What to do if the builder defaults

A long wait to get the keys of your home is hard hitting for any real estate consumer who has put in their life-long savings to buy a roof over their head. Delays in construction, delivery and false promises by developers are a few problems that real estate buyers are facing today. Most of them don’t know how to deal with the situation.

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In order to advise home buyers on how to deal with faulty builders, Magicbricks recently conducted an online chat session with Asha Nayar Basu, senior partner, S Jalan & Company, Solicitors & Advocates. The topic was “What are my options if the developer defaults?”

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“Delay in project delivery has become common in India. Developers include a grace period, generally six months, in their agreement with buyers. Most homebuyers take a delay of 6-12 months as granted. Sometimes, possession is delayed even beyond the expected tenure. In this case, a consumer can claim delay-in-possession charges,” said Basu.

In case the developer refuses to pay the delay-in-possession charges, Basu added, “You can send him a legal notice. The Supreme Court has held that a consumer has the right to approach the Civil Court or the Forum under the Consumer Protection Act for relief in a situation where the builder commits breach of his obligations. There are laws such as the Maharashtra Ownership Flats Act or the Development Control Rules, under which the case can be filed before a Civil Court for damages for refund of amount and interest on the said amount.”

Explaining the process of filing a complaint against the developer, Basu advised to consult a lawyer first and send a legal notice to the builder through him. After this, one must carefully draw up your complaint and file before the Consumer Forum.

Can a consumer get his or her money back with compensation, if the builder defaults? “Refunds can be claimed if a project is delayed beyond the period stipulated in the agreement. You can file a case in the Consumer Disputes Redressal commissions at the district, state and national levels,” explained Basu.

In cases such as, if the builder asks a consumer to pay the holding charges till the time registration formalities are not completed within the decided time, what should the home buyer do? Basu said, “If it’s not mentioned in the agreement, the builder cannot force you. The allottee can also file a complaint before the Competition Commission of India if he is able to show that the builder is a dominant entity in the market and is misusing his position to the detriment of the allottee by unilaterally imposing exorbitant hidden charges.”

If the project is completed and ready for possession, she says, it is wise to check that the builder has the Completion Certificate (CC) from the Municipal Authorities. “Although the certificate is withheld to penalise the builder/developer for not fulfilling the desired norms, it ultimately affects the flat owners. In many cases, builders/developers disappear once the flat is sold and the owners face the music because it is difficult for them to resell or mortgage the property without the document,” Asha said.

The CC documents the location and land identification of the building, certifies if the building is in accordance with the building standards eg distance from the road, distance from adjacent buildings, height of the building and other approved norms of the municipal authority as well as the building plan.

Advising those who have invested their money directly through subvention schemes and have not taken home loan, Basu said, “Home loan disbursal should be linked with the stages of construction of the building, so that the money loaned by the bank does not get locked up in case of a dispute between the borrower and the developer. These schemes are floated only because developers were finding it difficult to raise funds.”

Before buying, Basu said it is wise to check all the legal papers of the builder. A complete title search of the property must be done. Check all the chain deeds of the property and plan sanction approvals.

“You should also engage a lawyer to conduct searches in the registrar’s office and the courts. For ownership to be valid, a registered sale will also need to be executed. In the absence of which, you will not get the valid title of the property. Consult a lawyer who is familiar with the recent government notifications in your area,” Basu further added.

Source: http://content.magicbricks.com/industry-news/what-to-do-if-the-builder-defaults/78591.html