What To Do If Your Property Possession Has Been Delayed?

What To Do If Your Property Possession Has Been Delayed

When the builder delays the possession, it results in harassment to the buyer, and the excitement of owning a new house is also lost. Besides, there are financial losses also.

Nowadays, the Government is coming up with pro buyer rules and regulations for tackling the problem of delay in possession. Even courts are taking stringent action against the builders who default.  

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

Remedies available to the buyer are as follows:

Filling a complaint – A complaint can be filed by the buyer before

  • civil court – A civil court may order for a refund of the amount already paid, compensation or completion of the project.
  • consumer forum – awards compensation
  • criminal complaint – a criminal case can be filed in a court for cheating or  breach of trust

Authority set up under RERA – Real Estate (Development and Regulation Act, 2016). It is a new law under which the Government sets up a body known as Real Estate Regulatory Authority.  A complaint can be filed before it. Buyer may hire a lawyer or himself fight his case before this Authority. A complaint is filed if the builder is not compensating the buyer. RERA is applicable only for larger projects where the area of land to be developed is more than 500 square meters.

Also Read: Delay in Possession of Property by the Developers

Compensation: A buyer can seek compensation from the builder –

  • Compensation as per the compensation clause in the agreement signed by both the parties – by sending a legal notice or filing a case in civil court
  • Compensation – by filing a complaint in Consumer Forum 
  • Compensation under RERA – Buyer is given the right to withdraw from the project if the builder has not handed over the possession in time. Buyer can seek compensation for the entire payment made if he withdraws from the project. Otherwise, he has a right to be compensated for period of delay.

Arbitration:

If the agreement for sale of the house contains an arbitration clause, the dispute is resolved through arbitration. The arbitrator may order compensation. The buyer will have to move the civil court for implementation of the award passed by arbitrator. 

The buyer can choose Consumer Forum even if there is an Arbitration clause.

Other remedies:

The agreement itself may provide for the penalty in default. The buyer can get the clause enforced.

What should be the duration of delay in possession?

Compensation can be granted even when there is a delay of one day.

Choice of remedy: The buyer can choose:

  • At the first instance, send a legal notice. If the builder does not respond, an appropriate remedy can be availed.
  • If a Regulatory Authority is set up in a state by the Government under RERA, a buyer cannot seek remedy in a civil court in that area.
  • If no Regulatory Authority under RERA has been set up by the Government for a State, the buyer can approach civil court.
  • A buyer can also approach consumer forum for redressal of his grievance as he is a consumer and services provided by buyer are deficient.
  • A criminal complaint can be filed depending upon the facts of the case. In a criminal complaint, the builder is punished if found guilty, but the grant of compensation is the discretion of the court.

Also Read: Issues with property developers

Generally, the law does not permit availing more than one remedy at the same time. A buyer can approach consumer forum and RERA both, but he has to make a choice. One can withdraw his case from Consumer Forum and file the same before RERA as it a special law enacted for the protection of home buyers.

Consumer Forum and RERA can award compensation and impose penalty also. RERA can impose more stringent penalty.

Increasing Benefits of Real Estate Investment in India

Real Estate Investment in India

There is truth in the fact that the importance of land has remained same from time immemorial. Brothers fought brothers and kingdoms collapsed in this battle for land, and yet, we forget to learn from history and continue vying for what’s available. The prima facie fact that real estate never loses value or demand, makes it a great investment option, offering better returns than traditional investment ideas. There are a variety of reasons that make real estate investment so advantageous.

  • It provides great returns: Risk is a very important factor when we talk about good returns and that is minimised when real estate is held for a lengthy period of time. However, in other options like the stock market, the risk factor never goes away.
  • Better asset value: With increases and decreases in the market, there can be no value left in other investments, but your real estate investment will always offer tangible asset value. Home owner’s insurance also protects such investment.
  • Tax Benefits: One can get deductions in tax on various things such as mortgage interest, operating expenses and costs, cash flow from other investments and so on. It is always beneficial to contact a firm that deals in real estate to get more information on this, subject to the area where you want to invest. Accounts of rental repairs, utilities, maintenance etc should be maintained to make this job easier.
  • Steady passive income: Other than renting a property, profits can be generated by buying, selling and the ability to build equity on the property. It ensures that you get a passive income on the side, apart from your primary income.
  • It provides a hedge against inflation: With increase in inflation, prices of rent can also be increased with time. However, such a benefit is not necessarily offered with stocks or other investment options.
  • You will be the decision maker: Investing in real estate makes one their own boss and therefore, risk management is easier since the control is in the hand of the investment maker. Other factors will affect and cause changes in your investment, however, since you are the one calling the shots, the risk can be much better calculated.

Other than this, real estate investment in India is a very good early or regular retirement plan. If a person is well researched and knows the basics of how to invest, your property can ensure a steady income all through your years of rest from work. A few things should be kept in mind while doing the same:

  • One should be patient in choosing the property and the agent, to ensure that one doesn’t pay too much for a property and that the returns are as per your expectations and dreams.
  • Only a property with clear titles should be bought, otherwise, it will only lead to a series of court visits thereafter.
  • The price of the property should be checked properly with the local government records. A good real estate firm will easily do this for you.
  • Investment in real estate is never risk-free. However, it is a calculated risk that will offer great returns to you, unlike other investment options.
  • Negotiate your way through the process, for it will save you a lot of additional money and expenses.

RERA and its Impact on Developers

RERA Impact on Developers

RERA is the Real Estate Regulation (and Development) Act, 2017 and many states have started notifying it. It is intended as a buyer-friendly measure and had been in the news for quite some time. A lot of home buyers and property dealers and carefully studying the act to what impact would it have on them. RERA is introduced to introduce some amount of consolidation in the real estate sector. But the act is not all about protecting the property buyers and some provisions in the act are also in the favour of the developers.

