Delay in Possession of Property by the Developers

Delay in Possession of Property by the Developers

The Indian Government has been taking several steps such as Demonetization, RERA, GST, etc. to create a transparent and corruption free economy.

The Real Estate Regulation Act has been implemented to protect buyers and increase the investment in the real estate sector. The realty sector is a major contributor to the GDP of the country and the fall in the investment has affected country’s growth a lot.

The delay in possession of the property by the developers reduces their credibility in the eyes of the buyers. It also causes harassment and forces consumers to take action against them like filing a case, reducing the investment, etc.

The case of a harassed consumer:

In a recent case that we came across, Mr. Kunal had approached us to tackle the situation in which he had not been given the possession of his property till July 2017, even though he was promised that it would be handed over to him by July 2013.

He approached us with queries about provisions under RERA to protect his interest as a buyer and wanted to be aware of what action he could take against the developer.

RERA is an act that has been laid down by the government after observing the rising rate of buyer-developer disputes.

Provisions to protect the interest of the buyers under RERA

  • The developers are required to register their project with the State’s Real Estate Regulatory Authority so as to increase their credibility.
  • 70% of the amount is to be deposited in a separate account and is to be used only for the construction purposes ensuring timely delivery and any deviation will be punishable.
  • All the approvals have to be taken before initiation of the project to ensure timely delivery.
  • The buyer will only pay for carpet area, not for the super built-up area.
  • As for the delay in possession, the buyer has the right to claim an interest of 10.9% per annum.

Legal Action against the Builder for Delay in Possession of Property

The buyer can:

  • Issue a legal notice to the developer and demand for refund of the sum paid along with interest.
  • File a case in the Consumer court against any negligence on the builder’s part. For property:

Over Rs. 1crore – with the National Consumer Forum

Between Rs. 20 lakh to Rs. 1 crore – with State Consumer Forum

Up to Rs. 20 lakh – with District Consumer Forum

  • File a case under Indian Contract Act for any damages or lack of action, if an agreement was signed.
  • File a criminal trial to claim misrepresentation and fraud.
  • Claim the amount that would be equivalent to the cost of the property that you would have acquired as an alternate due to the delay of possession of the property by the developer.

Case of an NRI – Court judgement against property developer

Court judgement against property developer

In the present matter, the Complainant booked a Residential floor in the Project ‘Omaxe Cassia’ of the Developers. The Allotment letter (26.07.2012) provided that the floor would be delivered within 24 months from the date on which Agreement will come into effect but not later than 30 months (25.01.2015). The Complainant paid about Rs.51 lacs of the total amount of Rs. 56 Lacs. Developers through various emails sought the extension of the period for delivery but failed to transfer the possession of the Floor within the stipulated time.

The Complainant filed the Complaint in State Commission, U.T. Chandigarh holding the Developers responsible for Unfair Trade practises and deficiency in services. The Complainant claimed possession of floor along with interest, compensation and cost of litigation.

Claimed possession of floor along with interest, compensation and cost of litigation

The Developers challenged the complaint on the following grounds:

  • The matter was to be referred for Arbitration as per the Agreement.
  • The suit cannot be filed in the State Commission of Chandigarh as payments were made in New Delhi.
  • The State Commission did not have the Monetary Jurisdiction to deal with the case.
  • The Complainant being an NRI has bought the property for commercial purposes.
  • Time is not the essence in the case of sale of immovable property.

The Commission directed the Developers to complete the construction of the project and handover the possession along with fine or interest @12% p.a. and compensation for mental agony and harassment (as the Complainant invested huge amount of money with the hope to get a roof over his head but could not because of the Developer’s failure), and also Rs. 50,000 as the Cost of litigation.

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