The order—passed in the long-running Ashish Sea View dispute—clarifies that financial institutions cannot enforce security interests under the SARFAESI Act if the property is already burdened with registered agreements for sale or third-party claims from homebuyers.

The ruling is expected to have wide implications for banks, NBFCs, and developers operating in Maharashtra’s residential property market.

Why This Case Matters

The Ashish Sea View matter involved a situation where:

• Homebuyers had registered agreements for sale.
• The developer defaulted on loans.
• The bank attempted to take possession under SARFAESI.
• Homebuyers objected, claiming their rights were prior and protected under RERA.

MahaRERA has now sided firmly with homebuyers, calling them the “lifeline of the real estate sector,” and stating that banks must not override homebuyer rights merely because a project is mortgaged.

Homebuyer Rights Override SARFAESI: MahaRERA’s Key Finding

MahaRERA ruled that:

1. Registered homebuyers’ rights are superior to the mortgage rights of banks.
2. Banks must exercise due diligence before granting loans.
3. A lender’s failure to check existing agreements cannot prejudice homebuyers.
4. RERA, being a special social-welfare legislation, supersedes SARFAESI where homebuyers’ rights are concerned.
5. Banks are considered “financial creditors” only for the developer—not for the homebuyers.

This means banks cannot auction flats allotted or sold to homebuyers if agreements were executed before the mortgage or even if executed afterward but disclosed in RERA records.

Banks Must Check Third-Party Rights Before Lending

MahaRERA strongly criticised lenders for granting loans “mechanically” without proper checks.

The order notes that:

• RERA records are public and accessible.
• Project details clearly show registered homebuyers’ names.
• Banks have a duty to verify title, encumbrances, and buyer allotments.

The ruling emphasises:

“Financial institutions must conduct thorough due diligence before creating a charge or mortgage on project properties. Failure to do so cannot harm legitimate homebuyers.”

This sets a new compliance benchmark for lenders.

Developers Cannot Use Mortgages to Evict or Ignore Allottees

The authority also made it clear that:

• Developers cannot hide behind SARFAESI actions to delay or deny possession.
• Mortgage disputes between builders and banks cannot cancel homebuyers’ rights.
• RERA’s primary objective is timely delivery and protection of allottees.

The ruling promotes accountability in developer-banker dealings.

Direct Impact on Homebuyers

Your registered agreement is your strongest protection

Banks cannot evict you even if the project is mortgaged

SARFAESI cannot override RERA where allottee rights are established

You can challenge bank possession notices before RERA authorities

What This Means for the Market

For Homebuyers:

• Greater confidence in buying under-construction flats
• Assurance that their investment is protected even if developers default

For Banks:

• More rigorous due diligence required
• Need to check RERA records before issuing loans
• Higher compliance costs

For Developers:

• Pressure to maintain clean titles
• Increased transparency expected

Also Read: MahaRERA fines 12 developers Rs 5.85 lakh for printing advertisements without MahaRERA number

The post Homebuyers Come Before Banks: MahaRERA Pulls Bank For Ignoring Homebuyers While Lending Money to Builder appeared first on Square Feat India.

Details of Each Complaint

1. Five Buyers Seeking Refund
   • Each held a registered Agreement for Sale (AFS) for individual flats.
   • They requested refunds after receiving cancellation notices stating entire forfeiture of sums paid.
   • MahaRERA found these buyers defaulted on contractual payments per Section 19(6) of RERA and, as promoter fulfilled possession, they were not eligible for refunds under Section 18 maharera.maharashtra.gov.in+13hindustantimes.com+13timesofindia.indiatimes.com+13maharera.maharashtra.gov.in+7maharera.maharashtra.gov.in+7timesofindia.indiatimes.com+7.
2. One Buyer Purchasing Two Flats
   • Bought two units under one buyer, also issued termination notice.
   • MahaRERA validated cancellation under Section 11(5).
   • Ordered refund of entire ₹6.21 crore paid, to be processed within 60 days as per agreement indiatoday.in+1deccanherald.com+1deccanherald.com+5hindustantimes.com+5aurumproptech.in+5.

MahaRERA’s Key Directives

• Refund Timeline: ₹6.21 crore to be refunded within 60 days, no interest.
• Cancellation Deeds: Buyers must sign these within 30 days of refund.
• Promoter Rights: Godrej may proceed with cancellation under RERA if non-compliance by buyers continues indiatoday.in+5hindustantimes.com+5aurumproptech.in+5deccanherald.com+3aurumproptech.in+3m.economictimes.com+3.

Legacy of Raj Kapoor Studios

Raj Kapoor Studios once stood on this very Chembur site, founded in 1948 by Bollywood legend Raj Kapoor. Known as RK Studios, it was the birthplace of cinematic classics including Awaara and Bobby. A devastating fire in September 2017 gutted the studio, prompting the Kapoor family to sell the 2.2-acre property to Godrej Properties in May 2019—reported for around ₹180 crore .

Godrej’s Godrej RKS project aims to pay homage to the site’s iconic past by transforming it into premium residential towers coupled with luxury retail spaces, seeking to balance heritage and modern needs hindustantimes.com+6thestatesman.com+6timesofindia.indiatimes.com+6.

Why It Matters

• Buyer Responsibility: Homebuyers cannot defer contractual payments citing Covid and expect full refunds.
• Contractual Clarity: Agreements and termination clauses hold firm if promoters meet obligations and buyers default.
• Historic Revival: The project reflects a milestone in redevelopment—housing modern homes where legends once filmed.

Expert Commentary

“Since the allottees defaulted on their obligations by failing to make timely payments … the authority finds they are not entitled to relief under Section 18.”
— MahaRERA Chairperson Manoj Saunik maharera.maharashtra.gov.in+7aurumproptech.in+7m.economictimes.com+7homesindiamagazine.com+4thestatesman.com+4indiatoday.in+4maharera.maharashtra.gov.in+9hindustantimes.com+9timesofindia.indiatimes.com+9.

Looking Ahead

While MahaRERA affirmed contractual integrity and refund timelines, the spotlight remains on how restoration of RK Studios’ legacy and full project delivery will connect with buyers and Mumbai’s cultural narrative.

The post MahaRERA Orders Refund Paid for Seven Flats in Godrej RKS Project appeared first on Square Feat India.