If you find yourself in a situation where you are unable to arrange the finances needed to take possession of your under-construction property and are considering selling it off, fret not! We’ve got you covered with detailed information on how to proceed.

Ramesh Sawant (name changed on request), a private sector employee, purchased a house in Borivali, Mumbai in January 2022. However, soon after, the state government announced that they would be imposing an extra one per cent metro cess on properties registered after March 2022. Since Sawant was sure about his purchase and financial situation, he hurriedly finished the registration process before March 2022. However, things didn’t go as anticipated and his finances hit a roadblock. Sawant is now in a soup as he cannot make the pending payment nor can he get his booking and registration amount back. The building is now nearing completion and will get the occupancy certificate (OC) soon. Sawant now wishes to sell this apartment, but can he do the needful? Let’s find out.

Can I sell my under-construction house after registration?

The simple answer is, yes.

How can I sell the same?

To sell your booked flat after registration, you will need permission from the developer. Manmeet Kaur, partner, Karanjawala & Co. shares, “An under-construction property can be sold subject to the terms and conditions of the Builder Buyer Agreement (BBA). Usually, the BBA will have a clause for the assignment of allotment to subsequent allottees. Once your allotment is assigned to a new allottee, i.e. the subsequent purchaser, the subsequent purchaser steps into the shoes of the original owner. The consideration for such a transfer can be worked out between the seller and the purchaser. However, such assignments or transfer of rights under BBA are subject to approval and endorsement by the builder. Usually, the assignment will be through a tripartite agreement between the builder, seller and purchaser wherein the builder will agree to hand over possession to the purchaser instead of the seller and the purchaser will undertake to make the remaining payment. A transfer fee may also be charged by the builder. If the original purchase has been financed by a bank or financial institution, a No Objection Certificate (NOC) from such bank or financial institution will be required.”

However, take note that it is not going to be a simple process and it involves complex paperwork due to the unusual situation of selling a house. It is advised that you seek legal advice to manage the complexities and ensure a smooth transaction without any legal hurdles.

Can I return the house back to the developer and get a refund?

“It is not possible unless the allottee and the developer both, agree to cancel the allotment/sale. Under RERA, the developer is entitled to forfeit the amount as specified either in the allotment letter or agreement for sale as the case may be,” shares Sadhav Mishra, partner, SNG & Partners, Advocates & Solicitors.

However, you do have the option to give it back to the developer if he agrees, but it will probably be a loss-making deal for you. Ram Naik, director, The Guardians Real Estate Advisory shares, “Start a conversation with the developer and look over the contract for a cancellation clause. If a refund is agreed upon, follow the steps described, maintaining clear and documented communication throughout the process. In case of cancellation of the deal, refundable policies provide flexibility by allowing full or partial repayment within a given duration. However, keep in mind that GST is non-refundable, resulting in a loss of 10 to 12 per cent of the property cost if the booking is cancelled. Developers often charge cancellation fees of roughly 10 per cent of the property cost. Moreover, as buyers, you have already covered the cost of stamp duty and registration fees. For instance, in Mumbai, the stamp duty rate is set at six per cent, and the registration charges amount to one per cent of the property value.”  This means that cancelling the property and returning to the developer will mean that you face around 20-25 per cent of the total property cost loss.

What if the builder refuses to let you sell the apartment?

It is also possible that the developer might not permit you to sell the apartment before possession. In such a scenario, you will have to look for a buyer who is willing to pay the remaining amount on your behalf. In case you take the home loan and fall short on some amount, the buyer should pay you that amount that you will pay to the developer and after possession, you can transfer the loan to the buyer.

Let’s understand this with the help of an example. Suppose you bought a house for Rs one crore and now you are unable to take possession. You have already paid 15 per cent of the amount, i.e. Rs 15 lakh as booking and registration charges. You will have to find a buyer who can give you the remaining Rs 85 lakh before possession. Suppose the buyer is also not in the position to arrange such a huge amount but can manage Rs 35 lakh, you will have to take a home loan of the remaining Rs 50 lakh in your name and take possession. Once you get possession, you can transfer the Rs 50 lakh home loan to the buyer and sell it.

In all such scenarios, you will have to ensure that the buyer is trusted and that proper paperwork is carried out. As it is such a huge amount, it is preferred that both, the buyer and seller share a good mutual understanding on top of air-tight paperwork.

Naik concludes, “Maintain transparent communication with the developer, seeking guidance and viable solutions to unanticipated problems. Conduct extensive market research to identify a reasonable selling price, increasing the chances of a successful resale. Carefully assess your options, keeping in mind the volatile character of the real estate market, and seek professional guidance to make informed decisions.”