Financial Crisis? Can Builders Deregister Projects?

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has approved the deregistration of a stalled housing project in Pune after determining that all homebuyers had been refunded or had their claims settled, and there were no objections to the developer’s request to deregister the project.

According to the order, the developer requested deregistration because it no longer wanted to proceed with the project due to financial challenges, delays, and a preoccupation with other current ventures. The developer further informed MahaRERA that the project no longer had any allottees because Deeds of Cancellation had been signed with all customers who had agreed into Agreements for Sale, and all bookings had been duly cancelled.

MahaRERA authorized the deregistration request based on these representations and the absence of any ongoing claims from homebuyers.

The case

The case involves a developer trying to deregister a MahaRERA-registered project, claiming that it no longer intended to complete the development due to financial constraints. The developer also told the authority that all homebuyers’ claims for units in the property had been satisfied.

In its representation to MahaRERA, it stated, “The promoter (developer) no longer intends to proceed with the said project due to financial difficulties, pendency, and concern with other projects. That the said project now has no allottees (homebuyers), and that the promoter has officially completed Deeds of Cancellation of Agreements with all of the parties with whom the Agreements to Sale were signed, as well as cancelled the bookings in the said project.”

What does the MahaRERA order say?

MahaRERA analyzed documents and discovered that sales agreements with homebuyers had been terminated through filed cancellation deeds. In the instance of purchasers who had just made bookings, the developer produced papers indicating that refunds had been issued, as well as affidavits from the buyers confirming receipt of the monies paid.

The authority stated that notices were served to all allottees whose information had been provided by the promoter. However, none of them appeared before MahaRERA to contest the deregistration request or to question the developer’s claim that all dues and rights had been resolved.

Furthermore, MahaRERA issued a public notice allowing any interested parties to file objections to the proposed deregistration. No objections were submitted in response to the notice.It follows that if the Authority determines that a project registration number provided to a project is unlikely to be finished, the Authority is required to take awareness of the situation and take whatever actions are necessary to bring the project to a conclusion. The Authority sees no point in keeping a project registration number when there are either no allottees or allottees whose legal responsibilities have been met by the Promoter. Thus, the project is deregistered,” MahaRERA stated in its order.

Based on its findings, MahaRERA ordered the project’s deregistration and forbade the promoter from further marketing, booking, selling, or renting flats in the property.