Whenever there is slowdown in real estate market, project delays are common. A delay of around 2 years has become a norm in the real estate industry. However, builders still don’t refrain from over-committing and giving aggressive completion dates in agreements. Advertisement like “possession in 24 months are” are a big farce and often used because of vast competition among property developers.
But, should a home buyer just be a mute spectator to this entire delay episode? Just hoping for Real Estate Regulatory Bill is not going to help. While there is no easy way out from delayed projects, buyers should be careful about their investment and minimize the risk. We suggest that every homebuyer should follow these steps to safeguard their interests in real estate market full of cheaters. This article is not a legal advise but an informative piece of information for individual home buyers. We shall cover legal remedies separately.
Check your Agreements
Read the fine print of your agreement. It is important for you to go through the flat buyer or builder buyer agreement (BBA). Builders very carefully draft these agreements and safeguard themselves from all angles. Even in case of project delays, buyer shall not be entitled to delay penalty. There are cases where builder denied delay penalty because buyer did not ask for it as per the agreement. In another case, builder refused to give delay penalty because buyer had delayed the payment of demand by just one day. Is is important to note that buyer did pay 18% for the delayed payment. But the agreements were drafted in such a way that in both cases buyers stand to lose. In such cases, it is important for you to read the fine print of BBA and try not to miss important points like timely payments and demanding delay penalty.
It is important to note that, just because builder has drafted one sided agreement, it does not mean everything is binding on you. Builder can not just get away with everything. Recently National Consumer Forum came down heavily on builders and refused to entertain a lot of Force Majeure conditions. You can read more about it here : Force Majeure, Can Builder Escape Payment of Delay Penalty?
The day you suspect a possible project delay or slowdown in construction, it is very important to start documenting your communication with builder. Most of the home buyers makes this mistake of interacting with builder’s office over phone. Buyer should not rely only on verbal communication and start interacting with builder in writing. While you can use E-mail for general inquiries, it is advised to send signed letters through registered posts for all important matters. Buyers should inquire about delivery timelines etc every 2-3 months. These written communication shall help you put up a strong case if required in future.
Check actual reasons for delays and verify the facts
Builder will never tell you the actual reason for project delays. They usually come up with stupid stories just to calm down the home buyers and hide the grave issues. Sometimes, the actual reason for delay is far more serious than the stories of builder. In one of Noida’s group housing project, the builder did not even have the ownership of the land and had construed around 15 towers. The authority suddenly sealed the entire site and there has been no construction since last 18 months. In another project of same locality, High Court ordered demolitions of 2 towers because they were illegal.
It is advised that home buyers don’t buy the theories of builder and file RTIs to authorities to know actual reason. We recently covered documents that should be checked before buying a property. If your project is delayed, you should validate these documents once again. Documents to check before buying an under construction property
Filing RTI is very simple and in case you need help with RTIs you can refer to this article: File an RTI, a step by step Guide
Be vigil and look out for warning signs
It’s best to be vigil and always look out for warning signs. These are some of the things that points to some serious issues with project delays.
- Sudden suspension of disbursement of loan by banks.
- Public notices in newspapers by local authorities.
- Any farmer agitation of news of land litigation.
- Split between directors or stakeholders.
- Non responsive builder or customer care staff.
- Sudden withdrawal of machineries or contractors from construction site.
If you see any warning sign, you can take an informed decision of exiting the project on time rather than being stuck for life.
Write to local authorities
If builder is not responsive or he is not very forthcoming in sharing the right details, it is advised to write to local development authorities. It is the duty of local development authority to intervene in the matter. Local authority may give you details of builder’s non compliance to statutory requirements if any.
Join home buyer’s groups
Thanks to social media, home buyers are increasingly becoming vigil and connecting with fellow home buyers. Do not wait for project delay signs and look for home buyers group on social media platforms like Facebook, Yahoo Groups or Google Groups. A group can collectively keep a tab on builder and can maintain a good written documentation of discussions. The biggest advantage of such groups is that even if you can not personally check the progress of the project, you can still be updated through fellow home buyers.
Pressurize developer to complete the project
Meet the developer in big group and pressurize them to come clean on reasons for project delays. While builders are notorious and don’t entertain individuals, they usually give up easily when confronted by group of home buyers. To avoid any negative publicity, they usually listen to the groups. Discuss various option with builder and always try to take possession timelines in writing.
Such regular meetings with builder help strengthen your documentation. Always prepare minutes of meetings and get it signed by builder. Chances are builder won’t do that easily but the group should push for it. Such documents helps in court of law where you can always mention that home buyers have tried to resolve the matter amicably.
Register your home buyers association
A structured and formal association is always better to engage with builder. Builder would always have the seriousness in mind when they know that association is a legal body and can be serious about their actions. We recently wrote more about home buyers association, you can read it here: Home Buyers Associations, their benefits and registration process
Your legal options
- You can send a legal notice to the developer mentioning the issues being faced and the relief you seek. Legal notice needs to framed carefully as it is the backbone of any civil or recovery proceeding.
- You can approach a consumer forum that is created to help consumers who have been cheated by companies. Such forums are created at the district, state and national level. As a buyer you can lodge your complaint against the developer.
- You can reach Competition Commission of India to file a complaint for the wrong and dominating practices of the developer. You can approach the Commission in person or online to report the developer’s unfair practices for the authority to take necessary legal action against the builder.
We recommend Consumer Forums
When everything fails, you can always approach consumer forums. NCDRC has been very strict on builders lately and have given very good judgements to safeguard interest of home buyers. Here are some of the good Judgments from Consumer Forums.
- Higher delay penalty : National Consumer Forum awards 12% delay compensation to Sahara Grace buyers
- Refund of money with penalty: National Consumer Forum orders refund at 18% for long delays
- Complaint as home buyer’s association: Maintainability of complaints by Home Buyers Associations