The Real Estate (Regulation & Development) Act, 2016, which came into force on 1st May 2017, with the implementation of Sections 3-19, 40, 59-70, 79 and 80. The Ministry of Housing & Urban Poverty Alleviation had worked out and circulated Model Real Estate Regulations for accepting by the Regulatory Authorities in the States/UTs.

It regulates transaction between buyers and builders of a residential project, through the establishment of a state-level regulatory authority known as Real Estate Regulatory Authorities.

It explains that buyers can cancel allotment of the booked flat with a builder at any stage even if the builder is not guilty. At the same time, the builder is also limited by law to return the money collected from buyers within 45 days, after forfeiting the 10% of booking amount.

There are many reasons under which buyers generally cancel their booking. Some cancel due to existing market conditions when the cost of the housing unit doesn’t appreciate. Some cancel it due to a family emergency or financial crisis. For some who decide to withdraw because they don’t like the unit configuration.

Earlier, the booking amount was either never returned or delayed for years until the unit was sold to a new buyer. This new law will now ensure that the builder is confined by law to return the money within a fixed timeline. It was very difficult earlier to get back the booking amount.

On the other hand, builder lobby term this law “Unsuitable” under RERA rule. The builder says if there are multiple bookings by a buyer and he decides to pay installments for only one unit. Also, clause for the builder to return the amount paid for by the buyer within 45 days after forfeiting the booking amount. It is not practical because maximum amount collected from the buyers has already gone into the purchase of land or in construction cost.

Yes, this is difficult for the builder as they will now have to return the booking amount within 45 days but there is no provision for the builder to withdraw this amount from the escrow account.

Also, if the developer fails to give possession of the flat as per the specified time, the buyer can cancel the agreement and is entitled to refund of the amount paid with interest within 45 days.

Under RERA Act, if a buyer unable to pay his/her dues on time and such a default persists for an agreed upon the number of months, the developer has now rights to terminate the agreement and cancel the allotment made to the buyer.

Many of us are agree with this provision on cancellation. But builder has to remember that very less number of buyers want to give away 10% of the booking amount unless he is under pressure to exit. Currently, there is no exit clause in the builder-buyer agreement, only one-way entry for the buyer.

Furthermore, if a builder delays the project and the buyer decides to exit, he can cancel his units notifying the builder or sending him a mail and withdraw from the project and get a penalty if the project is delayed.