How to pursue errant builders
Bringing fraud builders to book
With almost 1/3 of the houses booked between 2007 and 2009 in Delhi,Mumbai,NCR,Bangalore,lagging behind schedule by upto 3-4 years,the house buyer is a suffering soul these days.The reason for the delay could be many fold,but typically,its lack of funds or rather ,funds diverted in the purchase of land rather than the construction of the building.
Contact a builder and he will give you a host of reasons,but the main reason is diversion of funds from one project into buying land elsewhere.
The culprits are the who’s who of the real estate developers like DLF,Jaypee group etc.Most people who have purchased or booked flats in projects such as Jaypee Wish Town in Noida sector 128 or DLF park place,Gurgaon can count on themselves as victims.
With lax real estate regulations and archaic laws on their side,the builders flout their clout with impunity.Most don’t even answer calls or reply to letters as they know that legal matters can last for years in the courts and no one has lasting power to go all the way,especially with the money power of builders to take it from one court to another.
But now,thanks to the internet,people are finding their voices collectively.Aware of the bad publicity,the builders have formed an industry association of 6000 members (credai) which can be the first stop for complaints against builders,but without any real powers,the role of credai is customary.
Some of the recommendations by the CREDAI code of conduct are:-
- Title certificate of the project land should be made available to the buyer before signing the agreement.
- All sanctions like approved plans should be made available to the buyers at the time of signing the agreement.
- The developer should only start bookings after all the sanctions for beginning construction have been obtained.
- The sale agreement should be made as soon as the deposit or token money is recieved by the builder.
- The price of flats cannot be changed once agreement is made.
- The agreement should mention the carpet area and built up area.
But since CREDAI cannot legally do anything to its members violating the rules,there are other options that the buyer can go for.
- Cancel the booking.
Most people are not aware that house purchase makes the builder liable to the Consumer protection act.Not only that,in Maharashtra,all sales of flats are governed by MOFA (maharashtra ownership of flats act).According to this act,the builder has to refund the amount if the delivery is delayed along with interest.Most builders think that by wording the sale agreement in their favour they have managed to fool the buyer.,but little do they know that if the buyer took them to court,they would fall flat.Forget about builder deducting a percentage if you cancel the booking,he is actually liable to pay you for the delay.In some cases you can also get compensation for the harassment and interest together along with legal costs.
- Forming a flat buyers association
This is a better option as it brings together the resources of many people who can then join hands and take on the builder.Two people can join and make and association and get it registered to grant it legitimacy.To register an association one needs basic documents like pan card,address proof etc.,and a copy of the bylaws of the association.Bylaws specify why the association has been formed,who can become members,what its objectives are,membership charges,frequency of the meetings,rights and duties of the board,various committees of the association etc.You can also get an auditor to audit the accounts of the association.
Total cost could work out between 3000-8000 rupees and take 20 days to complete the formalities.
You can get members to join by using social media like facebook and by visiting the site personally or by advertising in newspapers once you have the basic members.You can also post on dedicated opinion sites like mouthshut and indian real estate forum.
Once an association is formed,you can approach the consumer courts (no lawyers or expensive fees required) or take the legal route.You can also file a complaint with the competition commission of India if the builder has stated unjust or anti competitive one sided sale agreements.Recently,DLF was at the receiving end of such a judgement in Gurgaon.A penalty of 630 crores has been imposed on DLF.DLF has appealed and the final judgement is pending.Kolkata west international city is also embroiled in a similar case.The builder had charged Rs. 4.20 per sq ft maintenance with 3 yrs advance payment.But once the association was formed,he quickly reduced it to 1.75 per sq ft with 2 yrs advance payment.
Housing construction is a service under the consumer protection act
Interest has to be paid for delayed possession
Buyer can opt out if there is a delay in delivery
Buyer can withhold payment if construction does not proceed.
Buyer can move court despite signing one sided agreements.
The first step is sending a legal notice.Even if he does not recieve it,it is considered delivered if sent via speedpost or registered mail.Preserve all brochures/catalogues and website page printouts to prove what was promised.
Ref:Economic times Wealth
Best of luck and please share your experiences below.
- Builder fined for cheating flat buyer (navimumbairealestate.org)
- Documents required for flat purchase in Navi Mumbai (navimumbairealestate.org)
- Maharashtra Housing Regulation and Development Bill-Will it help? (navimumbairealestate.org)
- Builders wait for BMC chief Subodh Kumar to go (navimumbairealestate.org)