Demand of Extra Money by Builders: Legal Remedies Under RERA for Homebuyers

The demand for extra money by builders has become one of the most common causes of real estate disputes in India. Homebuyers are often promised a fixed price at the time of booking, only to face unexpected financial demands during construction or at possession. These hidden charges not only cause financial stress but also raise serious legal and ethical concerns.

This article explains why builders demand extra charges, what types of hidden costs are commonly imposed, and what legal remedies are available under RERA and consumer law

What Is the Demand of Extra Money by Builders?

Demand of extra money by builders refers to any additional financial charge imposed on a homebuyer after execution of the builder-buyer agreement, which was not clearly disclosed or agreed upon at the time of booking.

Such demands are often introduced at advanced stages of construction or just before possession, leaving buyers with limited bargaining power.

Reasons Why Builders Demand Extra Charges

Builders justify additional demands on several grounds, many of which do not hold legal validity:

  1. Escalation in Construction Costs

Builders claim increased cost of raw materials, labour, or compliance with revised building norms.

  1. Change in Government Levies and Taxes

GST, development charges, or municipal levies are passed on to buyers without contractual authority.

  1. Alteration in Project Specifications

Buyers are charged for alleged upgrades, changes in layout, or increase in super area without consent.

  1. Delay in Project Completion

Despite delays being caused by the builder, buyers are asked to pay holding charges, interest, or maintenance fees.

  1. Financial Mismanagement or Fund Diversion

Extra charges are sometimes imposed to cover cash flow issues arising from poor financial planning or diversion of project funds.

Common Hidden Charges Imposed by Builders

Homebuyers commonly face the following hidden or illegal charges:

  • Preferential Location Charges (PLC) without disclosure
  • Increase in super area loading
  • Illegal car parking charges
  • Mandatory club membership and amenities fees
  • Maintenance and security deposits before possession
  • Inflated electricity and water connection charges
  • Floor rise charges introduced mid-project
  • Penal interest for alleged delayed payments

Such charges often amount to unfair trade practices under Indian law.

Legal Framework Governing Extra Charges by Builders

Real Estate (Regulation and Development) Act, 2016 (RERA)

RERA provides protection to homebuyers against hidden charges.

Section 4(2)(l)(C) – Disclosure of Project Cost

Builders must disclose the total project cost, including all charges. Any undisclosed demand is a direct violation of RERA.

Section 11(4)(a) – Binding Nature of Agreement

The builder must strictly adhere to the registered agreement for sale. Unilateral charges are illegal.

Section 12 – Misleading Advertisement

If brochures or advertisements concealed additional charges, buyers may claim compensation.

Section 18 – Refund and Compensation

Buyers can seek refund of excess money, interest, and compensation for financial loss and mental agony.

Section 31 – Filing Complaint Before RERA

Aggrieved buyers can file complaints before Punjab RERA or Haryana RERA.

Section 40 – Execution of RERA Orders

Non-compliance allows recovery of amounts as arrears of land revenue through the District Collector.

Consumer Protection Act, 2019

  • Deficiency in Service – Charging hidden costs violates Section 2(1)(g).
  • Unfair Trade Practice – Concealment of charges falls under Section 2(1)(r).
  • Consumer remedies are additional to RERA remedies.

Indian Contract Act, 1872

  • Section 73 – Compensation for breach of contract
  • Section 74 – Enforcement of penalty clauses, where applicable

Any charge not agreed upon in writing is legally unenforceable.

Legal Remedies Available to Homebuyers

  1. Filing Complaint Before RERA Authority

Buyers may file a complaint under Section 31 for illegal and hidden charges.

Documents Required:

  • Builder-buyer agreement
  • Payment receipts
  • Project brochures and advertisements
  • Email and WhatsApp correspondence
  • Legal notice (if issued)
  1. Claim Refund and Compensation

Under Section 18 of RERA, buyers may claim refund of excess charges along with interest and compensation.

Important Judicial Precedents on Hidden Charges

Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan (2019)

The Supreme Court held that builders cannot impose unilateral or undisclosed charges not agreed upon in the sale agreement.

Sanjay Sharma v. Omaxe Chandigarh Extension Developers Pvt. Ltd.

Punjab RERA directed refund of illegal charges and awarded compensation for mental harassment.

Conclusion

The demand of extra money by builders is not merely a contractual dispute—it is a violation of statutory rights granted to homebuyers under RERA and consumer laws. While genuine statutory charges may be recoverable, arbitrary and undisclosed demands are illegal and unenforceable.