Thursday, 16 November 2017

How Lodha Group's "Application Form" Traps Unwary Customers

Mumbai, 16th November, 2017: Lodha Group's Application Form is like a bear-trap for prospective flat buyers. When you are preparing property papers and legal documents, every single word has to be clearly understood and agreed upon. But Lodha's customers are forced to make fatal blunders in the paperwork right in the beginning. The consequence of those blunders is that Lodha Group gets a crushing grip on your balls, which it squeezes whenever it wants. If you are a Lodha customer who tried to stand up for your own rights, you may have experienced this crushing grip.

Lodha Group's insidious Application Form is not declared before MahaRERA. Lodha Group insiders never share a copy, but we have procured it. Click here to download. These are the papers you are sweet-talked into filling up in the euphoric afterglow of a site visit.



1. The Application Form reverses who is the promisor and the promisee. Lodha's Application Form turns the factual position upside down -- the factual position that Lodha has built many flats, wants to sell them and is therefore running a sales office and a website, and is paying salaries and commissions to sales staff, channel partners and estate agents. In the language of law, Lodha is the "promisor" and you are the "promisee", and Lodha has to make a proposal, to which you are the assenting party. Section 2 of Indian Contract Act. Section 2(d) states, "When, at the desire of the promisor, the promisee or any other person has done... does... or promises to do... something, such act... or promise is called a consideration for the promise". In the natural order of things, Lodha has to promise to deliver a flat of specific dimensions, at a specific geographic location, with specific common amenities such as clubhouse, on a specific date. But... surprise, surprise! Lodha Group studiously avoids making a single specific promise, opting for only vague and dreamy communications in advertisements, brochures etc. When you fill up the Application Form, you become the promisor and Lodha becomes the promisee; you propose to buy the flat and promise to make payments according to a strict schedule, and Lodha assents to your proposal. 

It says here: "This Application constitutes an offer by the Applicant to acquire a Unit in the Building/Project as mentioned in this application form, on the terms and conditions contained herein." So who is the promisor? You are!

Who mentions the Unit and its specification? You do. Lodha doesn't mention anything. This is crucial. Lodha does not inform you about the carpet area of the flat you propose to purchase; instead, you inform Lodha about the carpet area of the flat, and the date of possession, in your own handwriting. If you find out later on that the carpet area is much less, or that the possession is delayed, how can you blame Lodha? Lodha didn't write the carpet area or the date of possession, you did!

Look at the wordings:

At the bottom of the first page, in hard-to-read small print, is the most important part of the Application Form, which you probably never read before signing:

It says, "I confirm that the details provided by me in this Application Form are true and correct. I have read and understood the terms and conditions stated herein and the same are acceptable to me and I shall be bound by the same. I further confirm that I have read and understood the terms and conditions of the Agreement to Sell to be executed pursuant to acceptance of this Application and allotment of a unit to me."

This is important. The majority of Lodha's customers sign without reading and understanding the full weight of their meaning, and these very words come back to haunt them later on.

2. The Application Form allows Lodha Group to tell you lies without any legal consequences. Let us go back and read the first point of terms and conditions again.

It says here: "The Application and the terms hereof shall supersede all prior discussions/correspondences/letters/emails (written or otherwise) between the Applicant and the Company." What does that mean? It means that the Company i.e. Palava Dwellers Private Limited, is not bound by any misinformation and false assurances that the sales staff, estate agents, channel partners, brochures and advertisements gave you orally or in writing, nor can it be held legally liable for any of it. Essentially, this clause sets the company free to misinform and misguide you before you sign the Application Form, and even afterwards.

3. The Application Form allows Lodha Group to act like a loan shark, without any legal justification whatsoever. The terms and conditions force you to submit to extreme financial stress. How much of a financial stress? Look at this payment schedule:

Within six months of booking, you have to pay 95% of the booking amount, regardless of the state of readiness of the flat you are buying. The payment schedule is not based on completion of slabs, etc. Why? Because your Application Form made you take on such an overconfident commitment! See here:

So what happens if you have taken a home loan, and your bank delays in disbursal? Will Lodha take a reasonable view of it? No. Read point 3 in the notes below the Payment Schedule in the Application Form. It says, "In the event that the Applicant approaches a bank/financial institution for availing a loan, any delay by such bank/financial institution in making the payment as per the Payment Schedule shall attract interest at as per the terms of this Application from the date they fall due till realization of payment and shall constitute an event of default."

What is the consequence of "an event of default"? Let us see what the terms and conditions say. Para no. 3.5 states: "In the event that the Company rejects the application on account of non-receipt of Booking Amounts or any part thereto... all amounts paid towards Booking Amount I and II (or 10 per cent of the Total Consideration, whichever is higher) or part thereof shall stand forfeited." In other words, in case you fail to pay 10% of the consideration value within 21 days of booking, you will forfeit whatever you have paid till that date, to the extent of almost 10 per cent. In fact, para 3.5 says that even if you have paid the entire booking amount of 10%, but you do not "abide by the terms and conditions mentioned in the Application Form", you may forfeit the booking amount. See the small print below.  

But what happens if the "event of default" is after you have registered the Agreement to Sell? In that case, Lodha will charge you "administrative charges" of at least Rs 20,000/- for each instance of default, in addition to about 9% interest on the overdue amount. The administrative charges can be revised upwards in April 2018. Dishonoured cheques will further attract "cheque-bouncing charges equivalent to 2.5 per cent of the cheque in question.

From where does Lodha Group derive the power to impose such absurd conditions on you? From you, Mr and Mrs Flat-Buyer! From your basic ignorance of law, and your sheepish willingness to sign such one-sided documents, from your unwillingness or inability to read the small print. Signing this Application Form is quite similar to signing your own death warrant. If you sign this document  (about which the Real Estate Regulatory Authority is kept in the dark), it lays the foundation for an inequitable relationship with the builder through an inequitable Allotment Letter and a completely unfair Agreement to Sell.

Supposedly, you are signing the Application Form with full awareness and free will. Read para no. 15:

Did you sign this toxic document with open eyes, Mr and Mrs Flat Buyer? Or did you do it with your eyes wide shut?

There are half-a-dozen other dicey clauses in the Application Form, which we will discuss in another article.

Krishnaraj Rao


Also read: Measure your flat, Lodha Group has cheated you


  1. thanks to bring darkside of the very important/main document and wish/hope to enlighten in future also

  2. Mr Krishnaraj Rao , thank you for your analysis but i would like to tell you that to lot of informed buyer like us , it is the inadequate support and protection provided by goverment ,law and order that we have to move on and proceed inspite of awareness of all the locuna . For you it is easier to look the game from outside and call buyers ignorant as you have just touched tip of the iceberg .