The Maharashtra Real Estate Regulatory Authority (Maharera) has ruled that if the promised facility is not constructed within a reasonable period, a home buyer can demand a refund of the money collected by the developer for the proposed club house.
In a recent order, the regulator directed a Mumbai-based developer to refund ₹Rs 5 lakh, which was collected as clubhouse membership fees, was recovered after it was discovered that the promised facility had not been constructed even more than six years after the apartments were handed over.
Case
The dispute involved a home buyer who purchased an apartment in a Mumbai housing project and took possession in October 2019. The buyer contacted MahaRERA and demanded a refund of the money. ₹5 lakh club house charges, plus interest, arguing that despite taking possession six years ago, the developer has failed to construct the promised club house or provide access to it.
According to the complaint, several years had passed after the execution of the agreement for sale and handing over of possession, yet the developer neither completed nor made the club house available to the residents, prompting the buyer to demand a refund along with interest.
“It is argued that the developer has also failed to provide any membership rights, access or benefits of the proposed clubhouse, while retaining the amount collected from the complainant,” Homebuyer said.
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developer defense
The developer submitted to MahaRERA that the said project is only a phase of a larger integrated redevelopment plan and the proposed club house is envisaged as a common facility for the entire larger layout and not exclusive to the said project.
The developer told MahaRERA, “The club house will be developed upon substantial completion of the larger layout, and the collection of club house charges at the time of possession will be as per the contractual arrangement between the parties. The complainant having acted under the agreement for sale and having received the benefits, cannot later back out of his contractual obligations.”
According to the developer, the delay was due to the shifting of the existing BEST bus depot and the need to obtain statutory approval from the authorities, he added that the construction of the club house had not been abandoned.
“The sale agreement contemplated collection of club house charges at the time of possession and provided for refund only if the club house was not constructed,” the developer told MahaRERA.
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Maharera decision
While investigating the dispute, MahaRERA noted that the sale agreement did not stipulate any specific timeline for the completion of the clubhouse, but the facility was clearly envisaged as part of the larger development.
The agreement also states that if the developer does not construct the club house within five years from the date of the agreement, the membership amount will be refunded without interest.
MahaRERA said in its order, “The agreement does not stipulate any specific timeline for the completion of the club house. In the absence of any agreed timeline establishing the default in the construction of the said facility and keeping in mind the contractual terms governing the refund, the complainant is entitled to refund of the said amount without interest.”
Accordingly, MahaRERA directed the developer to return the money. ₹Rs 5 lakh was collected for the proposed club house within 60 days. However, it refused to grant interest, noting that the agreement for sale specifically stipulated that any refund of clubhouse fees would be without interest and that no fixed timeline was set for construction of the facility.
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This is what legal experts say
According to legal experts, in 2024, MahaRERA makes it mandatory for developers to disclose the delivery date of facilities. Therefore, home buyers should confirm such deadlines during purchase.
“In the present case, no specific timeline was stipulated for the completion of the club house in the sale agreement executed in April 2018. MahaRERA held that, in the absence of a stipulated timeline, the developer is bound to provide the facility within a reasonable period,” said Trupti Daftary, a Mumbai-based advocate and lawyer.
“Recognizing that developers fail to disclose the time-frame by which amenities and facilities will be made available for the use of allottees, MahaRERA issued an order mandating greater transparency in 2024. Now, developers are required to make detailed disclosures about the amenities and facilities proposed for the building along with common areas as well as in the overall layout. The approved plans are required to be attached with the agreement for sale. The stipulated clause is mandatory and non-negotiable, And it also requires specifying the proposed date for handing over such facilities and amenities to the developers,” Daftari said.
Accordingly, Daftari said that before executing the agreement for sale, home buyers must verify the developer’s estimated timeline for providing the promised amenities and facilities.
“Even where such timelines have been specified, if the developer fails to provide the promised facilities within the prescribed or reasonable period, this order of MahaRERA serves as a useful precedent for allottees seeking refund of the amount collected for such facilities,” Daftari said.
