Builder Cannot Forfeit Amount Collected Beyond 10% Without Registered Sale Agreement: MahaRERA Directs ₹42.45 Lakh Refund
Pranav B Prem
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has held that a builder who accepted more than 10% of the flat consideration without executing a registered Agreement for Sale and subsequently resold the flat cannot forfeit the amount paid by the homebuyer. Declaring such forfeiture to be unlawful, MahaRERA directed Accord Builders to refund ₹42.45 lakh to the complainant homebuyer. The order was passed on December 18, 2025, by MahaRERA Member Ravindra Deshpande, in a complaint filed by Vaibhav Singh against Accord Builders in relation to a flat in the “Omkar Meridia” project at Kurla West, Mumbai.
The complainant had booked the flat in December 2012 and paid a total amount of ₹52.45 lakh, which included nearly ₹42.45 lakh paid by cheque towards the flat consideration and ₹10 lakh paid in cash towards parking. Despite having received close to 20% of the total consideration, the developer did not execute a registered Agreement for Sale for several years. An allotment letter was eventually issued only in July 2017, and even thereafter, discussions and negotiations on the draft agreement continued without any agreement being registered.
In January 2020, Accord Builders terminated the allotment on the ground that the complainant had defaulted in making further payments, forfeited the amount already paid, and subsequently sold the flat to a third party. Aggrieved by this action, the homebuyer approached MahaRERA contending that in the absence of a registered Agreement for Sale, the forfeiture was illegal. It was argued that the amounts paid constituted part consideration and not earnest money, and since the flat had been resold, the builder had not suffered any loss.
The complainant further relied on Section 13 of the Real Estate (Regulation and Development) Act, 2016, which expressly prohibits a promoter from accepting more than 10% of the cost of the apartment without first entering into a written and registered Agreement for Sale. According to the homebuyer, the developer had violated this statutory mandate by retaining the money since 2013 without executing the agreement.
The builder, on the other hand, sought to justify the termination and forfeiture by relying on the allotment letter. It claimed that possession had been offered, that the complainant had defaulted in making balance payments, and that the complaint itself was not maintainable since the flat had already been sold to a third party.
Rejecting these contentions, MahaRERA found that the developer had failed to comply with its statutory obligations. The Authority noted that the builder had retained nearly 20% of the consideration for several years without executing a registered agreement and held that “the action of the Respondent forfeiting the Deposit Amount even prior to execution of agreement for sale is contrary to the said Act”.
On examining Clause 10 of the allotment letter, MahaRERA observed that the clause only permitted recovery of interest on delayed payments and did not authorize forfeiture of the entire amount paid by the allottee. The Authority categorically held, “The Allotment Letter nowhere grants the Respondent entitlement to forfeit the entire amount paid by the Complainant under the guise of Clause 10 of the Allotment Letter. As a result, in my opinion, it was incorrect on the part of the Respondent to forfeit the entire amount paid by the Complainant towards the purchase price of the said flat”.
Emphasising that RERA is a social welfare legislation enacted to protect the interests of homebuyers, MahaRERA observed that the builder could not be permitted to “use the hard earned money of the Complainant without handing over possession of the said flat,” particularly when third-party rights had already been created in respect of the property.
Invoking its inherent powers under Regulation 39 of the MahaRERA General Regulations, the Authority declared the forfeiture unlawful and directed Accord Builders to refund ₹42,45,355 to the complainant within 30 days. It was further ordered that in the event of failure to refund the amount within the stipulated period, the sum would carry simple interest at 2% above the State Bank of India’s highest marginal cost of lending rate until realization. The complaint was accordingly allowed to the extent of refund, with no order as to costs.
Appearance
For Complainant: Advocate Shadab Jan
For Builder: Advocate Namrata Powalkar
Cause Title: Vaibhav Singh v. Accord Builders
Case No: CC006000000490389
Coram: Member Ravindra Deshpande
