Consumer Connect: Rehab Members Can Seek Removal Of Defaulting Builder

A group of 12 members from a Borivali society with 40 members have sought assistance from MahaRERA to remove a builder who has defaulted on a development agreement. The developer was supposed to complete the flats within 36 months of the Initial Occupancy Date (IOD) in May 2018, but has only finished around 75% of the work and stopped construction due to financial issues. The managing committee and some members fear that removing the builder could lead to litigation and discourage future builders.

MahaRERA, under Section 7 of the Real Estate (Regulation and Development) Act (RERA), has the power to revoke a project's registration if the promoter fails to comply with Act requirements, violates authority terms, or engages in unfair practices. The authority can revoke registration based on complaints received or suo motu. Interestingly, it does not require the majority of allottees or homebuyers to file the complaint.

To file a complaint, evidence must be provided demonstrating the builder's default in complying with RERA requirements, violation of authority terms, or unfair practices. Once a complaint is filed, MahaRERA will issue a show-cause notice to the builder, giving them 30 days to respond. If MahaRERA finds the builder capable of compliance, it may impose strict terms. If not, the registration may be revoked.

Upon revocation, Section 8 of RERA allows allottees, comprising society members and homebuyers, to either complete the project or permit another developer to take over. However, unless the project remains financially feasible, no builder will accept it. Members must then raise the remaining funds and hire a contractor, retaining their legal rights to claim rent arrears and compensation from the defaulting builder.