Forfeiture of booking amount of flat by developer

sachin (Querist) 29 June 2014 This query is : Resolved
Dear Friends,

Is it legal for a Developer to forfeit the Booking Amount taken by the Developer in the event of the intending Buyer fails to honor future payments?

In our case, we as developers had taken Rs.500000/- as booking amount. The buyer subsequently on account of his personal health problems could not make future payments on the demand made by the developer.

Our Booking Form provided for the forfeiture of the entire booking amount. However, we forfeited only Rs. 300000/- and returned Rs. 200000/- on humanitarian grounds.

Now the buyer has send Notice through his Advocate seeking refund of the forfeited amount.

Kindly advise.

Regards,

Sachin

Follow Query

Report Abuse

Advocate Bhartesh goyal (Expert) 29 June 2014
No,condition in booking form that "entire booking amount will be forfeited on cancellation of booking " is against public policy and not legal in eye of law so developer can not forfeit.

prabhakar singh (Expert) 29 June 2014
I squarely agree with Mr. Bhartesh goyal

ajay sethi (Expert) 29 June 2014
refund the balance rs 3lakhs to the buyer . you cannot withhold more than 60%of the booking amount

Rajendra K Goyal (Expert) 29 June 2014
Reply the notice received and consult local lawyer, show him all the documents.

prabhakar singh (Expert) 29 June 2014
May i know the basis behind your answer Mr.Sethi?
Why 60%? Why not all or 80 or 20%?
In my knowledge only damages caused can be forfeited and not the entire earnest but if damages caused are above earnest,earnest is maxima that can be forfeited.