MahaRERA’s Historic Ruling: Cancels Pune Home Buyers’ Agreements for Non-Payment

Pune, 22nd March 2024: In a landmark judgement, MahaRERA has issued a historic order marking the first instance where it has canceled home buyers’ agreements and instructed the registrar to take appropriate action. This decision marks a shift indicating customers too are defaulters and action can be taken against customers too. The registrar will now take steps to remove names from the index II. MahaRERA’s balanced stance sets a precedent for the nation.

In September 2023, The Maharashtra Real Estate Regulatory Authority (MahaRERA) directed nine homebuyers in Pune to execute cancellation deeds after city-based developer GERA Developments filed a complaint with the real estate regulator stating that the homebuyers had failed to make timely payments in accordance with their respective sale agreements.

GERA Developments complained that the nine homebuyers had made a partial payment for the purchase of apartments in their respective real estate projects and executed agreements for sale between 2019 and 2020. However, they had failed to pay the balance despite being issued demand notices from time to time and receiving payment reminders.

The nine homebuyers had paid between 10 to 20 percent and blocked the apartments since 2019. The promoters were in a situation where they were not able to cancel the agreement and sell it to another buyer nor were they getting the balance payment from the existing homebuyers.

The nine apartments have an overall average size of 1,000 sq ft each. The developer made a submission before MahaRERA to issue termination directions and sought cancellation deeds, with the same to be conveyed to the Sub-Registrar.

The MahaRERA, via its order dated August 25, directed the homebuyers to present themselves to execute the cancellation deed within 30 days of the order, on a day mutually convenient to both parties.

The order added that in the event the homebuyers failed to come forward to execute the cancellation deeds, the developer could file a non-execution application (non-compliance) against the homebuyers before MahaRERA for further action.

The order was quite balanced, asking homebuyers in default to come forward and sign the cancellation deed. After Gera’s filing with MahaRERA, five of the nine homebuyers came forward and paid the balance amount.

The remaining four homebuyers had not come forward, and the company decided to submit their status to MahaRERA to go ahead with the cancellation deed.

What was the violation?

According to MahaRERA, the homebuyers violated section Section 19(6) of the RERA Act. The section mandates every homebuyer who has entered into an agreement for sale to take a flat, plot or building and make necessary payments in the manner and within the time specified in the sale agreement.

Further update on the case

After Gera Developments had filed a suit against 9 defaulters in World of Joy for non payment, MahaRERA issued the order against the nine homebuyers. The customers got an order for their agreement to be cancelled and as a result, five homebuyers came forward and made the necessary payment and four did not.

Subsequently, Gera Developments went back to RERA and appealed that the agreements should be cancelled by RERA.

The regulator has passed the agreement cancellation order against the home buyers for non-payment making it an industry first.

Mr. Rohit Gera, Managing Director, Gera Developments said, “We are very happy with this outcome. The fact that the customers were not coming forward to pay nor were they executing the cancellation deeds was causing tremendous hardship as we have been unable to sell all these apartments in the market as we could have been accused of selling the same apartment to multiple people.

We have spent all the money on the construction and received only a fraction from these customers. This order now allows us to sell the apartments. It is also important that the regulator has taken a balanced view in favour of a promoter. This is a sign of maturing of the industry and the recognition that not all promoters are wrong all the time.”