Can builders invoke force majeure clause to delay possession? Know what RERA says
All you should know about the force majeure clause
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How long can builders keep extending projects by enforcing force majeure clause?
Can builders include clauses in the sale agreement that facilitate the auto-extension of the project delivery date?
Can RERA grant extensions without first consulting buyers involved in the project?
You've been waiting ages for your dream home, and you've always paid all your home loan EMIs on time. But even after all this, actually getting the keys to your flat feels like a distant dream. Why? The developer is not giving you any clear answers, just keeps throwing around the term ' force majeure ', which basically means 'uncontrollable circumstances', to justify these delays.But what exactly are these circumstances, also known as 'force majeure' situations? Do distressed homebuyers have any legal recourse against such delays under RERA ? Read on to know more.Section 6 of the Real Estate (Regulation and Development) Act 2016 allows developers to apply for extensions when their projects face delays caused by 'force majeure' events. These events are generally unforeseeable and beyond the builder's control, and so, they need more time to finish the project.According to the Act, a 'force majeure' event is defined as a 'case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project'.Adds Advocate Pranav Gupta, legal advisor at the Confederation of Real Estate Developers ' Associations of India (CREDAI) and expert in real estate matters, 'Real estate developers can use events such as earthquakes, floods, pandemics (e.g., COVID-19), and court injunctions as valid grounds for invoking force majeure'.'While force majeure is a legitimate defense, its misuse is a frequent point of litigation. Builders often attempt to classify generic commercial difficulties under this clause, but courts have insisted on a strict interpretation. Judicial pronouncements require developers to show a causal nexus, which means that the event must directly impede performance. To avail relief under this clause, developers must submit credible documentary evidence and a formal application using Form REP-V. ', he explains.Experts say that while RERA has no statutory obligation to grant extensions, it generally does provide extra time to builders in cases of court orders, or the pandemic, where such extensions were granted en masse.However, project extensions on the grounds of financial constraints, shortage of raw materials, or workforce unavailability do not qualify for relief under this clause, since they are seen as occupational risks on the part of the developer.But, according to Harshit Batra, whose firm deals in real estate matters, 'force majeure circumstances also includes, but are not limited to bans/ orders/ regulations on mining activities, regulation of the construction and development activities by the authorities like the National Green Tribunal , Hon'ble Courts and other quasi-judicial authorities on account of the environmental conditions, restrictions on usage of water, shortage of labour and materials, lockdowns, etc'.As per Section 6 of the RERA Act, a promoter can request an extension of up to one year by providing valid reasons for the project's delay.Even though the law specifies that developers can't keep asking for indefinite extensions to delay their delivery obligations, it also mandates that 'no application for extension of registration shall be rejected unless the applicant has been given an opportunity of being heard in the matter'.This means that if the relevant authorities haven't reviewed this extension application, the project might be stuck in a limbo, which also means that there is not much that homebuyers can do regarding the project.According to Gupta, any attempt to stretch this one-year limit under Section 6 must be grounded in documented, exceptional conditions. 'Courts have frowned upon habitual extensions sought under the pretext of continuing uncertainty. But, the key principle here is proportionality — a temporary disruption cannot justify indefinite postponement', he says.Sometimes, in a bid to protect themselves, builders might try to include auto-extension clauses in the sale agreements, which could potentially give them blanket power to postpone handing over possession, using vague justifications. Frequently, these clauses try to bypass the legal options that the buyers have regarding delivery schedules.However, experts have pointed out that such one-sided clauses are not generally enforceable in standard builder-buyer agreements, and RERA also overrides these clauses. Also, under various other laws, such as the Indian Contract Act and the Consumer Protection Act , such unfair terms can be struck down as unreasonable.Generally, most model RERA sale agreement clearly state that 'the promoter assures to hand over possession of the plot/ unit/ apartment for residential/commercial/industrial/ IT/ any other usage (as the case may be) along with parking (if applicable) as per agreed terms and conditions unless there is delay due to 'force majeure', court orders, government policy/ guidelines, decisions affecting the regular development of the real estate project.'If the completion of the project is delayed due to the above conditions, then the allottee agrees that the promoter shall be entitled to the extension of time for delivery of possession of the Plot/ Unit/ Apartment for Residential/ Commercial/ Industrial/ IT/ any other usage (as the case may be)', it further adds. However, it does not state any standard timeline for such extensions, which potentially leaves room for ambiguity.In case the project does not go through due to such 'force majeure' situations, the allotment automatically stands terminated. Not only will the promoter have to refund the entire amount to the allottee within 90 days, but also inform them 30 days before the termination, adds Batra.'Starting May 2025, a public notice is required to be issued, i.e. the extensions granted by the relevant RERA will have been made subject to the issuance of public notice in prominent newspapers inviting objections towards the grant of such extensions under Section 6 and for consideration under Section 7(3). This now forms part of a mandatory requirement on the part of promoters', per Batra.Gupta says that while there is no statutory obligation to seek buyer input, RERA's decisions can be challenged if they seem arbitrary or lack transparency. Buyers' associations are free to seek a legal review if such extensions are granted without due process or documentation.
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