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Economic Times
8 hours ago
- Business
- Economic Times
Can builders invoke force majeure clause to delay possession? Know what RERA says
You've been waiting ages for your dream home, and you've always paid all your home loan EMIs on time. But even after all this, actually getting the keys to your flat feels like a distant dream. Why? The developer is not giving you any clear answers, just keeps throwing around the term ' force majeure', which basically means 'uncontrollable circumstances', to justify these delays. But what exactly are these circumstances, also known as 'force majeure ' situations? Do distressed homebuyers have any legal recourse against such delays under RERA? Read on to know more. All you should know about the force majeure clause Section 6 of the Real Estate (Regulation and Development) Act 2016 allows developers to apply for extensions when their projects face delays caused by ' force majeure' events. These events are generally unforeseeable and beyond the builder's control, and so, they need more time to finish the project. Also Read: Even RERA won't help if you commit these 6 mistakes while buying a property According to the Act, a 'force majeure' event is defined as a 'case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project'. Adds Advocate Pranav Gupta, legal advisor at the Confederation of Real Estate Developers' Associations of India (CREDAI) and expert in real estate matters, 'Real estate developers can use events such as earthquakes, floods, pandemics (e.g., COVID-19), and court injunctions as valid grounds for invoking force majeure '. 'While force majeure i s a legitimate defense, its misuse is a frequent point of litigation. Builders often attempt to classify generic commercial difficulties under this clause, but courts have insisted on a strict interpretation. Judicial pronouncements require developers to show a causal nexus, which means that the event must directly impede performance. To avail relief under this clause, developers must submit credible documentary evidence and a formal application using Form REP-V. ', he explains. Experts say that while RERA has no statutory obligation to grant extensions, it generally does provide extra time to builders in cases of court orders, or the pandemic, where such extensions were granted en masse. Also Read: RERA impact: Homebuyer to get Rs 65 lakh compensation for delay of over 9 years in possession of a home in Delhi NCR However, project extensions on the grounds of financial constraints, shortage of raw materials, or workforce unavailability do not qualify for relief under this clause, since they are seen as occupational risks on the part of the developer. But, according to Harshit Batra, whose firm deals in real estate matters, ' force majeure circumstances also includes, but are not limited to bans/ orders/ regulations on mining activities, regulation of the construction and development activities by the authorities like the National Green Tribunal, Hon'ble Courts and other quasi-judicial authorities on account of the environmental conditions, restrictions on usage of water, shortage of labour and materials, lockdowns, etc'. How long can builders keep extending projects by enforcing force majeure clause? As per Section 6 of the RERA Act, a promoter can request an extension of up to one year by providing valid reasons for the project's though the law specifies that developers can't keep asking for indefinite extensions to delay their delivery obligations, it also mandates that 'no application for extension of registration shall be rejected unless the applicant has been given an opportunity of being heard in the matter'. This means that if the relevant authorities haven't reviewed this extension application, the project might be stuck in a limbo, which also means that there is not much that homebuyers can do regarding the project. According to Gupta, any attempt to stretch this one-year limit under Section 6 must be grounded in documented, exceptional conditions. 'Courts have frowned upon habitual extensions sought under the pretext of continuing uncertainty. But, the key principle here is proportionality — a temporary disruption cannot justify indefinite postponement', he says. Can builders include clauses in the sale agreement that facilitate the auto-extension of the project delivery date? Sometimes, in a bid to protect themselves, builders might try to include auto-extension clauses in the sale agreements, which could potentially give them blanket power to postpone handing over possession, using vague justifications. Frequently, these clauses try to bypass the legal options that the buyers have regarding delivery schedules. However, experts have pointed out that such one-sided clauses are not generally enforceable in standard builder-buyer agreements, and RERA also overrides these clauses. Also, under various other laws, such as the Indian Contract Act and the Consumer Protection Act, such unfair terms can be struck down as unreasonable. Generally, most model RERA sale agreement clearly state that 'the promoter assures to hand over possession of the plot/ unit/ apartment for residential/commercial/industrial/ IT/ any other usage (as the case may be) along with parking (if applicable) as per agreed terms and conditions unless there is delay due to ' force majeure ', court orders, government policy/ guidelines, decisions affecting the regular development of the real estate project. 'If the completion of the project is delayed due to the above conditions, then the allottee agrees that the promoter shall be entitled to the extension of time for delivery of possession of the Plot/ Unit/ Apartment for Residential/ Commercial/ Industrial/ IT/ any other usage (as the case may be)', it further adds. However, it does not state any standard timeline for such extensions, which potentially leaves room for ambiguity. In case the project does not go through due to such ' force majeure ' situations, the allotment automatically stands terminated. Not only will the promoter have to refund the entire amount to the allottee within 90 days, but also inform them 30 days before the termination, adds Batra. Can RERA grant extensions without first consulting buyers involved in the project? 'Starting May 2025, a public notice is required to be issued, i.e. the extensions granted by the relevant RERA will have been made subject to the issuance of public notice in prominent newspapers inviting objections towards the grant of such extensions under Section 6 and for consideration under Section 7(3). This now forms part of a mandatory requirement on the part of promoters', per Batra. Gupta says that while there is no statutory obligation to seek buyer input, RERA's decisions can be challenged if they seem arbitrary or lack transparency. Buyers' associations are free to seek a legal review if such extensions are granted without due process or documentation.
