Multiple Selling of Flat by Builder: Legal Remedies, Rights of Homebuyers and Judicial Protection

Multiple selling of a flat by a builder is one of the most serious and fraudulent practices in the real estate sector. It occurs when a developer allots or sells the same flat or unit to more than one buyer, often by issuing multiple allotment letters or entering into separate agreements for sale. Such acts result in severe financial loss, prolonged litigation, and emotional distress for innocent homebuyers.

With the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA) and the Consumer Protection Act, 2019, the legal position has significantly tilted in favour of buyers, treating multiple selling not merely as a contractual breach but as an unfair and deceptive trade practice.

What Is Multiple Selling of a Flat?

Multiple selling refers to a situation where:

  • The same flat or unit is sold or allotted to two or more purchasers
  • Separate allotment letters or agreements are issued for the same property
  • One buyer is kept unaware of the earlier allotment or agreement
  • The builder accepts money from multiple buyers for the same unit

Such conduct is inherently fraudulent and violates statutory, contractual, and consumer protection laws.

Common Reasons Cited by Builders

Builders often attempt to justify or conceal multiple selling by citing:

  • Cancellation or alleged default by the first allottee.
  • Malafide Intent of the Builder to dupe innocent homebuyers and earn money unlawfully.
  • Committal of Profile Funding Scam
  • Internal booking errors or software mistakes
  • Oral surrender or withdrawal by an earlier buyer
  • Non-execution of agreement for sale
  • Clauses permitting cancellation at builder’s discretion

Courts have consistently rejected these excuses, holding that accepting money and issuing allotment creates binding rights in favour of the first buyer.

Real Causes Behind Multiple Selling

The real causes behind this malpractice include:

  • Greed and profiteering due to rising property prices
  • Cash flow problems and diversion of funds
  • Poor record-keeping and lack of transparency
  • Intentional fraud and misrepresentation
  • Lopsided builder-buyer agreements
  • Weak internal compliance mechanisms

In many cases, the flat is resold at a higher price, causing deliberate loss to the original allottee.

Precautions Homebuyers Should Take

Homebuyers can protect themselves by taking the following precautions:

  • Verify RERA registration details and unit inventory on the RERA portal
  • Insist on a clear unit number, floor plan, and carpet area in writing
  • Ensure execution of a registered Agreement for Sale
  • Avoid large payments before formal documentation
  • Conduct a title and project due-diligence through a legal professional
  • Maintain all payment receipts, emails, and communications

Despite all the precautions, Homebuyers may still face this issue as there is no Government Record in India which keeps record of allotment of units by the Builder. Only the Builder has that record and if the builder has malafide intentions, then the builder will engage in this scam and dupe innocent homebuyers. It is only after the execution of the sale deed, one can check the ownership records.

Legal Framework Under RERA, 2016

RERA expressly prohibits multiple selling and imposes strict liabilities on promoters.

Key Provisions:

  • Section 11(4)(e): Promoter cannot accept more than 10% of the cost without a registered agreement
  • Section 13: Mandates a written agreement for sale
  • Section 14: Prohibits alterations without allottee consent
  • Section 18: Entitles buyers to refund, interest, and compensation
  • Section 31: Allows complaints before RERA Authority

Multiple selling is treated as fraud, misrepresentation, and breach of statutory duty, attracting penalties, interest, and even imprisonment in serious cases.

Remedies Under the Consumer Protection Act, 2019

Under consumer law, multiple selling amounts to:

  • Deficiency in service
  • Unfair trade practice
  • Fraud and misrepresentation

Buyers can seek:

  • Refund with interest
  • Possession of a similar property
  • Compensation for mental agony
  • Punitive damages
  • Litigation costs

Consumer Commissions have consistently held that buyers cannot be made to suffer due to builder misconduct.

Judicial Precedents

Indian courts have taken a strict view against multiple selling of flats:

  • Lucknow Development Authority v. M.K. Gupta (1994)

The Supreme Court held that housing authorities and builders are liable for harassment and unfair practices.

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

One-sided agreements and unfair conduct by builders were declared non-binding.

  • DLF Ltd. v. Bhagwanti Narula (NCDRC)

Multiple allotments of the same unit were held to be fraudulent, entitling buyers to compensation.

  • Various RERA Authority Orders

RERA authorities have directed refund, restoration of allotments, and imposed penalties for double selling.

Conclusion

Multiple selling of a flat by a builder is a grave violation of law and trust. Indian courts and regulatory authorities have clearly held that such conduct cannot be excused as an administrative lapse or contractual issue. With RERA and the Consumer Protection Act in place, homebuyers today have strong legal remedies to protect their investment and dignity.

Buyers facing multiple selling should act promptly, preserve evidence, and seek legal redress to enforce their rights and hold errant developers accountable.