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Can a developer forfeit a homebuyer’s booking amount if the sale agreement is not signed and the booking is cancelled?
MahaRERA update: Developers can forfeit only 2% of the total property cost if a homebuyer cancels the booking after 61 days, the authority said in its order
The Maharashtra Real Estate Regulatory Authority (MahaRERA), the state's real estate regulator, has ruled that a real estate developer cannot forfeit the entire amount paid by the homebuyer if the agreement for sale has not been executed and the booking is subsequently cancelled. The MahaRERA said that in such cases, the developer can deduct only 2% of the flat’s cost as cancellation charges.
The case
A homebuyer, Rajesh Singh (name changed), had booked a 2 BHK apartment worth ₹62.9 lakh in Panvel, near Mumbai.
The homebuyer had paid ₹6.55 lakh, including taxes and stamp duty. The homebuyer later cancelled the booking after the developer allegedly failed to secure a home loan under an interest subvention scheme, as had been promised earlier.
The developer, on cancellation, forfeited the entire amount paid by the homebuyer, prompting the homebuyer to move to MahaRERA seeking a refund with interest and compensation.
The developer argued that since no agreement for sale had been signed, the buyer was not entitled to relief under RERA.
MahaRERA's verdict
The MahaRERA rejected this contention, observing that the booking form itself was provisional and could not be treated as a final allotment letter or binding sale agreement.
“If the booking form is provisional in nature, the amount accepted from the homebuyer shall also be treated as provisional,” the MahaRERA, in an order dated October 3, 2025, said.
The MahaRERA cited order number 31, issued in 2022, which states that a developer is allowed to forfeit only up to 2% of the unit's cost when a booking is cancelled after 61 days.
Since the developer had forfeited the full ₹6.55 lakh, the MahaRERA ruled that the developer must refund the remaining amount after deducting only 2% of the total consideration within 60 days.
According to MahaRERA, the developer had accepted more than 10% of the flat’s cost without executing a sale agreement, which is in violation of Section 13(1) of the Real Estate (Regulation and Development) Act, 2016, prohibiting promoters from taking more than 10% of the property value before signing the agreement for sale.
The MahaRERA further rejected additional claims made by the homebuyer for compensation, along with several other components, as well as the refund of the consideration amount.
All about MahaRERA
The Maharashtra Real Estate Regulatory Authority (MahaRERA), the state’s real estate regulator, has registered over 50,000 projects since its inception in May 2017. The authority has also addressed nearly 30,000 complaints from homebuyers and other stakeholders.
