Builder demanding extra payment before registration, is this legal?
I purchased a flat in Bangalore and I've already paid 90% of the agreed amount. Now, the builder is demanding an extra ₹3 lakh, saying it's for additional charges not covered initially, otherwise, he won't proceed with the registration. I never agreed to these charges. What are my rights in dealing with this? I feel extorted and just want to move into my new home. Please advise.
Disclaimer: The answers on this page are for general informational purposes only and do not constitute legal advice. They do not create a lawyer-client relationship. Laws vary by jurisdiction and facts matter — please consult a qualified lawyer before acting on any information here.
- File a Complaint with RERA: You can file a complaint with the Karnataka RERA authority against the builder for non-compliance. RERA authorities have the power to ensure that the builder registers the property as per the original terms.
- Consumer Court: Alternatively, you can approach the Consumer Dispute Redressal Forum. In the case of Kishore Kumar Khaitan & Anr. vs. M/s. Prestige Estates Projects Ltd. (2018), the National Consumer Disputes Redressal Commission (NCDRC) ruled in favor of the buyer where the builder demanded additional charges that were not part of the original agreement.
- Send a legal notice to the builder through a lawyer, demanding the registration to proceed as per the original terms.
- If the builder still refuses, file a complaint with the Karnataka RERA or the Consumer Forum.
Hello! I looked into this carefully and here's what I found. You're definitely not alone in facing this issue, and there are legal protections available to you under Indian law.
First, let's talk about the Real Estate (Regulation and Development) Act, 2016 (RERA). This Act was specifically designed to protect homebuyers like you from unfair practices by builders. Under RERA, builders are required to adhere strictly to the terms of the agreement and cannot demand any additional charges unless they are clearly specified in the contract you signed. You can check whether your builder is registered under RERA in Karnataka, as this registration imposes certain obligations on them.
My understanding is that if these additional charges were not part of your initial agreement, the builder cannot legally demand them as a precondition for registration. This is particularly relevant if the builder is registered under RERA. You might want to review your agreement to see if there’s any clause that allows for such additional charges.
For your situation, I found two important cases that might help:
- Fortune Infrastructure v. Trevor D'Lima (2018) - In this case, the Supreme Court held that builders cannot impose arbitrary demands on buyers, especially if those demands are not specified in the agreement.
- K. Raheja Corporation Pvt. Ltd. v. State of Maharashtra (2019) - This case further emphasized that buyers are protected against such arbitrary demands and that the terms of the agreement are binding.
If the builder continues to insist on these payments, you have a few options:
- File a Complaint with RERA: If the builder is registered under RERA, you can file a complaint with the Karnataka RERA authority.
- Consumer Court: You can approach the consumer court for redressal, as demanding extra money can be considered an unfair trade practice.
- Legal Notice: Consider sending a legal notice to the builder through a lawyer, demanding adherence to the original agreement.
One thing I want to flag that people often miss is the importance of acting quickly. There are limitation periods for filing complaints, so it's crucial to move promptly if you decide to take legal action.
Please do share if there are any more details — I want to make sure you have everything you need. I hope this helps you move forward with confidence!
📚 References
As an advocate, I understand your predicament, and I will guide you through the legal options available under Indian law to address this issue with your builder.
Firstly, it is essential to examine your Builder-Buyer Agreement. This document should outline all the agreed terms, including the total purchase price and any additional charges. If the agreement does not mention the additional ₹3 lakh, the builder's demand is likely unjustified.
In such cases, the Real Estate (Regulation and Development) Act, 2016 (RERA, 2016) is particularly relevant. RERA aims to protect the interests of homebuyers and ensure transparency in the real estate sector. Under Section 13 of RERA, a builder cannot demand any payment beyond what is agreed upon in the agreement without your consent.
"A promoter shall not accept a sum more than ten percent of the cost of the apartment, plot, or building as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force."
If your builder is registered under RERA, you can file a complaint with the RERA authority in Karnataka. This is a faster and more cost-effective remedy compared to traditional litigation. You can file the complaint online through the Karnataka RERA website.
Additionally, you may consider filing a complaint with the Consumer Disputes Redressal Commission if there is a deficiency in service or unfair trade practice by the builder. The Consumer Protection Act, 2019 could provide relief by directing the builder to perform the contract as agreed or to compensate for any unfair practices.
There are also relevant judgments that support your position. For instance, in Fortune Infrastructure vs. Trevor D'Lima & Ors (2018), the Supreme Court of India held that builders cannot impose additional charges unless clearly specified in the agreement.
Time is of the essence in such matters. Ensure you act promptly to protect your rights.
In summary, review your agreement, consider filing a complaint with RERA and/or the Consumer Commission, and use the judgments as leverage in negotiations. If needed, consult a local advocate for assistance in filing and representing your case.
📚 References
I'm sorry to hear about the difficulties you're facing with your builder. This situation is unfortunately not uncommon, and it's important to know your rights as a homebuyer.
First and foremost, your rights primarily depend on the terms and conditions stated in your Agreement to Sell or Builder-Buyer Agreement. This document should outline all the charges you are liable to pay. If these additional charges were not mentioned in the agreement, the builder generally cannot unilaterally demand them.
Here are some steps and legal provisions you can consider:
- Review Your Agreement: Carefully review your agreement to ensure that there are no clauses that allow the builder to levy these additional charges. Builders sometimes include clauses for escalation in prices due to changes in raw material costs or other factors, but these should be clearly mentioned.
- RERA Compliance: Check if your project is registered under the Real Estate (Regulation and Development) Act, 2016. RERA mandates transparency and accountability from builders. You can file a complaint with the RERA authority in Karnataka if the builder is acting against the provisions of the Act.
- Consumer Protection: If the builder's demand is not justifiable, you can file a complaint under the Consumer Protection Act, 2019. Builders demanding extra payments without basis can be considered as an unfair trade practice.
- Legal Precedents: The Fortune Infrastructure (Builders) & Anr vs. Trevor D'Lima & Ors (2018) case by the Supreme Court held that builders cannot levy additional charges beyond what was agreed upon unless it is clearly specified in the contract.
- Negotiation and Settlement: Sometimes, a direct negotiation or mediation can resolve such disputes without going to court. It may be beneficial to have a legal professional assist you in these discussions to ensure your interests are protected.
Time is of the essence here. Builders often delay registration to exert pressure, so it is advisable to act promptly.
If these steps do not resolve the issue, you might need to consider legal action. Filing a complaint with the appropriate authorities or taking the matter to court can be considered, but it is advisable to consult with a lawyer who can guide you based on the specifics of your case and the local laws in Karnataka.
Remember, the best approach often depends on the specific facts of your case, so consider seeking personalized legal advice.
📚 References:
- Review Your Agreement: Go through your sale agreement to check for any clauses that might allow the builder to levy additional charges. If there's no such clause, the demand is likely unjustified.
- Send a Formal Notice: Draft a detailed notice to the builder, preferably through a lawyer, stating that the demand for additional payment is not supported by the agreement and is therefore unacceptable. Request the builder to proceed with the registration as per the original terms.
- File a Complaint with RERA: If the builder refuses to comply, file a complaint with the Karnataka RERA Authority. RERA is designed to protect homebuyers from such practices and can order the builder to register the property without extra charges.
- Consider Legal Action: If the situation doesn't resolve, you might need to file a case in the consumer forum for deficiency in service and unfair trade practices.
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