Property buying: Buyer rights vs builder manipulation It is not an uncommon thing to know of builders making fake promises to home buyers or delaying the project than the time period mentioned in the agreement or cheating the buyers by changing the layout. The lack of regulation in real estate sector in India has been a concern over the years and the builders seem to have gotten away with cheating the buyers in more than one occasion. Project delays Project delays are the most common complaints levied against the builders. Often customers complain of builders delaying delivery of flats to them than what had initially been promised. The hassle over project delay is usually the main contention between the builder and the buyer. In some cases, the buyers may be offered the choice to cancel their booking and the payment made to the builder is given back. However, that helps in no way to compensate the buyer as he/she loses out the opportunity to invest in other properties and incurs a heavy opportunity cost. There may be more than a single factor behind project delays in India – projects entwined in clearance tangles, change in fiscal policies, delay in supplies, political unrest, etc. However, the buyer needs to know that it is his/her prerogative to make sure the builder does not get way with delay in delivering the apartments. Penalty for delay in possession Buyers can complain against delay in possession of apartment. Delays may incur a payment of Rs 5-10 per square feet or the builder may have to pay an interest payment of 5-10 percent for the amount paid. Here, it must be mentioned that apartment owners association should be formed as per legal norms. Once the society is registered as per the guidelines of the state, then the owners can claim compensation against any delay in possession. A project may be delayed indefinitely by the builder. As a buyer you have to ensure that the agreement between you and builder protect you from incurring any loss. If the buyer delays payment as project is being delayed by the builder, there is always the risk of facing penalties from the builder. The builder can impose a penalty as high as 15 percent on the buyer. Hence, to counter that the buyer should go for an agreement which would link payment schedules to construction progress. It would enable the buyer to withhold payment in case of any delay in possession of the flat. Violation of other buyer rights The builder may violate the buyer’s rights in many ways other than delaying the possession. The builder may misguide the buyer regarding details of the property. The builder may change the specification regarding floor-plan, construction material and amenities provided. Worse even, the builder may reduce the total undivided area and also reduce the parking space and promised size of amenities like club house or gym. Despite the Supreme Court ruling that buyers cannot be sold parking spaces and that parking space are to be provided in every apartment, builders in many projects continue to sell parking space. Real estate bill The real estate sector has been an unregulated one in India and the government has sought to regulate the sector. Real estate regulatory bill is proposed to bring in transparency and to protect the rights of consumers. As per the bill, the builders will have to register the project under state regulatory authority. They will need to adhere to the committed completion period and developers can launch a project only after all the clearance is acquired. Furthermore, any misleading advertisements on part of the developers to lure the home buyer will invite penalty. The proposed real estate bill is expected to bring in transparency and accountability and ensure fair practice and to address any manipulation on part of the developer.
Posted on: Sat, 20 Jul 2013 09:22:29 +0000
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