Yes, a builder may cancel a flat allotment after receiving payment, but the cancellation must generally be based on a valid contractual or legal ground. Simply accepting payment does not automatically mean the allotment can never be cancelled.
When can a builder cancel the allotment?
A builder may have grounds for cancellation if, for example:
- The buyer fails to make payments according to the agreed schedule.
- The buyer violates a significant condition of the Agreement for Sale.
- The buyer provided materially incorrect information or documents.
- The agreement contains a valid cancellation clause and its conditions have been met.
- The project or allotment is affected by circumstances specifically covered by the agreement or applicable law.
However, the builder generally cannot arbitrarily cancel an allotment merely because it wants to sell the property to someone else or demand a higher price.
What if the buyer has paid regularly?
If the buyer has complied with the agreement and made the required payments on time, an unexplained or unilateral cancellation by the builder can potentially be challenged. The buyer should ask the builder for the cancellation notice and the specific contractual clause or legal basis relied upon.
Depending on the circumstances, the buyer may seek remedies such as restoration of the allotment, refund of the amounts paid, interest, compensation, or other appropriate relief.
What should the buyer do?
The buyer should preserve the allotment letter, Agreement for Sale, payment receipts, bank statements, demand letters, cancellation notice and all correspondence with the builder. If the dispute cannot be resolved, the buyer may consider approaching the appropriate RERA authority or consumer commission, depending on the facts and the remedy being sought.
The buyer should also check the cancellation and forfeiture clauses in the agreement because these can significantly affect the amount that may be refunded. The exact legal remedy depends on the reason for cancellation, the terms of the agreement, payments made and applicable RERA rules.
