Securing Your Investment: Understanding RERA’s Token Money Refund Rules
The Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, has brought significant changes to the real estate sector in India, especially in terms of financial transactions between buyers and developers. One of the critical areas RERA focuses on is the rules regarding token money and its refund. Token money is a nominal amount paid by the buyer to the developer as a sign of commitment to proceed with the purchase of a property. However, there are instances where a buyer may decide to cancel the booking, leading to the question of the refund of token money.
Token Money and RERA Compliance:
Under RERA, developers are mandated to register their projects with the state's Real Estate Regulatory Authority. This registration process includes strict guidelines on financial transactions, including the acceptance and refund of token money. The act aims to protect the interests of homebuyers by ensuring transparency and accountability from developers.
Maximum Limit on Token Money:
RERA stipulates a cap on the maximum amount of token money that can be collected from homebuyers. This limit is set to prevent developers from demanding excessive sums as token money, which could financially exploit consumers. The exact limit varies and is determined by the respective state authorities.
Refund of Token Money:
One of the significant benefits for homebuyers under RERA is the provision for the refund of token money. If a buyer decides not to proceed with the purchase, RERA outlines the conditions under which the token money must be refunded. Generally, the developer is bound to return the money collected from the buyers within 45 days of cancellation, after deducting the booking amount. The booking amount, however, is typically forfeited by the developer.
Interest on Delayed Refunds:
To discourage delays in refunding token money, RERA includes provisions for developers to pay interest on delayed refunds. This ensures that buyers receive timely compensation and that developers are held accountable for any undue delays.
Escrow Accounts:
RERA also mandates that developers maintain escrow accounts for their projects. A certain percentage of the funds received from the buyers must be deposited into these accounts, which are used to cover construction costs. This measure ensures that the developers do not misuse the funds and that the financial integrity of the transactions is maintained.
Cancellation of Property Deal:
The RERA empowers homebuyers to cancel an allotment of an apartment booked with a builder at any stage, even if there is no default on the part of the developer. The act clearly states that the booking amount shall be forfeited, and instructs the builder to return the balance amount within 45 days.
Treatment for Refund of Money:
The treatment for the refund of money varies depending on the stage of the transaction and the nature of the charges involved. For instance, stamp duty charges are determined by the state governments and have different rules for refunds. Registration charges paid to the government are non-refundable. In the case of GST, when a buyer books an under-construction property, the developer levies GST on the agreement value, which has its own set of rules for refunds.
Conclusion:
The introduction of RERA has significantly empowered homebuyers in India, providing them with clear rules and protections regarding financial transactions in real estate. The act's provisions for token money, including its refund, interest on delayed refunds, and the use of escrow accounts, ensure that the interests of homebuyers are safeguarded. It is essential for both buyers and developers to be aware of these rules to ensure smooth and transparent property transactions.
Also Read About : RERA's Token Money Refund: Ensuring Fairness in Real Estate Transactions
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Recent comments(1)
Surendra Dalvi
on basis of the verbal information provided by the sales person of the developers i have paid Rs.5.50 lac thru bank transaction to developers i.e 10% of the total cost as commited possesion in a year. After that they demamded more 10% for agreement execution . I asked for the format of their agreement & property title documents . They refuse to give property title douments & said same will provide after paying another 10% i.e 20% of the property amount. Against agreement format they gave me MOU format in which they showed all points in favour of developer. I asked to refund my money in month of march-24, builder staff told due to fy year end refund cant processsame will done in april-24. I approch in first week of april their one of the staff who expalined me drawback of cancellation. 1. 25% will be dedcuted -may be rule framed by them not clarified at the time of booking. 2. payment will start after six month & that too in stallment which may take more than 2 years.... for Rs.5.5 lac refund... By this any one can understand well planned dumping incocent people money by showing Lucrative ads . on my 3-4 visit at their office I found lot of inncocent peoples are sitting & fighting for refund. I dont understand how such a big scan doing company is running & melting inccocent peoples money.... hope such company sales promotion should be stopped immediately.