Should you keep paying EMIs after the builder misses possession date?

In a recent case involving a housing complex, Rivali Park Project in Borivali—now called Wintergreen—the builder contended that buyers making payments after the possession date has passed amounts to them agreeing to the delay. But the Maharashtra Real Estate Regulatory Authority (MahaRera) rejected the developer's claim that the homebuyers had consented to the delay because they kept paying the instalments despite the chance in possession date.

“As per Rera guidelines, in case of a delay by the developer in completion of the project, buyers may opt for either cancelling the deal and claiming refund with interest, or to continue the agreement and seek compensation for the delay period,” said Mukesh Jain and Associates, a Mumbai-based law firm.

Even though MahaRera ruled against the builder in this case between CCI Projects Ltd. and homebuyers, saying buyers were eligible to receive interest payment for the delay period, this might not always be the case.

So, does it make sense to keep making payments after the promised possession date passes?

According to Anuj Puri, chairman, Anarock Property Consultants, you may not have a choice.

“Frustrated with the prolonged project delays, many buyers stop payments to developers. However, under the agreement to sale, sellers or developers are well within their legal right to cancel the booking if buyers fail to honour their part of the payment deal. Since each case may be different, a legal person must always advise on such matters,” he said.

Puri added that although MahaRera ruled in favour of the buyers, the exact variables may differ from case to case and not all such cases are equal in the eyes of the law. “Despite Rera being in place across the country, it is still largely work-in-progress. It is very much a case-to-case scenario. Moreover, respective states’ and union territories’ Reras have their own rules and regulations. Therefore, buyers should first seek local legal advice before taking any action,” he said.

According to Anuranjan Mohnot, MD and CEO, Lumos Alternate Investment Advisors Pvt. Ltd, Rera needs to be simplified to protect interest of homebuyers as well as developers.

“To avoid situations like this, Rera should introduce a milestone-based project review instead of just having one parameter of delays with respect to the possession date. This will help buyers to sense serious deviations at an early stage and they can approach Rera for taking proactive steps to avoid major delays,” he said.

Even in states with a fully functional Rera in place, moving the authority in favour of homebuyers might turn out to be a challenge. It can be very frustrating to have inordinate delays in getting possession of your house, but discontinuing payments can cause further complications. Consider the circumstances and seek legal advice to protect your interests as a homebuyer.