Buying a flat? Don’t trust promises, check these approvals before payment | Personal Finance

A homebuyer may be shown an allotment letter, a project registration number and a promise that additional approvals will follow. But none of these should substitute for checking whether the flat being sold is covered by the approvals granted.

 

A recent Maharashtra Real Estate Regulatory Authority (MahaRERA) order highlights this risk. In the case involving the project Swami Krupaa, buyers had booked flats on the sixth and seventh floors, while the Commencement Certificate (CC) available on record permitted construction only up to the fifth floor. The buyers said they were told that further approvals would be obtained later.

 

MahaRERA eventually ordered the developer to refund the amounts established as having been paid towards the flats, along with interest. But for prospective buyers, the lesson is what should be checked before handing over the booking amount.

  

Check the floor against the approved plan

 

The order records that the CC dated October 22, 2010 permitted construction only up to the fifth floor. The buyers, however, had allotment letters for Flat 603 and Flat 703.

 

The buyers’ case was that they had booked these flats based on representations that approvals for the higher floors would subsequently be obtained. The order also records that architect certificates from 2017 and 2019 did not show progress on the upper floors, while no later approvals or relevant architect certificates were produced on record.

 

Shashank Agarwal, founder of law firm Legum Solis, says this is precisely the kind of discrepancy a buyer should identify before committing money. Booking a flat on a floor beyond the level covered by the CC creates a clear regulatory risk if the promised additional approval has not actually been obtained, he says.

 

The key point for a buyer is therefore simple: Do not check only whether the building has a CC. Check what the CC actually permits and whether the particular floor and flat form part of the sanctioned construction.

 

Do not treat a promise of future approval as an approval

 

Khushi Parmar, advocate, D.M. Harish & Co. LLP, says the documentary record was decisive in the MahaRERA proceedings. The evidence concerning payments, the project’s incomplete status, the lapsed registration, the absence of further approvals and the failure to execute agreements for sale collectively supported the buyers’ case.

 

For a new buyer, this means verbal assurances from the sales team should not be treated as proof that an approval exists.

 

Madhura Samant, founder of Elarra Law Offices, says buyers should independently verify the Commencement Certificate, sanctioned plans, floor-wise approvals, MahaRERA registration and the project’s status before committing funds.

 

In practical terms, buyers should ask the developer to show the approval covering the exact floor and unit they are buying. If an additional floor is said to have been approved later, obtain the approval document and verify it rather than relying on a sales representative’s assurance.

 

Check RERA disclosures yourself

 

A project’s RERA registration is useful, but buyers should go beyond checking the registration number.

 

The MahaRERA portal provides project-level information, including registration details and documents filed by the promoter. Buyers should compare the information in these filings with what is being promised to them.

 

Ashirwad Sapre, senior associate, SKV Law Offices, says the buyers’ case was strengthened by the project’s lapsed registration, the lack of progress on the upper floors and the developer’s admissions regarding money received. For buyers, he says, the broader lesson is to examine the documentary trail of the project and the approvals rather than relying solely on representations made during booking.

 

Check whether the project’s registered plans correspond with the flat being offered, whether the stated completion date is current, and whether subsequent approvals referred to by the promoter are actually available on record.

 

Keep every payment traceable

 

Approval checks are only one part of the due diligence. The MahaRERA case also highlights why buyers should maintain a clean record of payments.

 

Tushar Kumar, advocate, Supreme Court of India, says there is an important distinction between having paid money and being able to establish that payment in a regulatory or judicial proceeding. Buyers should therefore make payments through identifiable banking channels and obtain contemporaneous acknowledgement from the promoter, he says.

 

The issue becomes particularly important when part of the consideration is paid in cash.

 

Raheel Patel, partner, Gandhi Law Associates, points out that the buyers were able to establish substantial payments, but the cash component was a weak point because the disputed cash payments were not backed by equivalent receipts. His advice is straightforward: buyers should avoid unrecorded cash payments and preserve receipts, bank statements and other evidence for every instalment.

 

What should a buyer check before paying?

 

Before paying a booking amount, buyers should verify:

 

Commencement certificate: What floors does it actually permit?

 

Sanctioned plan: Does the exact flat and floor match the approved plan?

 

Subsequent approvals: If the developer says additional floors have been approved, ask for the actual approval document.

 

RERA record: Check the project’s registration, sanctioned plans, progress filings and other disclosures.

 

Agreement for sale: Ensure the promoter executes the required agreement and that the unit details match the approvals.

 

Payment trail: Use banking channels wherever possible and keep receipts and written acknowledgements.

 

Promises in writing: Any representation about future approvals, construction or possession should not remain merely verbal.

 

In the Swami Krupaa case, MahaRERA ultimately directed the developer to refund the amounts established as consideration paid, excluding statutory payments, along with interest from the respective payment dates. It also directed execution of cancellation deeds after refund and awarded Rs 20,000 as costs to each complainant.