Today the land business is one most thriving industry in India. The interest for private and business property is expanding continuously as is the quantity of builders and developers who offer extraordinary highlights to pull an increase of sales of the real estate properties of their. A significant job is played by manufacturers and designers in the redevelopment of housing societies.
The expansion in the interest and the offered guarantees doesn’t guarantee that the guarantees will satisfied on schedule. Non conveyance of possession / ownership on time is one of the major reason of clash between the buyer and builder. There are various situations where developers have taken more time on which they agreed upon resulting in financial loss to buyers in one way or another. Late government endorsements, getting the certificate of completion, delay in getting raw material, concrete and steel acquisition, labor delay and so forth are a portion of the main considerations that add to the deferral caused in dealing with over the possession to the purchasers.
At all be the explanation, the delay in fulfillment of the project / venture influences the general spending plan of a developer and directly affects the purchaser. On the off chance that the purchaser has made sure about a home credit for the apartment, its reimbursement plan is treated as pre-EMI till the purchaser gets the property’s possession. Under sections 24 (b) and 80 (c) of the Income-Tax Act 1961, a purchaser is eligible for tax rebate but only after securing possession of the property and accordingly beginning of EMI. Till at that point, he gets no expense help or tax rebate on the pre-EMI. In this manner, the purchaser needs to pay the EMIs of the bank and furthermore the lease for his present rented accommodation. The money related loss and mental agony that the purchaser needs to confront can’t be repaid aside from by giving him the possession of his home.
Other than the late conveyance of the ownership, various different misbehavior are whined against the developers. Deficit in providing service, lacking in amenities, leakage in roof, problems in drainage system, inadequate fire safety system, inferior quality of electrical wiring, ill-advised water arrangements, not giving the occupation certificate, and so forth are a portion of the significant complaints against the developers.
Addition of a penalty clause which is one-sided in support of themselves is likewise one of the unreasonable practices submitted by the developers and builders. In the vast majority of the cases, the arrangement contains a penalty provision wherein the purchaser is charged a penalty at the rate of 18% for postponed / late installments in the buying of apartment, when the builder defers the conveyance of a similar flat, the rate at which the developer pays is just at the rate of about 1 – 2 % demonstrating an unjustifiably loaded agreement.
Safety measures to be taken by a prospective purchaser
Prior to purchasing a house, a purchaser must do an intensive due diligence of the structure / building. An imminent purchaser should completely experience the original copy of the agreement with the developer. One must check the original documents of the property. The title of the Vendor to the property must be clear and attractive. The purchaser must pursuit the title re port throughout the previous few years.
One should likewise confirm whether the developer has acquired non agricultural permission for the land from the collector. And also one should likewise confirm the development agreement between the owner of land and the developer.
He should request the duplicate of order under the Urban Land Ceiling Act. One should also check the structure plans authorized by the competent authority and the commencement certificate granted by Corporation / Nagar Palika. One should likewise request the building completion certificate (if accessible).
Purchaser should likewise check the structure/ building bye-laws in the region to confirm any issue with setback, side setback, height and so on. One must also confirm with the vender the exchange expenses, stamp duty and registration charges to be paid on buying of the property just as outgoings to be paid for the property. The deal arrangement must be examined in detail. It ought to have the municipal-approved plan of the apartment, carpet area with the region of the galleries / balconies indicated independently, cost of the property including the proportionate cost of common areas and facilities demonstrated independently and time spans at which installments might be paid. It must also be checked that the proper stamp duty has been paid.
Remedies
A purchaser who is the victim of the unfair trade practices of the developer can move toward the following forums for his redressal:
One can file a civil suit in a Civil Court
One can submit a complaint before the consumer Forum
One can file a complaint before the Competition Commission of India
One can approach Regulatory Forums
One can file a Criminal Case
Civil Court
Respected Supreme Court has held that a purchaser has the option to move toward the Civil Court or the Forum under the Consumer Protection Act for relief in a circumstance where the developer commits breach of his commitments. There are well laws, for example, the Maharashtra Ownership Flats Act or the Development Control Rules under which the case can be filed under the watchful eye of a Civil Court for harms for refund of sum and interest on the said sum.
