Flat Booking Rules– The purpose of the booking amount is to cover the costs associated with the cancellation of the deal. The builder suffers a loss due to the cancellation of the deal. When the booking of a flat is cancelled, the builder has to again mobilise resources to find a new buyer.
New Delhi. While booking a flat or plot, the booking amount has to be paid to the builder. The rules of the Real Estate (Regulation and Development) Act, 2016 (RERA) say that the booking amount cannot be more than 10 percent of the price of the house. Many times it happens that a person cancels his booking even after booking a flat and paying the booking amount. In such a situation, the question arises that will the builder confiscate the entire booking amount deposited on cancellation of booking? In one such case, the Maharashtra Real Estate Regulatory Authority (MahaRERA) has now given an important decision.
Maharashtra RERA has directed a Thane-based real estate developer to keep 1% of the total value of the flat from the booking amount deposited by a flat buyer and return the rest of the amount to the buyer. The buyer had cancelled the booking of a flat worth ₹ 67 lakh citing financial difficulties. The buyer Pulakesh G Majumdar booked a flat worth ₹67 lakh on 3 April 2022 and paid ₹1 lakh for the booking. However, he cancelled the booking within 45 days due to financial problems. The developer confiscated the entire booking amount after the booking was cancelled.
RERA did not accept the builder’s argument
The developer argued before MahaRERA that the entire amount was seized as per the forfeiture clause mentioned in the booking application form. At the same time, the buyer said that the developer had agreed to refund the entire amount after the booking was cancelled, which is mentioned in the email.
The developer also said that the complaint has been filed against the wrong entity (Puranik Builders), while the booking was done with Sai Pushp Enterprises. However, MahaRERA in its order decided to ignore the issue, following the principles of natural justice.
Can the developer seize the entire booking amount?
The developer had seized 1.5% of the total value of the flat (₹ 67 lakh). Maharashtra RERA said that such seizure by the developer (which is 1.5% of the total value) is not valid as per the provisions of RERA, as there is no clear provision for such seizure in RERA. RERA, citing an order issued in August 2022, said that if the allottee cancels the booking within 45 days, the promoter (developer) can only forfeit 1% of the total value.
This provision also applies to transactions made before August 2022, as there was no prescribed format before that. RERA in its order dated 23 December 2024 directed the developer to deduct 1% of the total price of the flat (excluding government statutory charges/brokerage) and refund the remaining amount to the buyer within 45 days without any interest.