Builder demanding extra money before flat registration, what can I do?

Question

I booked a flat in Chennai two years ago, and now the builder is asking for an additional ₹3 lakh before registration. He says costs have increased, but this wasn't mentioned in the contract. I'm already stretched thin on my budget, and this demand feels unfair. I contacted him multiple times, but he refuses to budge. I'm worried I'll lose the flat or my deposit. What are my legal options here? How can I ensure I get the flat without paying extra?

Adv. Pallavi Joshi · Accepted Answer

In your situation, the builder's demand for additional money not stipulated in the contract may be considered unfair and potentially unlawful under Indian law. Here’s how you can approach this issue:

Review the Agreement: First, carefully examine your sale agreement or builder-buyer agreement. It should clearly outline the total cost of the flat, payment schedule, and any conditions under which the cost can be increased. If the agreement does not mention any clause allowing the builder to increase the price arbitrarily, the demand may be unjustified.
Refer to the Real Estate (Regulation and Development) Act, 2016: Under the Real Estate (Regulation and Development) Act, 2016, builders are required to adhere to the terms of the agreement. Any unilateral demand for additional payment, without a contractual basis, could be challenged as a violation of this Act.
File a Complaint with RERA: You can file a complaint with the Tamil Nadu Real Estate Regulatory Authority (RERA). RERA is empowered to address grievances related to unfair trade practices by builders. The complaint process is relatively straightforward, and you can file it online through the RERA website.
Approach the Consumer Forum: If the builder's actions amount to a deficiency in service or unfair trade practice, you can file a complaint with the Consumer Disputes Redressal Forum. The Consumer Protection Act, 2019 provides remedies for such grievances. The forum can direct the builder to adhere to the original agreement.
Legal Notice: Before initiating formal proceedings, consider sending a legal notice to the builder through an advocate, demanding adherence to the original terms of the contract. This could prompt the builder to reconsider the demand.
Limitation Period: Keep in mind that you have a specific period to initiate legal proceedings. Under the Consumer Protection Act, the limitation period is generally two years from the date of cause of action. Therefore, act promptly to avoid missing any deadlines.

In similar cases, the Supreme Court has ruled in favor of buyers where builders have made arbitrary demands. For instance, in Fortune Infrastructure v. Trevor D’Lima (2018), the court held that builders cannot make unilateral changes to the agreed terms to the detriment of the buyer.

By taking these steps, you can assert your rights and seek a resolution without succumbing to unfair demands. If the builder still refuses to comply, consider engaging a lawyer specializing in real estate disputes to assist you further.

📚 References

Adv. Asha Pillai · Answer

I'm sorry to hear about the situation you're facing. It must be incredibly frustrating to be hit with unexpected costs when you're already stretched financially. Let's look at your options and how you can handle this situation.

Short Answer: The builder's demand for extra money is likely not enforceable if it wasn't included in your original contract. You can challenge this demand legally.

Under the Real Estate (Regulation and Development) Act, 2016, any additional charges not specified in the agreement at the time of booking are generally not permissible. The contract you signed is binding, and the builder cannot unilaterally change the terms or impose new charges unless there's a clause allowing for such adjustments.

Practical Next Steps:

Review your agreement: Check your contract for any clauses that might allow the builder to increase costs. If there's no such clause, the demand is likely baseless.
Send a formal notice: Draft a written notice to the builder, preferably through a lawyer, stating that their demand is not in accordance with the contract. Send this notice via registered post and keep a copy.
File a complaint with the RERA Authority: Since your flat is in Chennai, file a complaint with the Tamil Nadu RERA. They are empowered to address grievances related to unfair practices by builders.
Consider filing a complaint with the Consumer Forum: You can approach the Consumer Forum under the Consumer Protection Act, 2019 for unfair trade practices.

Real-World Context: Builders sometimes use such tactics to cover their increased costs, hoping buyers will comply to avoid losing their flats. Courts typically look unfavorably on such demands if they are not contractually justified. In Fortune Infrastructure vs. Trevor D'Lima (2018 SC), the Supreme Court emphasized the importance of adhering to the terms of the contract.

Time Limits & Risks: Act promptly. The builder might try to delay registration or claim you defaulted. Document all communications and ensure you adhere to any deadlines specified in your contract or by RERA.

Stay strong, and don't hesitate to reach out if you need further help. Feel free to share more details about your agreement if you want a more tailored strategy.

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Adv. Mohan Das · Answer

I'm sorry to hear about your situation. Let's break down your options under Indian law. The builder's demand for additional money not agreed upon in the contract could be a violation of the terms you initially agreed to. Here’s how you can approach this: Review the Agreement: First, carefully review your sale agreement or builder-buyer agreement. Look for any clauses related to cost escalation or additional charges. If the contract does not mention any provision for increasing the price due to cost escalation, the builder's demand is likely unjustified. Legal Notice: If the builder refuses to comply after your discussions, you can send a legal notice. This notice should detail your position, reference the contract terms, and demand compliance. Sometimes, a formal notice can compel the builder to adhere to the agreed terms. File a Complaint with RERA: The Real Estate (Regulation and Development) Act, 2016 is designed to protect homebuyers. You can file a complaint with the Tamil Nadu Real Estate Regulatory Authority (TNRERA) if the builder is registered under RERA. RERA mandates that builders cannot demand additional amounts beyond what is agreed in the contract. Consumer Court: If the issue persists, you can approach the Consumer Forum. Builders demanding extra money without contractual basis can be considered a deficiency in service. The Consumer Protection Act, 2019, allows you to file a complaint for such grievances. Ensure you have all documentation, including the contrac

Adv. Gaurav Singh · Answer