Respite to homebuyers without sale agreements

The Real Estate (Regulation and Development) Act, 2016 (RERA Act), was enacted with the objective of regulation and promotion of the real estate sector and for the protection of the interest of the consumers. The Real Estate Regulatory Authority (RERA) has become a speedy and low expense dispute redressal mechanism.

One of the major issues plaguing the real estate sector is delayed projects, with promoters often unable to deliver possession of flats by the promised dates. Before the RERA Act, under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, the only relief available was under section 8, which provided for refund of amount paid with interest upon failure to give possession within the specified time. Under the RERA Act, section 18 and the proviso, provides for a choice to the allottee to withdraw from the project and be entitled to refund along with interest or to continue in the delayed project and earn interest until the possession is handed over.

Since the establishment of RERA in Maharashtra, a recurring question that the authority has been called upon to answer is the circumstances under which a complaint seeking reliefs under section 18 would be maintainable. The initial stand adopted by the RERA was that an agreement for sale was a sine qua non for a complaint under section 18. In the matter of Naim Kamaruddin Shaikh and Ors v JVPD Properties, the state regulator Maharashtra Real Estate Regulatory Authority (MahaRERA) held that section 18 would apply only in the event the promoter failed to complete or was unable to give possession in accordance with the terms of the agreement for sale or by the date specified in such agreement for sale and that in the absence of an agreement for sale, section 18 would have no role to play.

Subit Chakrabarti is an associate at Vidhii Partners

Vidhii Partners

G/F Construction House

5, Walchand Hirachand Marg

Ballard Estate

Mumbai – 400 001

New Delhi | Kolkata | Bengaluru

Contact details

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Email: vidhii.mumbai@vidhiipartners.com

Website: www.vidhiipartners.com