There exists no provision in RERA and its rules to forfeit earnest money paid by a home buyer. MahaRERA held this in a recent order it passed on July 6, 2020.

By Varun Singh

It is clear that there exists no provisions in RERA and its rules to forfeit earnest money paid by a home buyer.

MahaRERA in a recent order has held that there exists no provision in RERA to forfeit the earnest money. It asked the builder to refund the entire amount paid by the home buyer.

Home buyers Sumit Mukherjee and Ashutosh Mukherjee complained against developer Rajsanket Realty Limited to MahaRERA.

The buyers had booked flat in the Malad project of the builder on July 1, 2016. The flats were booked for a consideration of 2.23 crore.

At the time of the booking they paid a token amount of Rs 20 lakh to the developers. However, within 40 days of the booking they cancelled it.

Since then, they made several representations to the builder for refund which were allegedly neglected.

Because of which, they had register a complaint against the developer under provisions of RERA.

The developer informed MahaRERA that it was willing to refund the amount and had replied the legal notice sent by the home buyers.

The order states that, in an oral submission the developer even stated, that the money would be refunded once he gets new buyers for the flats.

Dr Vijay Satbir Singh, MahaRERA Member-1, who was hearing the case held, that although the developer agreed to refund the amount, he didn’t take any action to comply the same for more than two years.

Singh also held that, there was sufficient time for the developer to sell the flat to a new buyer and refund the amount.

“Moreover, there is no provision RERA and rules there under to forfeit the earnest money,” read the order.

MahaRERA then directed the builder to refund the full amount paid by the home buyers without any interest.

The builder is allowed to claim the benefits of moratorium period allowed by MahaRERA.

Also Read: In absence of agreement, during cancellation, builder to refund booking amount

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