What Are The Points You Should Know, Before You Cancel An Apartment Booking?

Are you in dilemma after you already have book your flat and you decide to cancel the booking? Then, there are main points that should be remembered while you cancel the residential flat. It will be dependent on the terms and conditions in the builder-buyer agreement and whether or not this agreement has legal validity.

There are many reasons that are not under the buyers control and they are then forced to end their home-purchase journey abruptly. In the last two years, there have been several cases, where buyers had to cancel the apartments they had booked, because of the sudden loss of income due to the Coronavirus pandemic.

In other cases, the buyer may have a change of mind, after discovering a problem with the property for sale. In both the scenarios, the buyer will have to cancel the flat booking. This is a situation that every buyer should consider, before they start their home purchase journey.

What Happens When You Cancel A Flat Booking?

When a buyer decides to cancel the booking of the flat, the terms and conditions in the builder-buyer agreement will come into play. Also, whether or not this agreement has legal validity – i.e., whether the builder-buyer agreement has been registered.

Thus, reading the registered builder-buyer agreement or agreement to sell should be read carefully because it becomes of chief significance while you cancel the booking.

Cancellation Of Flat Booking And Refund Of Token Money

The major concern that comes up is the refund of the token money as the buyer pays a certain percentage of the total amount to book the best home for sale. It is also known as booking amount, token money or Bayana.

Generally, at least 1% of the deal value is paid as the token money by the buyer to the seller or the builder, when the two parties give an in-principle approval to the deal. At this juncture, the paperwork will start after this only.

For example, if you are buying a new unit in an under-construction project from a builder, by the time the builder-buyer agreement is created, the buyer has to arrange another trance of the advance payment, which is typically 10% of the property’s value, after which the document is registered to attain a legal validity.

Note here that the arrangement of payment would be different in case you are buying a resale property. In this case, buyers have to typically make the payment in two tranches only.

As long as the agreement is not registered, the seller cannot deduct any money from the advance amount. If the buyer is able to negotiate well, he may be able to get his entire money refunded that he has given as booking amount for his residential flat for sale.

Cancellation After Builder-Buyer Agreement Is Registered

What is the buyer wants to cancel the booking after the builder-buyer agreement is registered? Let’s have a close look at this point of time and stage. 

From a buyer’s point of view, cancellation at this stage is costly as at this stage of cancellation as when the builder-buyer agreement is registered, the seller is legally empowered to forfeit a certain portion of this amount. Every builder-buyer agreement is written differently and depending on the terms and conditions mentioned in the agreement, the buyer will have to let go of a part of the entire amount that he has paid.

But, sometimes the real estate developers do not force the buyers to give up complete booking amount as it helps them for brand-building exercise and to gain the consumers’ trust. As per market experts, unless a buyer is willfully trying to interfere with the deal, developers are open to refunding the booking amount, as long as the reason behind the cancellation of the property is genuine and legitimates.

What are the Legal Remedy To Claim Refund For Flat Cancellation?

With the powerful intervention of RERA in 2016, now if the buyer is not happy with the developer’s conduct, concerning the refunding of money, they can approach the Real Estate Regulatory Authority of their respective state.

This can be done, if the seller is a developer and the unit purchased is an under-construction property or even a ready to move in property.

To get your grievance addressed in case of you have bought a resale home from an individual seller, you will have to approach the consumer court. But it is always feasible to have a discussion and negotiate with the seller as these processes take time to reach a satisfactory outcome for both the parties.

What Are The Things To Keep In Mind?

As home buyers there are a lot many things that need to be taken care of to make a sound investment in real estate. The buyer has no legal right over the property, till the builder-buyer agreement is registered. This is why it is important to keep everything documented and registered as it requires lifetime savings that you cannot afford to lose.

1. For every transaction, take a receipt from the seller and keep all such copies safe with you handy.
2. Carefully read the clause pertaining to cancellation of booking and get it changed, if you find that it is heavily in favour of the seller.
3. Hire a legal advisor to carry out the process, to reduce the chances of errors.
4. Ensure that seller is following the norms as per mentioned in the agreement.

So, buying an apartment is surely herculean but if you think that cancellation is easy, then you are wrong. As, it involves efforts and precise knowledge to get back the token amount without giving up even a penny. So, we hope this article would have helped you out while you decide to cancel the booking of your flat.

Happy investing and keep reading!!!

Read Also : Uttar Pradesh Online Building Plan Approval System-UPOBPAS