Can builder forfeit booking amount after giving notice 4 months later?


What legal remedy do I have to get my money back from Property Developers from whom I had purchased a plot from? A booking amount of more than 50% was paid. I was advised by someone that I should stop further payments and send them a notice through email to which I received no reply.

Now they have sent me a notice after 4 months stating that I should pay the balance amount with 2% interest else the booking will be cancelled and amount forfeited.

What should I do?

Answers (1)


205 votes

To advise you correctly we need to examine the Agreement executed between you and the builder. Generally, all such contracts provide an exit clause which mentions the liability of either party in case of default. When you wish to terminate a contract, then you need to follow the procedure prescribed in the contract.

The Supreme Court has recently held that the earnest money can be forfeited in full or in part by the builder if the earnest money was in the nature of payment to continue with the construction. However, if the payment was just part payment, then the same cannot be forfeited.

Therefore, it needs to be assessed as to which category your case falls in.

The option available to you is to send a Legal notice seeking recovery of the amount paid by you within 30 days and replying to his demand notice, making reference to the email sent by you earlier. If the payment is not made within 30 days, then you can initiate a recovery suit in the competent court.

Kindly contact us for any further details and action.


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