Clauses in Godrej Properties’ sale agreement of ‘The Trees’ project “most unjust and exploitive”: MahaRERA
New Delhi: MahaRERA has observed that the forfeiture clause in the sale agreement of “The Trees” project by Godrej Properties is “most unjust and exploits flat purchasers”. It has struck down the clause in the sale agreements of 2 apartments in the project when an NRI home buyer approached the authority, according to a news article by Times of India.
“I find that the clause to forfeit 20 percent of the amount of total consideration plus interest on delayed payment is one sided. Therefore, it is unreasonable and unfair,” MahaRERA member B D Kapadnis was quoted as saying in the article.
Kapadnis upheld the contention of the advocate of Amit Agarwal, an NRI homebuyer. He ordered Godrej Properties to return Rs 39 lakh to the hombuyer. He also ordered Godrej Properties to pay Rs 20,000 towards cost of complaint.
The Trees is a residential project located at Vikhroli in Mumbai. In October 2016, the home buyer and the realty player had executed sale agreements for 2 apartemnts measuring 480 square feet. The price was Rs 1.4 crore each. The forfeiture clause was inserted by the realty firm in the homebuyer’s default in payment as per the timeline.
In his petition, Agarwal said he paid Rs 97 lakh. In March 2018, Godrej Properties Ltd (GPL) allegedly terminated the sale agreements because of delay in balance payment by Agarwal. It allegedly forfeited Rs 56 lakh and but didn’t return the balance money. It allegedly asked for reinstatement fees of Rs 3 lakh and also Rs 9 lakh interest amount. Agarwal then filed a petition before MahaRera for the refund.
GPL argued that the home buyer was not paying money as per the agreed schedule and as much as 20 percent of the total consideration amount is ‘earnest money’ that could be forfeited legally.
Kapadnis observed that the forfeiture clause in the sale agreements entered into under Maharashtra Ownership of Flats Act (MOFA) invites cancellation of the bond. It also empowers the promoter company to recover interest for any delay in payment till the balance amount is paid out. “It is a most unjust condition and it exploits the allottees,” Kapadnis said.
Kapadnis said that the home buyer didn’t have equal bargaining power in the agreement as he had to simply sign the printed agreements.