‘Can’t take advance from home buyers prior to agreement’

Hearing an appeal of a real estate promoter, the tribunal chaired by Justice B Rajendran found that the promoter had made an advertisement claiming that the home buyers need not pay GST on their houses. However, the promoter asked home buyers P Govindara and Deeparaj to pay the tax on the house they booked at a project in Pazhavanthangal.

The home buyers paid Rs 3 lakh as an advance for 1,277 sqft flat against the total consideration of Rs 98.47 lakh, but the promoter reduced the size to 1,229 sqft by reducing the Rs 3.20 lakh from the total sale consideration. However, the buyers disagreed to the terms related to plinth and carpet areas.

The promoter also sought GST by contravening its advertisement, forcing the home buyers to seek a refund. In overall, the home buyers had paid Rs 48.22 lakh. “Before entering an agreement, the developer shall not demand more than 10 per cent of the cost of the flat as advance without entering into a written sale agreement. In this case, the promoter has collected more than 10 per cent of the contractual amount before entering into contract. Therefore, it is a violation of section 13 of RERA,” the order said.

Noting that the promoter gave an acknowledgement letter for the receipt of advance that had terms and conditions, the tribunal observed the contention that without entering into a written contract, there is no binding agreement between the parties and hence the RERA cannot be invoked is wrong.

Also, the tribunal directed the promoter to refund the amount paid by the home buyers with a compensation of Rs 1 lakh.