Written contract before flat sale

The developer of a residential project has a duty to enter into a written agreement for sale with the buyer on receiving an advance payment, the Supreme Court ruled while setting aside the judgment of the National Consumer Commission which had dismissed the appeal of a flat buyer. The agreement is necessary to get a loan from a financial institution, the court stated in its judgment in Suman Jindal vs Adarsh Developers.

In this case, the developer cancelled the allotment due to alleged delay in payment. The buyer moved the consumer commission which dismissed its petition. On appeal, the Supreme Court stated that the commission was wrong and asserted that even under the Karnataka Ownership Flats Act, the developer was obliged to enter into a written agreement.

The developer had meanwhile sold the concerned flat to a third party. The court held that it was a later sale and the original allottee had a greater claim and he should be handed over the flat.