Respected Supreme Court has held that commercials welcoming applications for distribution without having title to the impugned sites was misleading and unfair practice of the developer. For another situation it has held that a provision containing an acceleration cost in a flat buyer’s arrangement without uncovering the most extreme amount added up to vesting of unrestricted power to build the expense of the apartment and this is unfair practice by builder. In the event that a developer utilizes unacceptable material in development of a flat or makes bogus misleading representations about the state of the house then it is denial of the facility or benefit of which a buyer is entitled to claim value.
Consumer Forum
The Consumer Protection Act, 1986 is the Act which tries to accommodate better assurance of the interests of buyers / consumers. Any individual who employs any services for consideration is a buyer / consumer under the Act. It gives solutions for a buyer / consumer against inadequate services. At the point when a land is assigned or created by a statutory authority or it develops a house to assist an everyday person, it is as such, “service” as by a developer or builder. At the point when the possession of the land / flat / apartment isn’t conveyed inside specified period, the deferral so caused is denial of “service”. Such argument or claims are named as insufficiency in delivering of service of specific norm, quality or grade. An individual who applies for distribution of building site or for an apartment built by the Development Authority or went into a deal with a developer or a contractor is an expected client and the idea of development is covered in the expression ‘service’ of any explanation. Hence, the Consumer Protection Act gives security against the misbehavior of the developers and builders. Any individual disappointed by the service or delay in possession can move toward the consumer forum for his / her redressal. The buyers can move toward the Redressal Forums for insufficiency in service at various phases of construction.
The Consumer Protection Act gives a three level machinery to redressal of buyers complaints. The first level is The District Forum. The District Forums are set up in each District and have power/ jurisdiction to engage grievances where the estimation of products or services and the compensation if any, claiming amount doesn’t surpass Rs. 20,00,000 (Twenty Lakhs). The State Commission is set up in each state and have power/ jurisdiction to engage / entertain complaints / grievances where the estimation of products or services and the compensation if any, claiming amount surpasses rupees twenty lakhs yet doesn’t surpass rupees one crore. The National Commission has jurisdiction to engage grievances where the estimation of the products or services and compensation if any claimed surpasses rupees one crore. A purchaser can submit any grievance / complaint in the consumer forum against the developer or builder or contractor. The grievance should be filled within 2 years from the date of disagreement or argument with the developer or builder or contractor.
The Supreme Court in a recent landmark judgment has held that when the possession of the property isn’t given throughout to the allottee in time it adds up to denial of service and the allottee, who has been influenced by the postponement is entitled to compensation.
Also, National Commission in a judgment has held that the allottee is qualified for quit an undertaking if there is a delay in delivery possession of the house by the builder. It was additionally held that the allottee is qualified for a refund of the whole cash with interest and any deduction on the said sum is unjustified. In another judgment it was held that a manufacturer can’t decline to pay interest on the refund, if the refund is on the account of deficiency of service rendered by real estate developers, or on account of unfair trade practice by builder.
Competition Commission of India
The Competition Act of 2002 was passed to stop actions that would harm competition, forbid the use of dominance, and safeguard consumer interests. The Competition Commission of India, which has the authority to look into anti-competitive practices and impose severe penalties on offenders, can be approached by the allottee with a complaint regarding the unfair practices of the builders. The term “dominant position” is a subjective one that encompasses many builders who tend to take advantage of their position against the allottee, who has made financial investments in his project, by abusing their dominance. The Act’s punitive measures will serve as a deterrent to the real estate sector and aid in fostering healthy market competition, both of which will ultimately be advantageous for those seeking allotments. Only the builder who has market dominance may be the subject of a complaint to the Competition Commission.
The Competition Commission of India fined Delhi-based realtor DLF Rs. 630 crore in one of its landmark decisions, finding that it had engaged in unfair practices and market dominance. The commission found DLF responsible for starting construction on a residential project without permission, increasing the project’s floor count in the middle of construction, delaying completion, and forfeiting some allottees’ booking deposits.
Regulatory Forums & Criminal Case
An allottee may complain to the regulatory authorities about the builders’ failure to uphold their legal obligations.
