builder cannot charge interest if as per agreement balance amount has to be paid at time of delivery of possession of property
terms of contract are sacrosanct
complain to RERA against builder
Can builder charge interest on amount that has not been processed by bank for stage not completed
Hi, I have a purchased a property with a builder which is under construction. Loan has been approved for an amount of 73% and 27% has to be paid by me out of which I have paid 22% and an amount of 5% has to be paid at the time of handover. And bank has paid 90% of the loan amount and withheld 10% for the time of registration. Builder has raised demand for 95% payment to be done. Since bank has held 10% amount, they are charging me interest on that 10%. Am I liable to pay interest on a amount which has not been approved by the bank. If not, in what forums can I complain?
Asked 10 months ago in Property Law
Religion: Hindu
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6 Answers
You have to go through the copy of the sale agreement in connection with the periodical payments to be made in this regard.
You will not find the in the agreement that the payment will be made through bank loan alone and if the bank defaults payment then you cannot be liable for that.
If the balance amount of 10% should be paid at the time of registration then the builder cannot demand the final amount without registration.
If the builder is violating the conditions of the sale agreement then you can take appropriate legal action
Is there a sale agreement between you and the builder? If there is a sale agreement that specifies the payment terms and payment schedules, builder may be imposing penalty and demanding additional 5% based on that. PLease check what the sale agreement, if exists, states.
Even if there is a clause in the sale agreement but based on the fact that builder has not handed over the property to you and that 90% of the consideration amount is already paid, you can issue a legal notice to the builder asking him to drop the demand and penalty interest he is trying to charge. Since the builder should be aware that the remaining 10% is subject to disbursal by bank at the time of registration, which is a standard practice, so nothing extra ordinary here.
If the builder doesn't agree, you can file a case against the builder before the district consumer commission.
- As per Sub-Section 1 of Section 13 of The Real Estate (Regulation and Development Act,), A builder will have to enter into an agreement to Sell with a home buyer, and then accept the booking amount which should not be more than 10%.
Hence demanding 95% payment at the time of sale agreement and only allowing 5% to be left for registration is against the Law, and the builder can also not ask interest upon the remaining amount.
- However, you should check the terms and conditions mentioned in the sale agreement , as both the parties are bound to comply the terms of the agreement.
- You can lodge a complaint against the said builder before the Consumer Forum or RERA .
Dear client,
Builders in India are required by the Real Estate (Regulation and Development) Act, 2016 (RERA) to comply with project schedules and budgetary obligations. RERA rules may have been broken if the builder is requesting payment in excess of the sum that the bank has allowed. The builder should not seek more than the building cost specified in the selling agreement, according to RERA Section 4(2)(l)(D). You might not be required to pay interest on the portion that was not distributed, in relation to the interest on the 10% that the bank withheld. If the builder's demand exceeds the amount permitted by the bank, you can register a complaint with the Real Estate Regulatory Authority (RERA) in your state, mentioning that interest was charged on the money that was withheld.
Hope this helps you.
No he can’t charge
