Experts predict that more real estate developers may encounter situations similar to the one described in the ruling, in which the amounts forfeited due to booking cancellations exceed the legally allowable limit. 

The Maharashtra Real Estate Regulatory Authority (MahaRERA) has ordered Godrej Greenview Housing Private Limited of Godrej Properties to refund the remaining amount to a homebuyer who canceled their booking of an apartment worth Rs 92 lakh at the Godrej Emerald project in Thane, near  Mumbai, and only deduct 2% instead of 5%. 

Ajit Dabhade, the buyer, paid an earnest money of Rs 5 lakh in June 2019 to reserve a flat worth Rs 92.17 lakh. However, Dabhade opted to revoke the reservation because of difficulties getting the promised loan to cover registration and stamp duty. Godrej Properties then lost all of the money that Dabhade had paid. 

MahaRERA ordered the developer to deduct only 2% of the flat’s total consideration value in response to Dabhade’s complaint; this would mean that the homebuyer would receive a refund of the remaining amount. 

Dabhade claimed that his inability to receive the entire loan amount as promised made it difficult for him to move through with the purchase. Dabhade chose to cancel, which led to Godrej Properties’ Forfeiture even though the developer offered an amnesty program in 2021 to lessen the interest that has to be paid. 

In its March 11, 2024 ruling, MahaRERA found the developer’s forfeiture of the entire amount be unlawful, citing provisions under the Real Estate (Regulation and Development) Act, 2016 (RERA).  

Although the booking application form permitted forfeiture of up to 5%, the authority clarified that Godrej Properties’ actions went beyond the bounds of the law. 

Upon canceling the booking, the developer lost all the funds the buyer had paid, which amounted to over 5% of the flat’s total consideration value. According to the terms of the booking application from dated June 22, 2019, the developer has forfeited this amount. But according to the RERA’s provisions, the developer’s forfeiture of this amount– more than 5% of the flat’s total consideration — is not right or appropriate,” the MahaRERA order stated. 

Additionally, MahaRERA upheld its previous August 2022 order, allowing a maximum forfeiture of 2% of homebuyers who decide to cancel. The authority clarified that Godrej Emerald and other registered projects are subjected to its directives retroactively. 

As a result, Godrej Greenview Housing Private Limited has been given 45 days from the order’s receipt to return the money Dabhade paid, less than 2% of the entire flat value. 

Godrej Properties did not respond to an email request for comments.