Pay up on time or money and flat is ours, warn builders
Recent SC judgment states buyers will have to forfeit initial payment if remaining instalments are not made on time
Make sure you read the agreement carefully before you buy a flat and sign on the dotted line.
Recently in Delhi, a buyer lost Rs 7 lakh to a builder after he was unable to pay the rest of the amount for the property. As per an October 18 Supreme Court judgment the builder had the right to keep the initial amount paid and even cancel the deal since the buyer had failed to make the payment on time. The property was worth Rs 63 lakh.
The purchaser of an immovable property could forfeit his money if he fails to pay the remaining sum, the apex court said.
Realty expert Ajay Chaturvedi believes the judgment could set a dangerous precedent. “Builders who aren’t professional could collect earnest money and then come up with some frivolous excuses claiming that the buyer didn’t stick to the agreement, and thus call off the deal and forfeit the money,” he says.
Advocate Vinod Sampat says the agreement holds the key to the deals. “The buyer will now have to be very cautious before signing and registering an agreement. Even a simple mistake could cost him not only his money but even the deal. This helps builders save themselves from buyers who give a small amount of money and then not pay the rest, because of which the builder’s project gets stuck,” he adds.
Sampat adds that the agreement executed by the developer with the flat purchaser should be in conformity with the law of the land.
“A builder has no right to collect more than 20 per cent of the total amount from the purchaser before executing the registered agreement. A builders cannot collect more than 30 per cent, thus aggregating 50 per cent unless he completes the construction of all slabs of the building to be sold. Such rules should be read before signing an agreement.”