Time of India
11 hours ago
- Business
- Time of India
Can builders invoke force majeure clause to delay possession? Know what RERA says
All you should know about the force majeure clause Academy Empower your mind, elevate your skills How long can builders keep extending projects by enforcing force majeure clause? Can builders include clauses in the sale agreement that facilitate the auto-extension of the project delivery date? Can RERA grant extensions without first consulting buyers involved in the project? You've been waiting ages for your dream home, and you've always paid all your home loan EMIs on time. But even after all this, actually getting the keys to your flat feels like a distant dream. Why? The developer is not giving you any clear answers, just keeps throwing around the term ' force majeure ', which basically means 'uncontrollable circumstances', to justify these what exactly are these circumstances, also known as 'force majeure' situations? Do distressed homebuyers have any legal recourse against such delays under RERA ? Read on to know 6 of the Real Estate (Regulation and Development) Act 2016 allows developers to apply for extensions when their projects face delays caused by 'force majeure' events. These events are generally unforeseeable and beyond the builder's control, and so, they need more time to finish the to the Act, a 'force majeure' event is defined as a 'case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project'.Adds Advocate Pranav Gupta, legal advisor at the Confederation of Real Estate Developers ' Associations of India (CREDAI) and expert in real estate matters, 'Real estate developers can use events such as earthquakes, floods, pandemics (e.g., COVID-19), and court injunctions as valid grounds for invoking force majeure'.'While force majeure is a legitimate defense, its misuse is a frequent point of litigation. Builders often attempt to classify generic commercial difficulties under this clause, but courts have insisted on a strict interpretation. Judicial pronouncements require developers to show a causal nexus, which means that the event must directly impede performance. To avail relief under this clause, developers must submit credible documentary evidence and a formal application using Form REP-V. ', he say that while RERA has no statutory obligation to grant extensions, it generally does provide extra time to builders in cases of court orders, or the pandemic, where such extensions were granted en project extensions on the grounds of financial constraints, shortage of raw materials, or workforce unavailability do not qualify for relief under this clause, since they are seen as occupational risks on the part of the according to Harshit Batra, whose firm deals in real estate matters, 'force majeure circumstances also includes, but are not limited to bans/ orders/ regulations on mining activities, regulation of the construction and development activities by the authorities like the National Green Tribunal , Hon'ble Courts and other quasi-judicial authorities on account of the environmental conditions, restrictions on usage of water, shortage of labour and materials, lockdowns, etc'.As per Section 6 of the RERA Act, a promoter can request an extension of up to one year by providing valid reasons for the project's though the law specifies that developers can't keep asking for indefinite extensions to delay their delivery obligations, it also mandates that 'no application for extension of registration shall be rejected unless the applicant has been given an opportunity of being heard in the matter'.This means that if the relevant authorities haven't reviewed this extension application, the project might be stuck in a limbo, which also means that there is not much that homebuyers can do regarding the to Gupta, any attempt to stretch this one-year limit under Section 6 must be grounded in documented, exceptional conditions. 