You find your dream home, pay the booking amount, and even start planning interiors. But then — for reasons beyond control — you decide to cancel. The big question: how much of your money can the builder legally keep?
For years, homebuyers in Maharashtra faced uncertainty on this very issue. Developers often included vague clauses in booking forms, with some retaining 10% or more of the total cost upon cancellation. Such arbitrary deductions frequently led to disputes, especially when buyers had barely crossed the initial booking stage.
But things have changed. A regulatory order issued by the Maharashtra Real Estate Regulatory Authority (MahaRERA) in 2022 has finally brought clarity — and relief — to homebuyers by placing firm limits on what developers can forfeit.
A Uniform Rulebook for All Developers
MahaRERA’s 2022 directive was designed to end confusion and standardize documents used in property transactions. It made it mandatory for every developer registering a project to upload the model allotment letter and agreement for sale, both of which clearly spell out the dos and don’ts when a booking is cancelled.
This move ensured transparency right from the early stages of the transaction, when buyers typically pay up to 10% of the flat’s cost as a booking advance — often before the main sale agreement is signed. Cancellations at this stage are common, whether due to financing issues, delays, or personal reasons.
Before the order, there was no uniform rule — and forfeiture amounts varied wildly from one project to another. MahaRERA’s intervention created a single, state-wide framework to ensure fairness for all.
Gradual Deduction, Strict Limits
Under the new framework, the forfeiture depends on how long the buyer holds the booking before cancelling.
If a buyer cancels within 15 days of receiving the allotment letter, no deduction is allowed.
Between 16 and 30 days, the developer can deduct up to 1% of the apartment cost.
For cancellations between 31 and 60 days, the limit rises to 1.5%, and beyond 60 days — before the agreement for sale is executed — the builder can retain a maximum of 2%.
That’s the ceiling. Whether the apartment costs ₹50 lakh or ₹1 crore, the developer cannot legally forfeit more than 2% before the agreement is registered.
If the builder takes longer than 45 days to refund the remaining amount, they must pay interest at the SBI marginal cost of lending rate (MCLR) plus 2%, ensuring buyers aren’t left waiting indefinitely for refunds.
Even in Default, Fairness Prevails
The MahaRERA order also outlines what happens if a buyer fails to move ahead after allotment — such as missing further payment deadlines or not showing up to register the agreement for sale. In such cases, the builder must first send a 15-day notice asking the buyer to comply. If the buyer still does not proceed, the developer can cancel the booking — but even then, forfeiture cannot exceed the 2% cap.
All remaining money must be returned within 45 days. Any delay again triggers the same interest penalty.
Why This Order Matters
Before RERA came into effect, developers routinely retained hefty sums — often 20% or more — in the name of cancellation charges. Homebuyers rarely had a legal footing to challenge this practice. The 2022 MahaRERA order changed that landscape by aligning forfeiture norms with transparency and accountability, the very principles the Real Estate (Regulation and Development) Act, 2016, stands for.
Developers now have to upload their allotment letter formats and highlight any deviation from MahaRERA’s approved model in colour, so buyers can easily see what’s changed. This makes it harder for builders to sneak in unfavourable terms or clauses that go beyond what the law permits.
For homebuyers, this means peace of mind — knowing that a decision to cancel won’t lead to massive financial loss. For developers, it means clear boundaries and fewer legal disputes.
A Safer Market for Homebuyers
Today, any project registered after 2022 in Maharashtra must comply with these guidelines. For buyers, this ensures transparency not just in pricing and possession, but even in the event of a change of mind. MahaRERA has also made it easier to file complaints online if a developer violates the refund norms.
With a clear forfeiture cap and structured refund timelines, Maharashtra’s real estate sector is gradually becoming more equitable — one rule at a time.
Also Read: Homebuyer Loses Flat, Payment Forfeited After Ignoring MahaRERA Order to Clear Dues
