‘Force majeure’ clause under the Act
CHANDIGARH: The force majeure clause is in everysale agreement signed between a buyer and builder. The clause is incorporated in the sale agreement to exempt the builder from penalties in case there are some unforeseen reasons, including natural calamities because of which the builder failed to meet deadlines.
The Real Estate (Regulatory and Development) Act and state rules under it also elaborate on the meaning and exemptions related to force majeure.
The term in legal agreements refers to an event or effect that can not be reasonably anticipated or controlled by one or both the signatures of the agreement.
According to the R era Act, the expression‘ force maj eu re’ means acaseofwar, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting regular development of the real estate project.
The registration granted under the Section 5 to a builder may be extended by the state Rera on an application made by the builder due to force majeure.
Section 6 of the Act states that no application for extension of registration can be rejected unless the applicant is given an opportunity of being heard in the matter.
Section 6 of the Haryana Real Estate (Regulation and Development) Rules, 2017, stipulates that if the extension of registration is due to force majeure, court orders, government policy/ guidelines, decisions, the state Rera can waive the extension fee of registration.
On similar lines, the Punjab Rera rules stipulate that where the promoter applies for extension of registration of the real estate project due to force majeure, “it shall not be liable to pay any fee”.
POSSESSION DELAY PENALTIES
Force majeure is one of the exemptions under which the builder can miss the deadline for possession. In the model sale agreement, under the Haryana state Rera rules, the builder has to assure to hand over possession of property along with parking( if applicable) as per agreed terms and conditions, “unless there is delay due to force maj eu re, court orders, government policy/ guidelines, decisions affecting the regular development of the real estate project.”
Under the Punjab Real Estate (Development and Regularisation) Rules 2017, except for the exemption for force maj eu re conditions, the builder is considered under a condition of default if it fails to provide ready to move in possession of the apartment or plot to the buyer within the time period specified; and on account of discontinuance of builder’s business as a developer on account of suspension or revocation of his registration under the provisions of the Act or the rules or regulations made there under.
SALEAGREEMENT AND FORCEMAJEURE
As per the model sale agreement stipulated under the state Rera rules, if the completion of the project is delayed due to the force majeure, then the buyer has to agree that the builder is entitled to the extension of time for delivery of possession of the property.
Similarly, one of the terms and conditions of the model sale agreement stipulates that the buyer agree sand confirms that in the event it becomes impossible for the builder to complete the project due to force maj eu re then the allotment shall stand terminated.
In such a case, builder has to refund to the buyer, the entire amount received by him from the buyer within 90 days. The builder has to intimate the buyer about such termination at least 30 days prior to such termination.
After refund of the money paid by the buyer, as per the model sale agreement, the buyer can not claim any rights against the builder and the builder is to be released and discharged from all its obligations and liabilities under the said signed sale agreement if the force majeure clause comes into effect. In case of the force majeure, the builder is also exempted from compensating the buyer in case of any loss caused to the buyer due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under the Act.
Prior to the implementation of the Rera Act and the state rules, builders have too frequently tried to get away with long possession delays under the ambit of the clause. So far, consumer forums have rarely allowed the clause to restrict the home buyer from getting due justice against the defaulting builder. It is to beseen whether under the new Rera regime the force majeure clause is misused by builders or helps them in genuine adverse circumstances
According to the Rera Act, the expression ‘force majeure’ means a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature.