5.2 Duties & Statutory Obligations of Allottees

5.2 Duties & Statutory Obligations of Allottees

Quick Summary: While RERA is widely recognized for buyer protections, Section 19(6) through Section 19(11) explicitly establishes statutory duties and obligations for allottees. Homebuyers are legally required to make timely milestone payments, pay interest at SBI MCLR + 2% on payment defaults, take physical possession within 2 months of Occupancy Certificate (OC) issuance, and participate in society formation and Conveyance Deed execution.

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1. Overview of Allottee Duties under RERA 2016

Rights and duties under RERA are strictly co-relative. To ensure developers maintain financial flow and project completion schedules, the statute imposes five binding duties on every allottee under Sections 19(6) to 19(11). Section 19(8) is not a separate duty — it is the enabling provision that lets the promoter and allottee mutually agree to reduce the Section 19(6) payment obligation and the Section 19(7) interest liability.

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|                        STATUTORY ALLOTTEE DUTIES                        |
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|  1. Duty of Timely Payment of Installments [Section 19(6)]             |
|  2. Duty to Pay Delay Interest on Default [Section 19(7)]               |
|  3. Duty to Participate in CHS / Society Formation [Section 19(9)]      |
|  4. Duty to Take Physical Possession within 2 Months [Section 19(10)]   |
|  5. Duty to Participate in Conveyance Deed Registration [Sec 19(11)]    |
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2. Payment Obligations & Milestone Schedules [Section 19(6)]

Under Section 19(6), the allottee is responsible for making payments in the manner and within the timeframe specified in the registered Agreement for Sale:

1. Construction Milestone Payments: Installment payments linked to verified architectural completion stages (e.g., completion of plinth, slab casting, brickwork, plastering, plumbing).
2. Statutory Taxes & Charges: Payment of applicable government levies, including Goods and Services Tax (GST), Stamp Duty, Registration Fees, and local authority municipal taxes.
3. Outgoings & Maintenance: Payment of maintenance charges, electricity connection fees, water meter charges, and ground rent as stipulated in the agreement prior to handover of society management.

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3. Interest Liability for Allottee Default & Rate Symmetry [Section 19(7)]

A. Interest Rate Symmetry Benchmark

Historically, developers charged buyers penal interest rates of 18% to 24% for payment delays of even a few days. Section 19(7) read with MahaRERA Rule 18 establishes absolute statutory interest symmetry:

$\text{Allottee Default Interest Rate} = \text{Promoter Delay Interest Rate} = \text{SBI Highest MCLR} + 2.00\%$

B. Calculation of Allottee Delay Interest

If an allottee delays paying an installment beyond the due date specified in the demand notice, interest accrues for the exact period of delay:

$\text{Interest Payable by Allottee} = \text{Overdue Installment Amount} \times \left(\frac{\text{SBI MCLR} + 2\%}{100}\right) \times \left(\frac{\text{Delay Days}}{365}\right)$

Note: The promoter cannot charge arbitrary penalties, lump-sum default fines, or compound interest unless explicitly sanctioned under RERA rules.

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4. Duty to Take Physical Possession within 2 Months [Section 19(10)]

Under Section 19(10), once the competent authority issues the Occupancy Certificate (OC) and the promoter issues a formal offer of possession:

• 2-Month Acceptance Window: The allottee is legally obligated to take physical possession of the apartment within 2 months of the date of OC issuance.
• Consequences of Delay in Taking Possession: If an allottee refuses or fails to take possession within 2 months despite receiving an OC-backed possession letter, the allottee becomes liable to pay holding charges/maintenance outgoings to the promoter from the expiry of the 2-month window.

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5. Obligations Regarding CHS Formation & Conveyance Deed [Section 19(9) & 19(11)]

• Participation in CHS Formation [Section 19(9)]: Allottees must submit required documentation, passport photos, KYCs, and membership fees to assist the promoter in registering the Cooperative Housing Society (CHS) or Apartment Owners Association.
• Participation in Conveyance Registration [Section 19(11)]: Section 19(11) ties the allottee's duty directly to Section 17(1). Allottees must attend the Sub-Registrar's office, sign legal documentation, and pay their proportionate share of stamp duty/registration charges to execute the Conveyance Deed of the land and building.

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6. Cancellation of Booking for Default [Section 11(5) & the Model Agreement]

Section 11(5) preserves the promoter's right to enforce the terms of the agreement against a defaulting allottee, and the Model Agreement for Sale at Annexure 'A' sets out how that must be done. The procedural safeguard candidates are expected to know is the 15-day cure notice:

Step 1: Promoter raises the milestone demand under the registered Agreement for Sale
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Step 2: Allottee defaults; delay interest accrues at SBI MCLR + 2% (Section 19(7), Rule 18)
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Step 3: Promoter serves written notice of default, giving the allottee 15 DAYS to rectify
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Step 4: If the default is not cured within 15 days, the promoter may terminate the agreement
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Step 5: Promoter refunds amounts collected, subject only to deductions the agreement provides for

Forfeiture: What the Law Actually Says

There is no provision in the RERA Act that entitles a promoter to forfeit the earnest amount on cancellation. The MahaRERA Appellate Tribunal has held exactly that, and MahaRERA has ordered promoters to refund the entire amount with interest where forfeiture clauses were invoked. Agents should therefore never tell a buyer that "the builder can keep 10%" as though it were a statutory entitlement. If an exam question offers a fixed forfeiture percentage as a statutory rule, treat it with suspicion — the defensible answers are the 15-day cure notice and the refund obligation.

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7. Summary Matrix of Allottee Duties & Statutory Timelines

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8. Practical Real-World Scenario

Scenario: Allottee Y booked an apartment in Thane. In January 2025, the promoter issued a demand notice for INR 1,000,000 upon slab casting, due on 31st January 2025. Allottee Y failed to pay due to personal financial constraints and cleared the payment on 30th April 2025 (90 days delay). The promoter demanded a 24% penal rate fine totaling INR 60,000.

Legal Application:

1. Statutory Rate Standard: Under Section 19(7) and MahaRERA Rule 18, the promoter cannot charge 24%. The interest rate is strictly capped at SBI Highest MCLR + 2% (assume 10% p.a. total).
2. Interest Calculation: $\text{Interest} = 1,000,000 \times \frac{10}{100} \times \frac{90}{365} = \text{INR } 24,657.53$
3. Outcome: Allottee Y is obligated to pay INR 24,658 in delay interest. The promoter's demand for INR 60,000 is illegal under RERA, and Allottee Y can contest the excess charge before MahaRERA.