Rights of Indian Homeowners during Delay of Possession (RERA)

Introduction

For many Indians, the idea of becoming a homeowner is an exciting prospect. However, this aspiration often comes with various challenges and potential pitfalls. These include the difficult task of choosing an appropriate property, as well as navigating the numerous fees and taxes that must be paid to governmental authorities. Above and beyond all this, the delays in obtaining possession of a home are extremely prevalent in our country. Citing reasons such as unexpected delays or force majeure, property developers often fail to deliver possession of the property at the stipulated time in the agreement. There are, however, certain remedies which are available in legislation for those who suffer these delays.

Analysis

When looking at reliefs which are provided to homeowners to terminate an agreement, the Supreme Court in Venkataraman Krishnamurthy & Anr. v. Lodha Crown Buildmart Private Limited[1]emphasized on the obligation of sellers to execute agreements as per the timeline cited to purchasers, and the right of homeowners to terminate the agreement and obtain full refund with interest, upon unnecessary delays.

More recently in Ivan Dsouza & anr Versus Shashwati Realty Pvt Ltd[2], a complaint was filed before the Karnataka Real Estate Regulatory Authority, wherein the complainant had paid a large consideration towards the purchase of a flat which was meant to be delivered on 31.08.2016, with a grace period of 6 months. However, 6 years later the flat was yet to be delivered to the complainant. Looking into the reliefs of the complainant, Shri G.R. Reddy found that the Supreme Court judgement of M/s Newtech Promoters and Developers Pvt. Ltd vs. State of Uttar Pradesh & Ors[3] was relied on. This judgement looked into a conjoin reading of Section 18(1), (2) and (3) of the Real Estate (Regulation and Development) Act, 2016. This gives the allottee of a property the option to seek a refund of the amount by withdrawing from the project, along with claiming interest on the delay periods.

However, it need not be necessary to wait 6 long years before availing reliefs. Another order by the Karnataka Real Estate Regulatory Authority directed the builder, Ozone Urbana Infrastructure Developers to refund an amount of 82 lakhs to the purchaser after failing to provide possession of an apartment due in June 2023. The builder had exceeded the grace period of 6 months, and violated other clauses of the agreement without providing any proper communication or reasoning. Again, reliance was placed on M/s Newtech Promoters and Developers to grant the unconditional and absolute right to the purchaser to obtain full refunds with interest payments.

Conclusion

The path to homeownership in India is often fraught with challenges, particularly regarding timely property possession. While many sale agreements include clauses allowing for grace periods or exemptions during ‘force majeure’ events, which builders might attempt to exploit, the Real Estate (Regulation and Development) Act (RERA) has emerged as a powerful counterbalance. RERA’s provisions are designed to protect homebuyers’ interests, offering various forms of relief and recourse against project delays, regardless of contract terms. Recent legal developments and judgments have significantly strengthened homebuyers’ positions, establishing key rights such as agreement termination with full refund and interest for unreasonable delays, and the ability to seek relief even for shorter delays exceeding agreed grace periods. This evolving legal framework represents a significant shift in the real estate landscape, fostering greater accountability and transparency. As awareness of these rights grows, it is likely to benefit both homebuyers and ethical developers, ultimately creating a fairer real estate market.

[1] 2024 SCC Online SC 182

[2] Complaint No. CMP/00774/2023

[3] [LL 2021 SC 641]