The Karnakata Real Estate Regulatory Authority (KRERA) recently held both a property developer and a real estate agent accountable for not refunding a customer’s booking amount for a Bengaluru-based project. The order, issued on January 17, states that both parties are obligated to return the booking amount within 60 days.
In this situation, the homebuyer, Ranjeeva Ranjan, had booked an apartment in Damden Vivo, located in north Bengaluru, developed by Damden Properties and brokered by Square Yards Pvt Ltd. The booking amount, totaling Rs 98,256, was to be refunded in case the housing loan application was rejected, as per the agreement clauses.
Ranjeeva Ranjan booked the apartment in January 2018. When the loan sanction process faced issues in January 2019, he canceled the booking and requested a refund. Despite multiple reminders, when the refund did not happen, Ranjan approached KRERA for assistance.
During the KRERA proceedings, the developer argued that, according to the agreement with Square Yards, the amount was debited to an Escrow Account. In this arrangement, the developer received 78 percent of the share, while the agent received the rest. The developer emphasized that the Escrow Account couldn’t be operated solely by him and needed joint operation.
However, KRERA, after reviewing submitted documents, concluded that the booking amount should be refunded when the home loan is not sanctioned. The order clarified that the issue was not a delay but the homebuyer’s request for a refund. Since the booking amount was paid into the Escrow Account jointly held by the developer and the agent, both parties were directed to refund the amount.
Legal experts noted that this order establishes a precedent, indicating KRERA’s intention to make agents share responsibility in homebuying transactions. In Bengaluru’s active real estate market, where prices are rising and inventories are limited, holding agents accountable is seen as important. The city experienced a 42 percent increase in total home sales value from Rs 27,045 crore in the first nine months of 2022 to Rs 38,517 crore in the first nine months of 2023, according to ANAROCK data.
Experts also highlighted that KRERA has already mandated agents to register themselves for a period of five years. Advocate Amit Anand emphasized that this order ensures responsibility for home selling is placed not only on developers but also on agents, preventing homebuyers from being misled in their real estate investments.
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