Buying a home is one of the major financial decisions in every person’s life and it involves several steps. From initial negotiations on property prices to final registration, property purchasing requires a long process. However, not all property deals go smoothly, and cancellations can occur due to various reasons—ranging from legal complications to personal circumstances. If you have found yourself in a situation where your property deal has been cancelled, knowing how to secure a refund is crucial. In this blog, we have prepared a comprehensive guide to help you navigate the process of cancelling a property deal. 

Firstly, let’s understand some of the most common reasons behind the property deal cancellation. 

Common Reasons for Property Deal Cancellations

1. Legal or Regulatory Issues: Discrepancies in property documents, lack of necessary approvals, or disputes over ownership can derail a deal.

2. Financing Problems: Buyers may face issues securing loans or sellers might encounter financial constraints that delay construction.

3. Changes in Personal Circumstances: Personal emergencies, sudden relocations, or shifts in financial stability can lead to cancellations.
   
4. Unfulfilled Promises by the Builder: Delays in possession, deviation from agreed layouts, or lack of promised amenities may compel buyers to withdraw.

Nevertheless, no matter whatever reason you have for cancellation, the goal is to receive a complete refund of the token money or installments submitted as payment for the purchase of property. For this, the first and the most important thing you can do is to thoroughly check your sale agreement. Carefully read all deal cancellation clauses and analyse the loopholes that you as a buyer can leverage while negotiating refund terms.

Note that a buyer can face some set market standard penalties while cancelling the property deal. Here are some of them:

Case 1: Generally, builders deduct 10% of the token cost if the buyer cancels the deal. However, multiple grounds are evaluated while issuing the refund amount to the buyer. 

Case 2: If the buyer deceives the builder and cancels the contract due to diversification of the funds to another project that provides greater amenities and a more lucrative bargain, the penalty amount may range from 10-15% or higher. It varies depending on the builder. The time it takes to reimburse the cash in this scenario usually varies between 45 days to three months.

Steps to Secure a Refund

If your property deal has been cancelled, follow these steps to initiate and secure your refund:

1. Review the Agreement

Carefully read the cancellation and refund clauses in your agreement. These will outline the procedure, timelines, and any deductions applicable.

2. Communicate with the Seller or Builder

Notify the seller or builder in writing about the cancellation. Include all relevant details, such as your booking ID, property details, and reasons for the cancellation.

3. File a Formal Request

Submit a formal refund request with supporting documents, including payment receipts, agreement copies, and any correspondence related to the deal.

4. Seek Mediation

If the builder or seller delays or disputes the refund, consider mediation through consumer forums or professional property consultants to resolve the issue amicably.

5. Approach RERA or Consumer Court

For unresolved disputes, you can file a complaint under RERA if the property is registered. Alternatively, approach a consumer court to claim your refund and compensation for any losses incurred.

What About Stamp Duty Refund?

Property acquisitions or transfers usually come with state-mandated taxes, such as stamp duty and registration fees. Now, there are times when a buyer pays the necessary stamp duty charges and then decides to walk away from the property deal. This can happen due to various reasons such as sudden transfer from one city to another, bankruptcy, untimely death, or misrepresentation of the facts during the deal. Now, the question arises that can you get the stamp duty refund? 

Well, if the deed is cancelled within 30 days of the payment date, the buyer can request a return by submitting a written application to the concerned Deputy Commissioner. However, a minimal penalty will be deducted from the amount, resulting in the buyer receiving approximately 98 percent of what he or she spent in stamp duty.

What to Expect During the Refund Process

While refund timelines and procedures vary, here are some general expectations:

• Timelines: Refunds typically take 30-90 days, as specified in the agreement. Delays may occur, requiring follow-ups.
• Deductions: Cancellation charges and administrative fees may be deducted unless specified otherwise.
• Interest on Refunds: Under RERA, buyers are entitled to interest on delayed refunds at a prescribed rate.

Conclusion

Property deal cancellations can be stressful, but knowing your rights and the correct process can make the refund journey smoother. Always prioritize due diligence before signing agreements, and don’t hesitate to seek legal recourse if required. Trusted real estate consultants can also provide valuable guidance in navigating such situations, ensuring your investment remains secure. By staying informed and proactive, you can protect your financial interests and make confident decisions in future property transactions.