What are the most effective methods for home buyers to take legal action against builders who delay construction of property?

  • What are the most effective methods for home buyers to take legal action against builders who delay construction of property?

    Date : 23-01-2019 20:32

    An important issue arising these days. Whenever there is a slowdown in the 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. But, should a home buyer just be a mute spectator to this entire delay episode? 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 the real estate market full of cheaters. Even in case of project delays, buyer shall not be entitled to delay penalty. Filing RTI is very simple. and in case you need help with RTIs you can refer to this article: File an RTI. You can approach a consumer forum that is created to help consumers who have been cheated by companies. 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. 

    It is wise to actively look for early warning signs and follow basic steps to help you sail smoothly through the situation. Here's what you should do.

    Developer's background check

    Carry out background verification of the developer and analyze the track record of his past project deliveries. Get in touch with other buyers to understand the nature and market of credibility of the developers.

    Constant follow-ups

    Always seek details of the construction schedule from the builder along with regular construction progress reports. Request for copy of project-layouts which are duly stamped by appropriate local authorities.

    Do your math

    If a delay is imminent, evaluate the amount you need to spend additionally every month, in order to understand if you are financially stretched.

    Other ways to tackle delays 

    Make sure you verify the necessary documents pertaining to municipal corporations, declarations as well as sale deed from the previous owners to other financial details of the project.

    It is advisable to consult a lawyer to understand the intricacies of your issue. Send a mail to the developer expressing your demands and grievances.

    Scrutinize the buyer agreement thoroughly including the terms and conditions, legal implications for all parties involved as well as clauses - which protect the buyer rights and safeguard the developer.

    Claim interest on the payment made to date, seek construction progress reports and claim payments for construction-linked property bookings.

    Check if the project has received all regulatory clearances. Project delays mostly happen due to lack of funds, if possible check if the builder has enough funds.

    Buyers have a right to demand a refund when the project is delayed beyond the stipulated period.

    Finally, you can file a case at Consumer Disputes Redressal Commission at district, state, and national levels.

    When everything fails, you can always approach consumer forums. NCDRC has been very strict on builders lately and has given very good judgments to safeguard the interest of home buyers.

     There are various effective ways for the home buyers to take actions against the builders who delay construction of property:

    1. Court case:

    A civil recovery suit can be filed by a buyer against the builder to get the refund of the amount paid by the buyer for the flat to the builder along with interest and compensation from the builder for delay in delivery of possession of flat. Civil recovery suit should be filed within a span of 3 years from the date of on which the possession of the flat was promised by the builder to be delivered. In a situation where a builder breaches the agreement, homebuyers can file a case in a civil court for injunction/damages or refund of amount and interest as per the Code of Civil Procedure. However, the limitation of adjunction in the civil court is much longer as compared to the other available provisions.

    Mainly district courts in India have a pecuniary jurisdiction in those cases where the amount is less than Rs 2 crore. The original pecuniary jurisdiction of the High Court is for those cases where the money involved is over Rs 2 crore.

    2. Consumer Complaint:

    A consumer complaint is the second most effective way which can also be pursued for the delay of possession and deficiency of service from builders end. A Consumer complaint is a very simple complaint which is filed before the district forum or state forum or National forum, depending upon the amount of the refund demanded along with interest and compensation.

    In the case of any deficiency in services as per the agreement with the builder, a buyer can file a complaint under Section 12 of the Consumer Protection Act, 1986, within two years from the date of a dispute with the builder.

    Here buyers are given the following three-tier machinery for redress of grievances:

    • District Forum
    • State Commission
    • National Commission

    3. RERA Complaint :

    In case the project listed in RERA i.e Real Estate Regulatory Authority, a complaint can also be registered under RERA. This authority is set up recently to protect the interest of the buyers and to keep a check on the builders. Registration under RERA is mandatory by the builders. A person can file a complaint before RERA in case of delay in possession, unnecessary pricing, use of substandard raw material and other issues.

    RERA has the power to cancel the registration of the builder hence it is a very effective step which can be taken by a buyer if the buyer is unhappy with the builder. A home allottee can reach out to the regulatory authority—RERA (Real Estate Regulatory Authority) and file a case against the builder as per its Section 31.

    RERA has been recently launched to address issues like delay, price, quality of construction, title and other changes in the real estate sector. This act makes it mandatory for all real estate companies to get registered with the regulator.

    Further, all the promoters of a real estate firm have to keep a minimum escrow account for each of its projects. Any delay in meeting the deadline means the promoter will have to return the entire money invested by the buyer along with the pre-agreed interest rate.

    4. Criminal Courts:

    Under the provisions of the Indian Penal Code, 1860, the home allottee can file a criminal complaint against the builder for cheating, not responding to the grievances or poor quality of construction, etc.

    The allottee can issue a statutory notice to the builder and in case the builder fails to respond to the notice, the other party can approach the criminal court. While battling the legal case, it is necessary for the complainant to bring out the builder’s irregularities.

    In criminal cases, the trial is quick. The person at fault can be asked to appear before the court, and in the case of non-appearance, a bailable or non-bailable warrant can be issued.

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