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Does the Buyer need to Pay Interest on Delayed Payment? The question raises in everyone’s mind whether the builder can charge a considerable amount of interest for delayed payments or any fixed rate of interest is prescribed by the real estate laws. Assume you are planning to buy an apartment or you have already paid advance to the builder. In this case, the buyer would have made an agreement as to when the final payment has to be made. If you are unable to pay the money as per the timeline, there comes confusion. While some builders may not charge interest for delayed payments, most apartment builders charge their customers 10 to 20% interest for late payments. If you are someone who is keen to buy an apartment in Chennai, this blog will guide you through the laws and processes for delayed payments. 1. Government Norms and a case study : The Supreme Court has ruled that it is an unfair trade practice to force homebuyers to pay interest at a rate of 18% per annum for delays in payment of installments. In comparison, builders themselves only have to pay 15-29% for delays in project amounts. A group of judges from the National Consumer Disputes Redressal Commission (NCDRC) has ruled that clauses in builder-buyer agreements that protect the company’s interests atbuyers’ expenses are unfair and unreasonable. This decision comes as a relief to homebuyers who have long been at the mercy of real estate companies. With this ruling, homebuyers can now hold builders accountable for any unfair or one-sided terms in their contracts. 2. Current Law for Interest on Delayed Payments : If a builder charges interest on late payments, but no rate is specified in the contract, the builder may charge 6% per year simple interest under section 34 of the Code of Civil Procedure, 1908. If no date is specified in the contract for when interest will begin accruing, the builder has no right to seek a penalty if payment is made late. If you don’t make your payments on time, you as the buyer will be held responsible. This is in line with the terms and conditions of the selling agreement. If either you or the promoter default on payments, RERA has concluded that any party is entitled to claim interest as provided by the Real Estate Act, 2016. If the buyer does not make their payment on time, as stated in the agreement for sale, they will be charged interest at the rate of Marginal Cost Lending Rate + 2%. However, the builder cannot charge the allottee an excessive amount of interest; instead, they can only charge what is specified in the agreement or as a charge under the Code of Civil Procedure, 1908, and the Real Estate (Regulation & Development) Act, 2016. At Isha Homes, we abide by the government norms and charge the delayed payment interest accordingly. Continue Reading on: https://www.ishahomes.com/blog/does-the-buyer-need-to-pay-interest-on-delayed-payment/

Does the Buyer need to Pay Interest on Delayed Payment?
The question raises in everyone’s mind whether the builder can charge a considerable amount of interest for delayed payments or any fixed rate of interest is prescribed by the real estate laws. Assume you are planning to buy an apartment or you have already paid advance to the builder. In this case, the buyer would have made an agreement as to when the final payment has to be made. If you are unable to pay the money as per the timeline, there comes confusion. While some builders may not charge interest for delayed payments, most apartment builders charge their customers 10 to 20% interest for late payments. If you are someone who is keen to buy an apartment in Chennai, this blog will guide you through the laws and processes for delayed payments.

1. Government Norms and a case study :
The Supreme Court has ruled that it is an unfair trade practice to force homebuyers to pay interest at a rate of 18% per annum for delays in payment of installments. In comparison, builders themselves only have to pay 15-29% for delays in project amounts.
A group of judges from the National Consumer Disputes Redressal Commission (NCDRC) has ruled that clauses in builder-buyer agreements that protect the company’s interests atbuyers’ expenses are unfair and unreasonable.
This decision comes as a relief to homebuyers who have long been at the mercy of real estate companies. With this ruling, homebuyers can now hold builders accountable for any unfair or one-sided terms in their contracts.
2. Current Law for Interest on Delayed Payments :
If a builder charges interest on late payments, but no rate is specified in the contract, the builder may charge 6% per year simple interest under section 34 of the Code of Civil Procedure, 1908. If no date is specified in the contract for when interest will begin accruing, the builder has no right to seek a penalty if payment is made late.
If you don’t make your payments on time, you as the buyer will be held responsible. This is in line with the terms and conditions of the selling agreement. If either you or the promoter default on payments, RERA has concluded that any party is entitled to claim interest as provided by the Real Estate Act, 2016.
If the buyer does not make their payment on time, as stated in the agreement for sale, they will be charged interest at the rate of Marginal Cost Lending Rate + 2%. However, the builder cannot charge the allottee an excessive amount of interest; instead, they can only charge what is specified in the agreement or as a charge under the Code of Civil Procedure, 1908, and the Real Estate (Regulation & Development) Act, 2016.
At Isha Homes, we abide by the government norms and charge the delayed payment interest accordingly.
Continue Reading on: https://www.ishahomes.com/blog/does-the-buyer-need-to-pay-interest-on-delayed-payment/

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