause of action.

It's important to act promptly and document all communications with the builder. If you need further assistance, consider consulting with a lawyer who specializes in real estate or consumer law.

📚 References:

Adv. Nisha Kapoor · Answer

This is a classic situation where builders try to squeeze extra money from buyers, banking on the pressure of impending registration. Let's break this down. In theory, the builder has no legal right to demand additional money if you have already paid the full amount as per the initial agreement. The agreement you entered into should bind both parties to its terms unless there's a specific clause that allows for such an increase due to reasons like increased construction costs. You should check your agreement thoroughly for any such clauses. In practice, builders often use the threat of cancellation to pressure buyers. However, the law is on your side. Here's how you can handle this: Review the Agreement: Check if there's any clause that allows the builder to increase costs. If there isn't, the demand is likely unjustified. File a Complaint with RERA: The Real Estate (Regulation and Development) Act, 2016 (RERA) is designed to protect buyers. You can file a complaint with the Maharashtra RERA authority. They are quite responsive to such issues. Send a Legal Notice: Have a lawyer draft a legal notice to the builder, stating that his demand is illegal and that you will take legal action if he does not proceed with the registration at the agreed price. Approach Consumer Forum: You can also file a complaint with the consumer forum for unfair trade practices under the Consumer Protection Act, 2019. This is often effective in getting builders to back down. Regarding legal precedent,

Adv. Preeti Saxena · Answer

This is indeed a troubling situation, and it's crucial to handle it with care to protect your interests. Let’s go through the steps you can take and the legal framework that supports your position. 1. Review the Agreement: First, thoroughly review your initial agreement with the builder. Check for any clauses related to price escalation or additional charges. If there is no such clause, the builder’s demand is likely unjustified. 2. Legal Provisions: The Real Estate (Regulation and Development) Act, 2016 (RERA) protects homebuyers from such arbitrary demands. Under this Act, any changes to the cost must be explicitly stated in the agreement, and unilateral changes are generally not permissible. 3. Approach RERA: You can file a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA). The Act mandates that builders must adhere to the terms of the agreement, and any deviation can be challenged. MahaRERA has been proactive in addressing such grievances. 4. Legal Precedents: The Supreme Court and various High Courts have ruled against arbitrary demands by builders. For instance, in Fortune Infrastructure (Now Known as Hicon Infrastructure) & Anr vs Trevor D'Lima & Ors (2018), the Supreme Court held that builders cannot demand additional money beyond the agreed amount without any legal basis. 5. Consumer Protection: You can also approach the Consumer Forum under the Consumer Protection Act, 2019. This Act provides swift remedies for unfair trade practices and can

Adv. Kavitha Menon · Answer

I understand how stressful and frustrating this situation must be for you. Dealing with sudden demands for extra payments can feel overwhelming, especially when you've already planned your finances around the agreed terms. The short answer is: No, the builder cannot legally demand additional money if you've already paid the full amount as per the initial agreement, unless there is a specific clause in your contract allowing for such adjustments. Under the Maharashtra Real Estate Regulatory Authority (RERA) Act, 2016, builders must adhere to the terms agreed upon in the sale agreement. If the agreement does not mention any provision for additional charges due to increased construction costs, the builder's demand is likely unjustified. Here's what you can do: Review Your Agreement: Carefully check your sale agreement for any clauses related to price escalation or additional charges. If there is no such clause, the builder's demand lacks legal standing. Send a Legal Notice: Draft a legal notice to the builder, stating that their demand is not supported by the agreement terms and that you are prepared to take legal action if they do not comply. It's advisable to get this notice drafted by a lawyer. File a Complaint with RERA: If the builder persists, file a complaint with the Maharashtra RERA Authority. RERA is designed to protect buyers from such exploitative practices. Document Everything: Keep a record of all communications with the builder, including emails, messages, and any

Builder demanding extra ₹3 lakh before registration, what can I do?

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