'Courts have frowned upon habitual extensions sought under the pretext of continuing uncertainty. But, the key principle here is proportionality — a temporary disruption cannot justify indefinite postponement', he in a bid to protect themselves, builders might try to include auto-extension clauses in the sale agreements, which could potentially give them blanket power to postpone handing over possession, using vague justifications. Frequently, these clauses try to bypass the legal options that the buyers have regarding delivery experts have pointed out that such one-sided clauses are not generally enforceable in standard builder-buyer agreements, and RERA also overrides these clauses. Also, under various other laws, such as the Indian Contract Act and the Consumer Protection Act , such unfair terms can be struck down as most model RERA sale agreement clearly state that 'the promoter assures to hand over possession of the plot/ unit/ apartment for residential/commercial/industrial/ IT/ any other usage (as the case may be) along with parking (if applicable) as per agreed terms and conditions unless there is delay due to 'force majeure', court orders, government policy/ guidelines, decisions affecting the regular development of the real estate project.'If the completion of the project is delayed due to the above conditions, then the allottee agrees that the promoter shall be entitled to the extension of time for delivery of possession of the Plot/ Unit/ Apartment for Residential/ Commercial/ Industrial/ IT/ any other usage (as the case may be)', it further adds. However, it does not state any standard timeline for such extensions, which potentially leaves room for case the project does not go through due to such 'force majeure' situations, the allotment automatically stands terminated. Not only will the promoter have to refund the entire amount to the allottee within 90 days, but also inform them 30 days before the termination, adds Batra.'Starting May 2025, a public notice is required to be issued, i.e. the extensions granted by the relevant RERA will have been made subject to the issuance of public notice in prominent newspapers inviting objections towards the grant of such extensions under Section 6 and for consideration under Section 7(3). This now forms part of a mandatory requirement on the part of promoters', per says that while there is no statutory obligation to seek buyer input, RERA's decisions can be challenged if they seem arbitrary or lack transparency. Buyers' associations are free to seek a legal review if such extensions are granted without due process or documentation.
The Hindu
2 days ago
- Business
- The Hindu
Builders hail building regulations, seek amendments to NALA Act
Small-scale builders and owners of LIG category residential buildings will benefit the most from the key amendments in the Andhra Pradesh Building Rules, 2017 approved by the State Cabinet, sources in the Confederation of Real Estate Developers Association of India (CREDAI) said. This means that builders of structures up to G+4 categories or flats under 300-400 sq m will have ample options and relief from some restrictions, thereby helping them join the real estate and urban development sector in cities like Visakhapatnam. However, builders have expressed dissatisfaction over the lack of clarity on the Non-Agricultural Land Assessment (NALA) Act. As per the statements made by Chief Minister N. Chandrababu Naidu on several occasions, including the third District Collectors' meeting held in March, the NALA Act is expected to be repealed, citing it as a major impediment to urban and real estate development. 'We have come to know that the government is discussing the implementation of 4% charges for land conversion (agriculture to commercial) under the NALA Act, instead of 5% charged by the previous government. We want the Act abolished. We have urged the government to amend the law on land conversion in terms of acres instead of square yards in urban areas. This will be beneficial to urban developers. We are not worried about 4% or 5% charges for conversion,' said a senior builder on the condition of anonymity on Wednesday. In Visakhapatnam, the real estate sector has an annual turnover of around ₹700 to ₹800 crore. It is expected to touch ₹1,000 crore mark annually. This will be possible if the government accelerates projects like operation of software companies, employment generation and flow of financial transactions. The GVMC and VMRDA should complete the master plan roads and projects as soon as possible, they said. 'We discussed the need for basic completion of roads with the GVMC Commissioner. We are expecting a boost in the real estate sector as the market has been sluggish for the last 18 months. Approximately 10,000 residential units still remain vacant due to no sale. Now, the market is gaining some momentum,' said CREDAI city president E. Ashok Kumar.
