The Maharashtra Real Estate Regulatory Authority (MahaRERA) has ruled that a homebuyer can seek a refund of money collected by a developer towards a proposed clubhouse if the promised amenity is not constructed within a reasonable period.
In a recent order, the regulator directed a Mumbai-based developer to refund ₹5 lakh, that had been collected as clubhouse membership charges after finding that the promised facility had not been built, even more than six years after the apartment was handed over.
The case
The dispute involved a homebuyer who purchased an apartment in a Mumbai housing project and took possession in October 2019. The buyer approached MahaRERA seeking a refund of the ₹5 lakh clubhouse charges, plus interest, arguing that despite taking possession over six years ago, the developer had failed to construct or provide access to the promised clubhouse.
According to the complaint, several years had elapsed since both the execution of the agreement for sale and the handover of possession, yet the developer had neither completed nor made the clubhouse available to residents, prompting the buyer to seek a refund with interest.
“It is contended that the developer has also failed to provide any membership rights, access or benefit of the proposed clubhouse while continuing to retain the amount collected from the complainant,” the homebuyer said.
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Developer’s defence
The developer submitted to MahaRERA that the said project is only one phase of a larger integrated redevelopment scheme and that the proposed clubhouse is envisaged as a common amenity for the entire larger layout and not exclusively for the said project.
“The clubhouse would be developed upon substantial completion of the larger layout, and the collection of clubhouse charges at the time of possession was in accordance with the contractual arrangement between the parties. The complainant, having acted upon and derived benefits under the agreement for sale, cannot subsequently resile from its contractual obligations,” the developer told MahaRERA.
According to the developer, the delay was caused by the relocation of an existing BEST bus depot and the need to obtain statutory approvals from authorities, adding that construction of the clubhouse had not been abandoned.
“The agreement for sale contemplated collection of clubhouse charges at possession and provided for a refund only if the clubhouse was ultimately not constructed,” the developer submitted to MahaRERA.
MahaRERA’s verdict
While examining the dispute, MahaRERA noted that the agreement for sale did not prescribe a specific timeline for completion of the clubhouse but clearly envisaged the amenity as part of the larger development.
The agreement also stated that if the developer did not construct the clubhouse within five years of the agreement’s date, the membership amount would be refunded without interest.
“The agreement does not prescribe any specific timeline for completion of the clubhouse. In the absence of any agreed timeline establishing default in construction of the said amenity and having regard to the contractual stipulation governing refund, the complainant is entitled to refund of the said amount, without interest,” the MahaRERA said in its order.
Accordingly, MahaRERA directed the developer to refund ₹5 lakh collected towards the proposed clubhouse within 60 days. However, it declined to award interest, observing that the agreement for sale specifically stipulated that any refund of clubhouse charges would be without interest and did not prescribe a definite timeline for construction of the amenity.
This is what legal experts have to say
According to legal experts, in 2024, MahaRERA made it mandatory for developers to disclose the delivery date of amenities. Hence, homebuyers should verify such timelines during the purchase.
“In the present matter, the Agreement for Sale executed in April 2018 did not prescribe any specific timeline for completion of the clubhouse. MahaRERA held that, in the absence of a stipulated timeline, the developer is under an obligation to provide the amenity within a reasonable period,” said Trupti Daphtary, an advocate and solicitor based in Mumbai.
“Recognising that developers fail to disclose the timelines by which facilities and amenities would be made available for the use of allottees, MahaRERA issued an order in 2024 mandating greater transparency. Now, developers are required to make detailed disclosures regarding the facilities and amenities provided or proposed for the building, including the common areas, as well as those proposed in the overall layout. The approved plans are required to be annexed to the Agreement for Sale. The prescribed clause is mandatory and non-negotiable, and it also requires the developers to specify the proposed date for handing over such facilities and amenities,” Daphtary said.
Accordingly, Daphtary said that before executing the Agreement for Sale, homebuyers must verify the developer’s approximate timelines for providing the promised facilities and amenities.
“Even where such timelines are specified, if the developer fails to provide the promised facilities within the stipulated or a reasonable period, this MahaRERA order serves as a useful precedent for allottees seeking a refund of the amounts collected towards such amenities,” Daphtary added.
