Issues with Property Developers


A promising development of any country depends on its citizens and authorities that run its government. Since the past few years, the Indian government has been taking substantial steps to get rid of the parasites such as corruption, which were slowly destroying the country’s base and face. One of the major issues that the government is currently focusing on is corruption in Real Estate.

The most prevalent problems in real estate that the people face are illegal possession, fake deals, delayed transfer of assets and funds. These are even more prevalent among NRIs.

The NRIs face such issues when they either invest in real estate in India or when they sell their property in India.

When investing in Property in India

The primary objective of NRIs for investing in real estate in India is to earn maximum returns or security. Unfortunately, this goes down-hill when they have to face challenges such as delayed or non-delivery of property, fake deals or fraudulent builders; incurring massive financial losses.

Some of the issues that investors face are:

  • Issues in the transfer of title of the property
  • Poor quality of the delivered projects
  • Treachery by the seller regarding – showing and selling different properties or not handing over the property at all or submitting fake documents.
  • Purchased land falling under village survey or city survey.

If the area falls under village part and is an agricultural land, it is a huge problem for the NRI because as per the rules of the Indian government, NRIs cannot invest in Farmhouses, Agricultural Land, and Plantation Property.

  • If the area comes under city part, the NRIs are allowed to invest in residential or commercial property.
  • It may happen that at the time of investment the builder does not ask for the stamp duty and registration but later on the NRI may face problems because of the absence of such relevant documents regarding these.
  • Issues due to the lack of all or some of the following terms in the property agreement:
    • date of delivery
    • date of possession
    • the contract amounts
    • regular maintenance fees
  • Purchased building non-compliant with the state laws and bye-laws.
  • Lack of detailed drawings of structural details, electrical fittings, plumbing, drainage and water supply can lead to several problems in the future.
  • Improper or insufficient or forged signature on the agreement.

Even a small negligence can lead to a lot many troublesome circumstances. Though it is challenging to take care of every little nuance, it is crucial to do so, and one should not hesitate from taking adequate help whenever needed.

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.