Q: My friend booked a flat in Kandivali on March 15, 2025, by paying Rs17 lakh, which is 10% of the total flat cost. The builder issued only an allotment letter mentioning details such as the flat number, total area, cost, and possession date. In May, my friend received a transfer order and had to cancel the booking on May 28, 2025. He requested the builder to refund the amount paid, but the builder claimed that, as per the terms in the allotment letter, the entire 10% amount would be forfeited. Can the builder legally do this under RERA? What are the rights of homebuyers in such cases, and what is the maximum deduction allowed?
– Rajendra Rane, Borivali (West) Ans: Under the Real Estate (Regulation and Development) Act, 2016 (RERA), homebuyers are entitled to specific rights regarding cancellation and refund of property bookings. MahaRERA has issued a model allotment letter that every builder must use when accepting the booking amount, which cannot exceed 10% of the total flat cost. As per MahaRERA’s orders dated August 12, 2022, and September 3, 2024, if a homebuyer cancels a booking, the builder can forfeit a maximum of 2% of the total flat cost.
The refund deductions are capped as follows: Within 15 days of booking: full refund, no deduction. Between 16 and 30 days: deduction up to 1% of total flat cost. Between 31 and 60 days: deduction up to 1.5%. Beyond 60 days: deduction up to 2% only. In your friend’s case, since the cancellation was made after 60 days, the builder can deduct only 2% of the flat’s cost and must refund the remaining amount. The clause in the allotment letter allowing forfeiture of 10% is contrary to MahaRERA’s orders and is therefore unenforceable.
Many builders continue to include such arbitrary clauses despite MahaRERA’s clear directives. A relevant case here is Preeti Dwivedi v/s Raymond Realty, where the complainant had paid Rs 6.07 lakh as booking amount for a Rs 1.16 crore flat. After cancelling the booking within three months, Raymond Realty insisted on forfeiting 10%, citing its allotment letter. MahaRERA held the clause arbitrary and directed the builder to deduct only 2% and refund the balance to the homebuyer.
MahaRERA has also mandated that builders must refund the balance amount within 45 days of cancellation. Failure to do so makes the builder liable to pay penal interest at the MCLR + 2% per annum on the refund amount. Homebuyers often have genuine reasons for cancelling bookings, but builders have long exploited this situation by imposing unfair forfeiture terms. MahaRERA’s rules now protect homebuyers from such practices, ensuring fairness and accountability in property transactions.
(Advocate Shirish V Deshpande is chairman, Mumbai Grahak Panchayat. Queries can be sent to him on email: shirish50@yahoo.com)
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