Can Homebuyers Seek A Refund If A Developer Changes A Bungalow S Design And Layout After Booking Maharera Clarifies

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has clarified that homebuyers can seek a refund if substantial disputes arise regarding changes to a property's layout and design after booking, particularly when such changes lead to a complete breakdown of the contractual relationship between the parties.

MahaRERA held that the complainants were entitled to a refund of the entire amount paid to the developer, along with interest, excluding amounts paid towards taxes, stamp duty, registration fees and other statutory charges paid to government authorities.

The authority directed the developer to refund the amount paid by the homebuyers, together with applicable interest, within 60 days of the order.

In its order, MahaRERA observed that the contractual relationship between the parties had "irretrievably broken down" and that neither side was willing to proceed with the transaction. It noted that compelling either party to continue with the agreement for sale would neither serve the ends of justice nor further the objectives of the Real Estate (Regulation and Development) Act. Accordingly, it held that the complainants were entitled to seek relief under Section 18 of the Act.

The MahaRERA ruling came in a case involving homebuyers who had booked a bungalow near Mumbai in July 2021 for a total consideration of over ₹2 crore. The buyers executed a registered agreement for sale in December 2021 and paid approximately ₹50 lakh towards the purchase. The possession of the bungalow was scheduled for June 30, 2023.

However, disputes arose between the parties over alleged changes to the bungalow’s layout and design, a reduction in its built-up area, modifications to the parking configuration, and assurances purportedly made by the developer regarding compensation and restoration of parking access.

"Design changes and other changes were disclosed only shortly before execution of the agreement for sale, and they proceeded with the registration of the agreement solely on the basis of assurances extended by the developer regarding restoration of parallel parking access and compensation for the reduction in area," the homebuyers informed MahaRERA.

The homebuyers decided to cancel the transaction in August 2022 following disputes related to the project. According to the homebuyers, the developer initially agreed to refund the entire amount within 90 days but subsequently proposed a staggered payment schedule and delayed the refund. They further alleged that the developer issued coercive demand notices and sought the execution of a cancellation deed, citing termination reasons they considered inaccurate, and that they declined to sign it.

In its response to MahaRERA, the developer contended that the homebuyer had defaulted on payment obligations under the bungalow purchase agreement. "All changes were duly disclosed, were necessitated by statutory approvals, and the complainants voluntarily executed the agreement with full knowledge of the final specifications," the developer submitted before MahaRERA.

The developer contended that the complainants were bound by the terms of the registered agreement for sale and could not subsequently challenge the layout and specifications after having executed the agreement.

The developer further argued that the homebuyers’ grievance regarding the reduction in built-up area was untenable, as the agreement was based on the carpet area and plot area, with no contractual assurance regarding the built-up area. According to the developer, the homebuyers were attempting to raise issues beyond the scope of the agreement.

In its submission before MahaRERA, the developer stated that all changes to the layout and design were necessitated by regulatory requirements and approvals granted by competent authorities. It maintained that the modifications were lawful, duly disclosed, and permissible under the terms of the agreement for sale. Accordingly, the developer argued that no case of misrepresentation or violation of the RERA Act had been made out.

The MahaRERA, in its order, said that the record indicates disputes had arisen between the parties regarding the revised layout, parking configuration, and related assurances, which ultimately resulted in the breakdown of the contractual relationship.

“It is further evident that the respondent had itself agreed, in principle, to cancel the transaction and refund the amounts received from the complainants, however, the cancellation could not be concluded owing to disagreements regarding the terms and recitals of the proposed cancellation documents," the MahaRERA said.

"After considering the aforementioned observations, provisions of the Act, facts of the case, submissions of both the parties and the materials placed on record by both the parties, the Authority hereby concludes that the developer is in violation of the provisions of the Act and the complainants are entitled to claim refund along with interest on the total amount paid to the developer (excluding amounts paid towards taxes and other charges such as stamp duty, registration fees and such other amounts paid to statutory authorities)," the MahaRERA said in the order.