Although we all want to book a flat or apartment, cancellations do happen for various reasons pertaining to the individual or of the family too. Most of the cancellations happen because of the discontent of the customers towards the builder. Whatever may be the reason many are compelled to cancel the booking but very few know the procedure of cancellation. In such cases the buyers get exploited in the hands of the real estate developers.

In many instances the projects are delayed and hefty cancellation fees are levied by the builders to the buyers. We cite below few situations which the buyers may face and how to deal with them.

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Follow the agreement:

residential property agreement

The legal advisors ask the buyers to go through the sale or the allotment agreement carefully and check the clause relating to cancellation of the booking.Cancellation, if at all, it happens should happen according to the clause as prescribed in the allotment agreement. Some agreements have clauses such as; ‘If the developer does not commence the project construction within a year of the issue of the allotment letter, the builder shall refund the amount duly paid by the buyer with a simple interest of 6 percent per annum’. Thus the legal experts caution the buyers to be aware of their rights as per the agreement they enter into with the builder.

If there is no agreement or cancellation clause:

There are many cases where the agreement is not entered into or the cancellation clause is absent in the allotment letter. In such instances the advice of the lawyers are that in cases where there are no clauses of cancellation the contract can be cancelled on certain grounds of impossibility to carry on the contract which can be made out of the agreement.However they caution that the agreement should not be cancelled on baseless grounds and if it is it can be a breach of contract and one may have to face legal implications of that too.

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Use the allotment letter:

property allotment

In cases where there are no agreement at all between the builder and the buyer there may be a receipt, allotment letter or application form which states the terms and conditions of cancellation and the mode of payment of the amount thereof. If there are no such clauses of cancellation then the letter of allotment or the receipt can be used while asking for the refund of the amount paid by the buyer.

The lawyers opine that generally the cancellation amount or the charge is a part of the sale agreement. But if the developer refuses to pay the booking amount back, even when the clause is present, the buyer can file a case in the consumer forum asking for his refund back with the interest due.

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However the buyers should note that registration charges stamp duty, VAT and service taxes if paid is not refundable even if it is paid.

8 Responses

  1. Dattaraj

    Our builder form Apartment with the help of 4 members out of 21 members. earlier we are not aware about the same. but when we asked the builder about formation of Co-Operative Housing Society, he told he already formed Apartment. we told him that we wants to form Co_operative Society, but he refused to do so, in this matter what we have remedy for cancellation of Apartment Deed and such other documents and formation of Co-Oprative Society.

  2. aruna

    Recently I also cancelled a flat because they are fraud builders.They used sole project, which is not approved by any authority of construction work.By reading the above article we can get some information about the cancelling of an apartment.

  3. Niranjan Reddy

    Now a days the cancellation process is very critical with some logic. If you follow certain rules then it will be very simple. While cancelling a flat or house you have to follow agreement. According to my view this article is good. But I’m requesting you please add some real time examples if possible. Then everyone can understood very easily. Thank you.

  4. Ankith

    Recently I cancelled a flat due to the delay in completion of the project. They were promised to give within twenty months of time, but they were unable to complete within that period. after a two years now they started the construction. now they are again asking them for one more year to complete. but I lost hope on them to wait and I did the cancellation of flat & I got my money with interest which is mentioned in agreement.

    • Paramesh

      Hi Ankith, it is not a good decision of cancellation a flat for the reason of delay. There is a another option also, if the builder make delay to complete the project, they usually pay a rent which is mentioned in you MOU or agreement. Usually delay happens due to some construction approvals and technical modification.

      • Subramanyam

        Hi Paramesh what you said is correct, but all builders are not paying rent. Some builders are not giving interest which they mentioned in MoU. Some more builders are not giving paid amount also. They are not answering properly, and delayed to give. Some more Builders are not showing construction approvals also. In these situations better to cancel and move to some other builder.

  5. Preetham

    This article clearly explained about the Cancellation process. We should go through the clauses in agreement before booking/buying flat, it is very important and check the clauses of cancellation is present or not in your agreement.


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