A person wishing to buy the property invests his hard earned money into the construction project. However, where the seller fails to transfer the possession of property in time, the buyer not only suffers monetary loss but also undergoes mental harassment and is left to the mercy of the seller. He suffers losses on the account of payment of rent, EMIs on home loan, or increased price of building material with time, etc., unlike profits, which he could have earned had he invested the money in some other long-term investment project. It is often alleged that the promoters of the project invest the liquid cash of the consumers in some other projects and make to them some lame excuse and ask for timely extension.
The old principle that “time is not the essence in case of sale of immovable property” is more or less outdated in the present scenario where the prices of property are ever-changing (Mrs. Saradamini Kandappan v. Mrs. S. Rajalakshmi & Ors.). Whether time is or is not the essence has to be ascertained from terms of the contract, nature of the property and the surrounding circumstances (Chand Rani v. Kamal Rani). However, if there was delay for the reasons beyond the control of the seller, he can claim a defence.
To cater to the issue of delay in transfer of possession; civil, criminal and consumer laws have been introduced to the rescue of the property buyers. A buyer has the following remedies against the developer:
- Where the property is not transferred in time i.e. the terms of contract are breached, the buyer can repudiate the contract with the seller and claim refund along with interest or damages.
- Buyer can also file a consumer complaint for ‘deficiency in services’ under the Consumer Protection Act. Merely because the person is an NRI or has other properties in his name doesn’t disqualify him to fall within the ambit of the term ‘Consumer’. If the property proposed to be purchased is a residential plot, there is always a presumption that it is to be used for personal and not commercial purposes. Burden of proof is on the opposite party to prove otherwise.
- The buyer can continue with the contract despite its terms being breached and can claim compensation.
Recently, the government has come up with Real Estate (Regulation and Development) Act, 2016 which inter alia aims to protect the interest of the consumer and to ensure that the sale of plot, etc. is in an efficient and transparent manner. This Act requires the promoter to make a declaration with respect to the time in which the project would be completed and a written affidavit along with documents authenticating the title to the property. The Act also requires the ‘agreement to sell’ to specify the date of possession and rate at which interest would be payable in case of default. All this has been done to ensure timely transfer of possession.