What Will Happen if I Cancel a Property Deal?

Sujan Afi S

Making a successful real estate property deal is an art and it is of course not an easy task. A real estate property deal does not always appear to be a profitable one to the buyer or investor even if he/she had already paid token money for booking.

Due to unforeseen circumstances an investor or buyer might cancel the real estate property deal in the mid-way. He/she has the right to do so! Then the problem of refunding the money comes into play! It is witnessed that the builders or developers don’t will to refund the money.

Rather they try to create unnecessary delays in the process of refund of money. Even in some cases, they try to show unnecessary compensation for the cancellation of the deal which is unethical and illegal at the same time.  

Are you also facing the problem of money refund after cancelling a property deal? Then you are in the right place! 

In this blog, we will have a discussion on the process or way of refunding money after cancelling a property deal.

The Way of Refund

Although the cancellation of a property deal is disheartening for both the seller and the buyer/investor, certain situations can’t be avoided. It is beneficial when the cancellation of the deal makes profitable sense! While cancelling a property deal, we can have two types of situations, such as

Situation 1: When the Buyer or Investor Cancels the Deal

Generally, a seller charges 10 % of the token money as a penalty for the cancellation of the deal. But this amount of penalty charge varies according to the reason for the deal cancellation.

A seller may charge less than 10 % as a penalty when there seems a genuine reason behind cancelling the deal. For instance, you might be compelled to cancel the deal due to some medical emergency. A certain situation might arise when you might need money urgently. If the seller wants, he/she might not charge any penalty at all and return the total token amount to the buyer. 

The buyer might even charge more than 10 % of the token money if he/she (seller) feels that there is no strong or valid reason behind cancelling the deal.

If the buyer or the purchaser defaults on the construction-connected instalments and afterwards revokes the arrangement, the builder has the privilege to relinquish the booking sum and the interest due on the defaulted instalment, if relevant.  

Situation 2: When the Seller or Builder or Developer Cancels the Deal

A builder or seller might cancel the deal in the mid-way if he/she thinks that the deal is not beneficial for him/her and in this case if the buyer or investors feels that he/she is cheated or face unwanted financial loss then he/she can go to the RERA for legal support.

To refund money when a property deal is cancelled, we should focus on the following points:

  1. Stamp duty: An investor or buyer of property can claim for the refund of stamp duty (if the stamp duty and registration charges are already paid by investors) when the builder or developer fails to deliver the possession (the property) within the promised time. The process of refunding of stamp duty varies with the change of the state as there is the change of RERA provisions with the change of state. In general, the reason for the cancellation of the deal should be mentioned in the cancellation deal for the refund of stamp duty.

For achieving the refund of stamp duty money, you should make an application in the registration department against the cancellation of the deal. Carry the original copy of the sales agreement and the copy of the cancellation of the deed. However, you can only claim for stamp duty and not for registration charge!

  1. Registration fee: If you cancel the deal before registration then the builder or developer is liable to refund the total money. Once the registration is completed then the builder is no longer liable to pay the registration cost. In case the registration is not completed and the builder refuses to refund then can go to the RERA for legal support.
  1. Goods and services tax: When you book a property that is under construction and then wants to cancel the deal then in this case the builder may refuse to pay you the tax value or GST value. Because in this case, the builder has already paid the GST to the government and rendered services to you.

When you enter into an agreement to transfer your rights in the under-construction property to someone else and the developer is the confirming party, your sales price would include the GST and you cannot independently recuperate or charge any GST on such an exchange.

While computing the capital gains, the GST that is already paid by you will shape part of the cost of acquisition. The capital gains will be taxable as long-term provided that your holding period has been 3 years, else, the profits will be taxed as short-term capital gains.

On a Final Note

Recovering the refund money after cancelling a property is not an easy task. But it is not impossible too! However, you should not pay any amount of money to the builder without proper documentation. Why?

Because it is very difficult to recover the money while having no proper document! The scope of your legal support gets minimized while you pay the builder without any proper document.

Hence, it is always advisable to consult an expert real estate professional before taking any such crucial step.

Roodland is a one-step solution for these problems! You get promising solutions from our experts within a very short time. Our committed team helps you solve every kind of problem-related to the real estate market. They value your individual needs and take care of your desires too. They, thus, suggest you the best accordingly!

So, stop thinking more and mail us the queries at info@roodland.com.


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