The allottee has the option to file a criminal case in a criminal Court against the builder along with the consumer complaint to be filed in a consumer forum in cases where the builders make false promises to the flat purchasers and fail to uphold their statutory obligations. The provisions of the Indian Penal Code, 1860 permit the allottee to file a criminal complaint for fraud, contract violation, failure to respond to a grievance, and delivery of subpar construction. The builder may receive a statutory notice from the allottee. Parties have the right to go before the Criminal Court if the builder does not respond to the notice. After the notice is given, a police complaint may be filed, and after that, a criminal complaint may be filed with the Metropolitan Magistrate. The complainant should highlight any irregularities that the builders carried out while carrying out the building’s construction.
Different Defaults Made by Builders and Developers, along with their Remedies
1. Sub standard work
The Supreme Court of India has ruled that it is a denial of the facility or benefit for which a consumer is entitled to claim value if a builder uses subpar materials in the construction of a building or makes false, misleading claims about the condition of the home.
The allottee has the option to file a consumer complaint in the consumer forum against the allottee for deficiency in services in cases where the final product delivered to the allottee is of subpar quality. In these situations, the consumer forums have mandated that the contractors remove the flaws and compensate the assignee. The option for the allottee to sue the builder in court to recover damages for obligations broken also exists.
2. Construction without approvals
The consumer forums have determined that a builder’s actions constitute a deficiency in service when the plot was sold by the government without proper layout plan approval, preventing the delivery of possession to the prospective allottee.
The allottee may file a consumer complaint against the builder for a deficiency in service if the builder constructed the property without obtaining the necessary approvals from the authorities. Additionally, he has the option to sue the builder in court to get his money back. In these situations, the allottee may also contact the regulatory body that was supposed to grant the necessary approval, which may legally compel the builder to obtain the approval.
In this situation, the Supreme Court had prohibited construction within a five-kilometer radius of Badkhal Lake after the plots had been allocated. Because the complainants’ plot fell within this restriction, the Commission ordered the builder or developer to refund the money plus interest, concluding that the complainants and plot allotees were entitled to compensation.
3. Construction on illegally acquired land
The owner of the allotted property may seek redress from the consumer forum or the civil court in situations where the construction was done on land that had been illegally acquired. In such circumstances, the allottee may either request a refund of the money he invested in the property or request an alternative residence from the same builder.
Even the advertisements inviting applications for allotments without having title to the land were considered misleading and an unfair business practice by the Supreme Court.
4. Fraud in booking
The allottee may bring a civil lawsuit in civil court or lodge a complaint against the builder in instances of booking fraud. The allottee may also report the fraud to the police in a criminal complaint.
An applicant had a right to have his application taken into consideration along with those of others in a similar situation, and if at the right time, his name had been taken into consideration and assigned a plot, he would have been able to raise objections. However, the applicant’s name not being considered at the time of the draw was determined by the Supreme Court to be a deficiency in service as such.
It was decided that a fair and just compensation had to be determined and paid because he had been unfairly and illegally denied the chance to receive an allocation.
The courts have awarded interest even though the brochure that invited applications made it clear that no interest would be paid by the Development Authorities if the delay in refunding the application fee on the part of the Authorities was shown to be unreasonable. It was further held that a period of 9 months to a year is a justifiable period to return the application fee without any interest.
5. Change of land use, layout plan and structures without the approval of the allottee
The allottee’s permission is required if the builder wants to carry out additional construction that is not outlined in the layout plan that was presented to flat allotees at the time the purchase agreement was signed. The allottee must send a legal notice to the builder in cases where the builder/developer alters the use of the land, the layout plan, or the structures with respect to the one specified in the agreement. If the builder does not respond to the legal notice, the allottee may file a complaint against the builder in the consumer forum or file a civil lawsuit in a civil court.
If the allottee is able to demonstrate that the builder is a dominant entity in the market and is abusing his position to the detriment of the allottee by unilaterally changing the building’s structure or layout plan, he may also file a complaint with the Competition Commission of India.
