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Can homebuyers refuse possession of an apartment if the developer fails to provide a car parking space?
Mumbai real estate update: Maharashtra Tribunal upholds MahaRERA ruling allowing homebuyers to deny apartment possession without promised amenities and parking
The Maharashtra Real Estate Appellate Tribunal (MREAT) has upheld a MahaRERA ruling that homebuyers can refuse possession of an apartment if it is not delivered with all promised amenities, including a parking space.
Legal experts say the decision, holding that the absence of the automated parking rendered the possession offer invalid, safeguards buyers from being compelled to accept possession without all agreed-upon amenities, such as an operational automated car parking system.
The case
Two homebuyers purchased two apartments in a building in Mumbai's Bandra West. The two homebuyers booked apartments on the 12th floor of a 2,460 sq ft apartment for around ₹13 crore in a 15-floor building.
The homebuyers registered the agreement for sale in December 2015, and they were promised possession by June 2016, along with a list of amenities and two automated parking spaces in puzzle parking (mechanical parking).
The agreements for sale stipulated that if the developer fails to hand over the possession of flats to allottees on a specified date, he is liable to pay homebuyers interest at the rate of 18% p.a. on the amount received by the developer from the homebuyers until the developer hands over the possession of the flats, and such interest may be deducted from the balance consideration payable by the homebuyers to the developer.
However, the developer failed to hand over possession of the flats to homebuyers by the agreed date. In August 2017, the developer offered possession, stating that some work in the building was still ongoing and would continue for some time.
They said this could affect roads, open spaces, and overall living conditions, and asked homebuyers to bear the inconvenience without raising complaints or objections.
The homebuyers refused possession, arguing that the building was incomplete and the developer was not in a position to hand over flats with all the amenities promised in the agreement for sale, including two covered automated car parking spaces.
They further alleged that the developer insisted they take possession after paying the balance consideration amount, without accounting for deductions due to the delay. Aggrieved by this, the homebuyers filed a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA).
MahaRERA's order
The MahaRERA in September 2018 directed the developer to pay to each homebuyer simple interest at the rate of 10.5% p.a. on ₹5,14,00,000 with effect from July 1 2016, till handing over the possession of the flats with all agreed amenities.
The MahaRERA also directed the developer to refund over ₹61 lakh charged for 118 sq ft of lift lobby area. The MahaRERA said that the developer is entitled to get the amount of refund adjusted towards the dues payable by the homebuyers. The authority also directed the developer to pay each homebuyer ₹20,000 towards the cost of their complaints in the MahaRERA.
However, aggrieved by the order, the developer challenged it in the MREAT.
The developer defended that the project received a part-occupation certificate in August 2017, and before the issuance of the part-occupation certificate, the developer had made arrangements for open car parking spaces for flats up to the 12th floor.
He contended that, though automated car parking was not installed or in operation on the date of the offer of possession, ample open parking was available in the building premises for the homebuyers.
Therefore, the developer argued that homebuyers' refusal to accept possession of the subject flats was unreasonable, unjustifiable, and on flimsy grounds. The refusal on the part of homebuyers to take possession of the subject flats was only with a malicious intention to avoid and/or delay payment of the balance consideration and to harass the promoter with a view to extracting money.
The developer further contended that all other homebuyers have been occupying their respective flats since August 2017.
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Maharashtra Real Estate Tribunal's order
The MREAT, upholding the MahaRERA order, observed that as per sub-section 1 of section 18 of the Real Estate Regulatory Act, the developer is supposed to hand over possession of the subject flats to homebuyers in accordance with the terms of the sale agreements.
On scanning the agreements for sale, it is revealed that one of the terms of the agreements for sale is that the developer has agreed to hand over the possession of the subject flats to allottees in a habitable condition with all amenities, together with two automated car parking spaces. However, the material on record clearly indicates that on the date of offer of possession, the provision for automated car parking was not in place, the MREAT order noted.
The order highlighted that it is seen from record that the developer had furnished an undertaking to the concerned authority that 48 numbers of temporary car parking spaces provided in the open spaces at ground level are sufficient for the occupiers up to 12 floors and in due course of time promoter shall complete the pit puzzle car parking system and stacked parking at stilt level before coming forward for the full occupation certificate. This itself is sufficient to show that on the date of the offer of possession, the provision for automated car parking was not in place.
The MREAT said that since automated car parking was not in existence when the developer's letter of offer of possession was sent in August 2017, the offer was not valid. Therefore, homebuyers were right in refusing to take possession of the flats.
Legal experts opine that the Tribunal order protects homebuyers' interests
Legal experts have maintained that the MREAT's order protects homebuyers from being forced to accept possession without getting the promised amenities.
"The Tribunal’s observation is a clear win for allottees because it reinforces that possession under RERA means complete possession with all promised facilities as per the agreement for sale, ready and operational. By holding that the absence of the automated parking made the possession offer invalid, it protects homebuyers from being forced to accept possession without getting all promised amenities (like automated car parking) in operational condition," said Trupti Daphtary, an advocate and solicitor based in Mumbai.
"The ruling in my view applies beyond parking, if any essential amenity promised in the Agreement is missing and the promoter tries to force possession without delivering all agreed facilities, the allottee can rightfully refuse possession of the flat," Daphtary added.
