Saving yourself from fraud while buying or selling a property

Saving Yourself From Fraud While Buying or Selling A Property

It is a bitter fact that there is an occurrence of frauds while buying or selling the property. Misinformation or Ignorance or lack of information on procedures and documentation is the main cause.  However, one can easily avoid these complications. 

Some of such common frauds are:

Imperfect Title – For a buyer, it is significant to ensure that the seller has a clean title and can transfer the ownership rights in the property to the buyer. The title should be free from defects. The imperfect title means there is any encumbrance on the property or the property is disputed.

Multiple mortgages: The seller has mortgaged the house to different banks before selling the same.

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Delayed possession by developers – In case of buying house/flat constructed by a builder, possession of the flat is often delayed. The buyer’s money gets blocked.   

Building not as per the approved plan– The builder does not construct the building as per the sanctioned plan. Necessary approvals from the Government are not taken. The property is not as per the description/advertisement. Sometimes the location of the property may also differ.

Fake Documents– There is also a practice of preparing fake title deeds. Either the signatures are forged or the document (property document) is not valid i.e. proper stamp duty not paid or document not registered as required.

Fraud by Impersonation: The person presenting himself as the owner of the property is not the actual owner. The documents are signed forging the signatures of the actual owner.

Home equity frauds– In simple words, home equity frauds means a fraud where the fraudster hacks the information about the true owner and reroutes the loan amount to his account by forging the signatures of the actual owner.

Read More: Transfer of Property on the basis of Registered or Unregistered Will

Misuse of power of attorney: A POA granted to execute a sale deed can be misused. It is better to get the same verified from a lawyer to avoid any dispute later.

How to avoid them:

Information and knowledge is the key to avoid any property related frauds. Some steps can be:

To verify the Credentials of the developer/builder:

If the builder/company is reputed, it can help to ensure that necessary approvals have been taken and promises made are not fake. Possession will not be delayed as the developer has maintained a good track record.

Checking the revenue records:

There is a mention of the lien/mortgage over the property in the revenue records. The same can be verified to ensure that property is free from encumbrances and title is clear.

Buying a resale property:

Collect the encumbrance certificate from the office of the Sub Registrar as it helps to verify that the title is clear. EC also contains the name of the previous owner. Also, check the tax payslips. Try to verify that all dues have been paid.

Read More: How to file a partition suit for a property in India

Buying a house in a society:

Check that the society is registered and there is a resident welfare association in place.

Buying a house from a builder:  

It is better to check that the project is registered with RERA. It helps to ascertain that all necessary approvals are in place and construction is as per norms. Moreover, possession will be granted as per promise.

From Seller’s point of view certain precautions are:

  • Buyers generally ask for original ownership documents. Sellers must possess the same
  • Seller must have Approved building plan or occupation certificate from the local authorities
  • Sellers must ascertain the identity of the buyers especially if the buyer is executing the conveyance deed using a power of attorney
  • Proper valuation of the property to quote the correct price

Taking legal advice:

Property transactions are complex. To avoid the occurrence of fraud, the parties must take legal advice and ensure proper documentation.

 Investment in the property must be taken seriously. The casual approach may land you in trouble.

Does Consumer Has The Right To Damages And Recovery If Possession Is Delayed?

Delayed Possession

“A brand is no longer what we tell consumers it is, it is what consumers tell each other it is.”

Yes, the consumers must have the right to damages if delayed because delay in delivery of possession can cause the buyer losses which may also leads to defamation of the consumer as well as the buyer. So, it is the duty of the seller to make the losses good.

That is why there are some sections for the consumer’s protection:

Section 32 of Sales of Goods Act, 1930 says about the rules of delivery which includes the delivery of goods on time.

Section 57 and 58 of Sales of Goods Act, 1930 provides the damages for nondelivery and specific performance of the contract respectively.

This leads to ‘deficiency in service’ for which a buyer can file a consumer complaint under section 2(g) of CONSUMER PROTECTION ACT,1986 which defines the ‘deficiency’ means any fault, imperfection, shortcoming or inadequacy about the nature and manner of performance which is required to be maintained.

Section 49 and 50 CONSUMER CONTRACTS REGULATIONS, 2013 includes the terms of contract that the trader must perform the service and the liability for the breach of this term cannot be excluded.

PARDEEP NARULA VS. GRANITE GATE PROPERTIES (2016)

FACTS: The possession of apartment was not offered to the Complainant by the said date and the aforesaid deadline was later extended but being aggrieved by the said delay, the Complainant approached the commission against the builder.

HELD: The Builder had failed to complete the obligation to hand over the possession after construction till 31.1.17 and hence had to pay compensation in the form of interest with Rs. 10,000 as the cost of litigation.

JUSTIFICATION

Ongoing delay in the possession of the goods is one of the worst nightmares of a buyer.

It is justifiable to pay damages or recovery if possession is delayed to consumers in case of default by the seller’s side. So, whatever the reason may be, this delay not only causes a loss of money but also makes him/her feel depressed and frustrated and can put him/her through mental anxiety.

CONCLUSION

But still at last, there are certain things in such situation, the buyer can ask for compensation as law is always there to help you; you can claim indirect losses provided you must have a strong proof for it; refund rights etc.

“A CONSUMER IS NOT A MORON, SHE’S YOUR WIFE.”

Delayed Possession of Property

DELAYED POSSESSION OF PROPERTY

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.