Earlier developers would put in huge sums of money in the advertisement to attract buyers but there was no way to ascertain as to who is honest and who is not. This often results in honest developers not getting enough visibility. This would not be a case under this act as developer information would be public and buyers can see beyond advertisements. For quite some years the real estate business was not picking up steam but with stricter provisions to complete work on time buyers are expected to come back into the market. Another unintended impact of RERA is increase in the cost of the property because it will get costlier for developers to comply with the act. Thus, the burden of this cost will shift to the buyer and hence the more money would be paid by prospective property buyers. Earlier refund in 60 days was a clause if the project was not completed on time but developers are not backs with instant liquidity and all their money goes into construction. In fact, there will be strict monitoring of money under the RERA Act through the escrow account and 70% of the buyer’s money will be put in these accounts which only be used for construction purposes. With the coming of the RERA Act, the prospects of small players are going to diminish as either they are going to merge or be taken over hence increasing the prices of real estate as there will be lesser competition.

Other significant changes that the act brings are the setting up of the regulatory bodies and appellate bodies to solve dispute between buyers and seller within 120 days. Strict regulations will be imposed on promoters to complete construction on time. Buyers will be only required to pay for the carpet area (area within the walls) and not for any super construction outside the walls. Developers and agents will have to get themselves registered with regulators and get all their projects registered which involve more than eight apartments.

It totality is a welcome act that benefits both the buyers and the sellers. Much, more importantly, it brings transparency to the market and hence gone are days when buyers would regret their real estate decisions. The real estate sector can now realise its full potential.

When Realty Transparency became a Reality

RERA Act

The RERA Act short for Real Estate (Regulation and Development) Act, 2016 is one of the biggest improvisation in the sector of real estate. Real Estate Regulatory Authority (RERA) Bill was introduced by the Indian National Congress government in 2013 and after 6 years of debating, it was brought into effect on 1st May 2016. The rules under the act were to be formulated by the Central and State government within 6 months of the notification coming out, and each state had its own regulator along with a set of rules for the functioning of the regulator. RERA seeks to promote the interests of the consumers as well as builders and boost investments into real estate in an environment of trust and confidence. The transparency of the act ensures a steep drop in illicit activities and customer harassment, and an inclusion of agents in the provision now makes them accountable for their actions.

Making it mandatory for all commercial and residential real estate projects to register with the Real Estate Regulatory Authority India, now disclosure of names of promoters, project layout, the status of statutory approvals, the draft of builder-buyer agreements, land status, names and addresses of real estate agents etc is obligatory. This information has to be regularly updated on the website of the regulator as well. Non-registration of any real estate project can also lead to punishment upto 3 years or a fine upto 10% of the cost of the project. Various provisions of the act help in protecting the uninformed customers, such as:

  • The registration of the regulator can be revoked in case of any misleading or false representation, advertisements etc from his side.
  • Non delivery as per the terms of the contract would lead to a complete refund of the cost borne by the customer along with the pre decided interest rate or pay monthly interest on each delay month to the buyer, if they refuse to take the sum altogether.
  • The prescribed regulator will now have to give security as to quality of construction and provision of services to the customer for 5 years from the date of possession and upon any such reporting of error, the developer will have to rectify it within 30 days of complaint.
  • Before actually getting a registered sale agreement signed, the buyer cannot ask for more than 10% of the property’s cost as advanced payment.

All of these mandates increase the productivity and value of the real estate industry, and set a benchmark for growth and development. The act lays down that each state establish its own Appellate Tribunal that liberates the honest man and disciplines the swindlers.

However, the fly in the ointment is that project delays due to delays in obtaining completion certificates/essential connections from government agencies such as sanctioning authorities are uncatered for in the act.

Nonetheless, the act definitely makes this sector seem more organised and hopeful of immense prosperity and pellucidity.

Safety Net for Property buyers-Real Estate Regulatory Act (RERA)

RERA-Newsletter

Property transactions in India are set to become more transparent and safe. Besides the various regulations on Benami transactions, the government has also now reintroduced RERA.

The RERA (Real Estate Regulatory Act), 2016 is an act established for promotion and regulation of the real estate sector. It was announced last year (2016) by the government but finally came into effect on 1 May 2017. It was declared with the intention of protecting the interest of the consumers as well as bring about accountability and transparency in the realty sector.

To eradicate the common practice where a consumer gets cheated by the developers, face delay in receiving the property, etc. the Act was set up to speed up the adjudicating mechanism with respect to these issues.

The principal objective of RERA is to create a corruption free system that is favourable for both the parties involved, i.e. the buyers and builders/developers. Customer’s satisfaction is the top most priority of the Act.

Other than this, the objectives of the RERA are as follows:

  • To ensure fair-play.
  • To offer a well-organized and transparent procedure of selling any real estate project.
  • To maintain equality and similarity of information between the buyer and the builder.
  • To ensure professionalism.
  • To impose certain responsibilities on both the counterparties.

Under this Act, an Appellate Tribunal has been instituted to address the appeals after the judgment has been passed by the adjudicating officer and the Real Estate Regulatory Authority.

The Tribunal is supposed to have the same power as a civil court, such as:

  • To ensure maintenance of books of accounts and all the other records.
  • To insist on and summon the individuals and question them under oath
  • To order the cross-examination of witnesses and documents
  • To redeem penalty, compensation or interest from the agents.

RERA is a positive step taken in an attempt to lead the economy of the country forward towards a corruption free and transparent system. The Act is a reform in itself and along with it steps such as the implementation of GST, demonetization, and declaration of Benami ownership of property are providing aid in making it possible to have a well-organised, clean and efficient system.