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K-RERA Orders Builder to Compensate ₹2.56 Crore and Foreclose Homebuyer’s Loan Due to 7-Year Delay
In a significant ruling under the Real Estate (Regulation and Development) Act, 2016 (RERA), a builder has been ordered to pay ₹2.56 crore (₹2,56,47,520) in compensation to a homebuyer and to foreclose the buyer’s housing loan due to a seven-year delay in the possession of a flat. The Karnataka RERA tribunal found that none of the reasons provided by the builder justified the delay in project completion or exempted them from the application of Section 18 of the RERA Act.
The homebuyer, who purchased an apartment in March 2014 using ₹15 lakh of personal savings and a ₹65 lakh home loan, faced a prolonged nightmare when the builder failed to deliver the apartment by the promised date of March 31, 2017. Despite signing a tripartite agreement that stipulated the builder would reimburse all pre-EMI payments until possession was granted, the builder did not fulfill this obligation, leaving the homebuyer to pay the pre-EMIs until June 2024. After exhausting all options, the homebuyer approached the Karnataka High Court in 2024, which granted a restraining order against the bank from taking any action to recover the outstanding loan amount. Subsequently, the homebuyer filed a case with the Karnataka RERA tribunal, seeking a refund and loan foreclosure.
The tribunal’s ruling emphasized that the builder’s claims of delays due to various factors, including legal issues, heavy rainfall, and the COVID-19 pandemic, were insufficient to justify the failure to deliver the apartment on time. The tribunal noted that the builder could not cite COVID-19 as a reason for delays that predated the pandemic. As a result, the Karnataka RERA ordered the builder to refund the full amount paid by the homebuyer, including interest, within 60 days from the date of the order, and to close the home loan account. The tribunal’s decision underscores the rights of homebuyers under RERA, particularly in cases of significant delays in possession.
Legal experts highlighted several key takeaways from this judgment. They noted that substantial delays in possession entitle buyers to exit projects and receive refunds, including self-contributions and EMI payments. The ruling also clarifies that builders remain liable for loan foreclosures and refunds when a pre-EMI scheme is in place, and that reasons such as COVID-19 cannot be used as a defense for delays that occurred prior to the pandemic. This case serves as a critical reminder for homebuyers to understand their rights under RERA and the importance of holding builders accountable for their commitments.