6. Hidden charges
The allottee has the right to file a civil lawsuit in a civil court if they feel overburdened by the excessive hidden fees in the allottee builder agreement.
If the allottee is able to demonstrate that the builder is a dominant entity in the market and is abusing his position to the allottee’s detriment by unilaterally imposing exorbitant hidden charges, he may also file a complaint with the Competition Commission of India.
7. Enhanced external development charges
The allottees have the right to file a civil lawsuit in a civil court if the builder demands enhanced development fees from them.
8. Cancellation of booking/project
The allottee may send the builder a legal notice regarding the cancellation of the reservation if it occurs after receipt of the booking fee.If no resolution is reached or the builder does not respond to the notice, the allottee may file a consumer complaint against the builder seeking a refund of the booking fee. Additionally, the allottee has the option of suing the builder in court.
Additionally, the allottee has the option of prosecuting the builder in court.
9. Forfeiture of amount
The refund of the booking amount is subject to the terms and conditions of the agreement made between the builder and the allottee. There is no legal recourse if the contract contains a clause from an expert stating that the builder has the right to keep a certain percentage of the booking money. However, if there is no such clause in the contract, the allottee may give the builder a legal notice.
If the cancellation was brought on by the builder’s delay in finishing the project, the allottee may also turn to a consumer forum. According to the National Commission, the allottee may approach the consumer along with 18% interest if the request for a refund is made on the grounds that there has been a significant delay in development or handing over possession of the plots.
10. Delay in delivering possession
The allottee’s legal options include filing a civil lawsuit against the builder for the reimbursement of the amount paid to the builder and interest thereon or filing a consumer complaint in the event that the builder delays in delivering possession.
If the builder is a dominant player in the market and abusing his position to the detriment of the buyer, the buyer may also file a complaint with the Competition Commission of India in the event of an excessive delay.
According to the Supreme Court, when possession of the property is not given within the allotted time, there has been a denial of service. Such disputes or claims are made regarding “deficiency in rendering of service” of a specific standard, quality, or grade rather than immovable property.
The nature of construction is covered in the expression service of any description, and a person who applies for allotment of a building site, or a flat built by the development authority, or enters into an agreement with a builder or contractor is a potential user.
The Court further ruled that the compensation granted by consumer courts in these situations should have the dual goal of compensating the individual and enacting a qualitative shift in how manufacturers and service providers view consumers.
In another case, the Supreme Court ruled that the forum or commission would not be prohibited from making an award in excess of 12% per year when it is determined that the delay was intentional and there was no evidence of contributory negligence on the part of the allottee, resulting in harassment or injury, both mental and physical.
According to the National Consumer Commission, any deductions made by the builder are not justified and the buyer is entitled to a full refund of their money along with reasonable interest.
11. Creation of third party interests
When a builder creates a third party interest in a flat that has been allotted to a person, the allottee may serve the builder with a legal notice; if the builder does not respond, the allottee may file a civil case against the builder or a consumer complaint. Additionally, the allottee has the option to accuse the builder of deceit and fraud in court.
12. Not providing completion certificate
If the builder has not yet received the completion certificate from the relevant authority, the allottee may file an RTI application with the SPIO of the local municipality to request copies of all the documents submitted for the approval of the relevant authorities. They may also submit the necessary NOCs to the relevant authority and obtain the completion certificate on their own.
The allottee may file a consumer complaint or file a civil lawsuit against the builder if the builder has obtained the completion certificate and is willing to give it to him.
Conclusion
Today’s rising demand for residential and commercial real estate has given rise to a number of builders and developers who promise or make special features available in order to entice potential allottees. The same has also given rise to a never-ending dispute between the builders and the allottees regarding the unfair tactics used by the builders and the delay in giving the allottees possession. In this situation, the ultimate victim is the allottee, who suffers both emotionally and financially. The allottees have been able to recover their money with interest or have received financial compensation in addition to the allocation of flats by using the legal remedies. The builders are now required to refund any payments made with interest for any time that the delivery of possession is delayed. Once the builder has promised the allottees and obtained their money under the guise of those promises, there is no defense for the delay that was brought on by that builder.
Also, you can read latest Real Estate Builder & Developers complaints here.