Time of India
3 days ago
- Business
- Time of India
CREDAI Andhra Pradesh hails cabinet nod for amendments to building rules
VISAKHAPATNAM: The Confederation of Real Estate Developers' Associations of India (CREDAI), Andhra Pradesh Chapter, has lauded the State Cabinet's approval of key amendments to the Andhra Pradesh Building Rules, 2017, calling it a landmark step in reforming the urban development framework of the State. Tired of too many ads? go ad free now In a statement issued on Wednesday, CREDAI Andhra Pradesh President Bayana Srinivas Rao extended the association's heartfelt gratitude to Chief Minister Nara Chandrababu Naidu for his leadership in clearing the long-awaited regulatory amendments. He also acknowledged the pivotal roles played by the Minister for Municipal Administration and Urban Development, Dr. P. Narayana, and the Minister for IT & HRD, Nara Lokesh, in steering the reforms forward. Welcoming the Cabinet decision, chairman of CREDAI AP Buddiga Srinivasu described the move as a progressive measure aimed at enhancing transparency, efficiency, and investor confidence in the real estate and construction sectors. 'These amendments mark a new chapter in urban governance and planning in Andhra Pradesh,' said Dasari Rambabu, General Secretary of CREDAI AP. 'The reforms reflect the Government's proactive and development-oriented vision. They are expected to streamline the approval processes, eliminate long-standing bottlenecks, and create a more predictable environment for project execution,' he said. CREDAI city chapter presidents from across the State echoed similar sentiments, underlining the crucial role of the real estate and construction sectors in powering economic growth, creating employment, and driving urban transformation. Tired of too many ads? go ad free now By addressing key regulatory challenges and modernising the legal framework, the State Government has taken a decisive step towards positioning Andhra Pradesh as a globally competitive and investment-ready destination, the association noted. Describing the Cabinet's decision as a 'catalyst for sustainable development,' CREDAI expressed confidence that the reforms would open up new avenues of opportunity across the sector and contribute meaningfully to the Chief Minister's vision of building a $1 trillion economy for Andhra Pradesh. Reaffirming its commitment to collaborative development, CREDAI Andhra Pradesh pledged to continue working closely with the Government to deliver quality housing, develop world-class infrastructure, and contribute to shaping a Viksit Andhra Pradesh that meets the evolving aspirations of its people. EOM
Time of India
5 days ago
- Business
- Time of India
Inspired from Mumbai model, Noida Authority approves new redevelopment policy
Developers must ensure larger flats for original residents and arrange their accommodation until new flats are ready for possession. (AI image) The Noida Authority has implemented a new redevelopment scheme, following Mumbai's model, which aims to unlock land in prime locations of this growing Uttar Pradesh city, strengthening its real estate sector. The scheme involves demolishing existing EWS flats and constructing new ones in their place. Builders will have permission to sell additional housing units whilst providing larger flats to original residents. "We have identified 4-5 buildings, which are in a dilapidated state. When these buildings were constructed, FAR of 1.5 was allowed and now FAR of 3.5 is permissible. We will invite RFP (request for proposal) for every structure separately," said a Noida Authority official according to an ET report. Under this scheme, developers must ensure larger flats for original residents and arrange their accommodation until new flats are ready for possession. "While the policy is a much-needed step towards opening of prime land bank in the city centre, every project will come up with its own challenges. The project has to be commercially viable because buyer's preference had changed in recent times," said Nikhil Hawelia, MD, Hawelia group and secretary of industry body CREDAI (western UP). "The Noida Authority's decision can fulfil the dream of owning a home in the city's thriving sectors like 27, 93, and 93A," said Yash Miglani, MD, Migsun Group. "Allotment of higher FAR and engaging co-developers in stable projects will address the long-pending demand of stuck homebuyers and unlock immense potential for modern, vertical living spaces." The Authority has also sanctioned co-developers for five delayed projects, potentially benefiting over 5,000 awaiting homeowners. CREDAI reports 190,000 units valued at Rs 1 lakh crore are stalled across Noida, Greater Noida and Ghaziabad. Greater Noida specifically has 36 projects under insolvency proceedings. Approximately Rs 40,000 crore is due to various authorities, including principal, interest and penalties for allocated plots with ongoing real estate developments. "The (Noida Authority's) step marks a progressive step toward urban revitalisation as it unlocks a significant real estate potential, especially in the heart of the city. The redevelopment of old, dilapidated buildings with higher FAR while improving the existing structure and providing better facilities will also generate more homeownership," said Salil Kumar, director, marketing and business management, CRC Group.
