Bungalow Layout Changed After Booking? Refund May Be Possible

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

MahaRERA determined that the complainants were entitled to a refund of the total sum paid to the developer, plus interest, minus amounts paid for taxes, stamp duty, registration fees, and other statutory charges to government authorities.

The authority ordered the developer to reimburse the sum paid by the homebuyers, plus any interest, within 60 days of the order.

In its order, MahaRERA stated that the parties’ contractual relationship had “irretrievably broken down” and that neither was willing to proceed with the transaction. It stated that constraining either party to continue with the sale agreement would not serve the aims of justice or achieve the objectives of the Real Estate (Regulation and Development) Act. As a result, it determined that the complainants were entitled to seek remedies under Section 18 of the Act.

The case

The MahaRERA verdict involved homeowners who booked a property near Mumbai in July 2021 for more than ₹2 crore. In December 2021, the buyers signed a registered agreement for sale and paid around ₹50 lakh. Possession of the bungalow was expected for June 30, 2023.

However, disagreements emerged between the parties concerning alleged alterations to the bungalow’s layout and design, a reduction in its built-up area, changes to the parking configuration, and assurances given 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 buyers informed MahaRERA.

The homebuyers opted to cancel the purchase in August 2022 due to project-related problems. According to the homeowners, the developer initially agreed to repay the full sum within 90 days, but then proposed a staggered payment schedule, delaying the refund. They further claimed that the developer issued forced demand notices and requested the execution of a cancellation deed, claiming false termination reasons, and that they refused to sign it.

Developer’s defence

In its answer to MahaRERA, the developer claimed that the homebuyer had failed to meet payment commitments 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 told MahaRERA.

The developer maintained that the complainants were bound by the provisions of the registered agreement for sale and could not contest the layout or specifications after signing the agreement.

The developer further claimed that the homeowners’ complaint about the reduction in built-up area was invalid because the agreement was based on the carpet area and plot area, with no contractual commitment about the built-up space. According to the developer, the homebuyers were attempting to raise issues outside of the scope of the agreement.

In its submission to MahaRERA, the developer asserted that all alterations to the layout and design were required by statutory requirements and authorization from competent authorities. It claimed that the alterations were legal, properly disclosed, and acceptable under the terms of the sale agreement. As a result, the developer maintained that no case of misrepresentation or breach of the RERA Act had been established.

MahaRERA’s verdict

According to the MahaRERA’s order, the record shows that arguments arose between the parties over the amended layout, parking configuration, and related promises, resulting in the rupture of the contract.

The MahaRERA stated that the respondent had agreed to cancel the transaction and refund the complainants’ funds, but the cancellation could not be completed due to disagreements over the proposed cancellation documents’ terms and recitals.