6 Things Your Builder Shouldn't Be Doing But Still Does
Sifting through the numerous real estate related complaints that land on our desks every day is an instructive, enlightening and horrifying experience-all at once.
Instructive and enlightening because these complaints are a living, breathing manual on how to harass consumer; extremely handy should any of us decide to shift into the real estate business.
Horrifying because of the damning realization that this just the tip of the iceberg; a mere trailer of what consumers go through across country when dealing with builders and real estate developers. The ground reality of real estate sector in India, from a consumer perspective is harsh. And that is a gross understatement.
Pending a bill seeking to regulate the real estate sector to infuse some sanity in this opaque, unregulated, unaccountable sector-we decided to dig around some more on the prevailing scenario. The result was this list (which is neither comprehensive nor exclusive, given the rapid rate at which builders innovate when it comes to harassing their consumers) of some of the things that your builders should not be doing but are still doing just because no one has asked them to stop or dragged them to the consumer court!
1. Charging for the parking/open space-When one of our readers, Chetan Dhowan, wrote in to us complaining that his builder is asking for a ridiculous price for every parking space, we decided to dig into the issue. What our research revealed was not surprising in the least-the practice was indeed illegal. What was surprising was the fact that this practice has been struck down by the Supreme Court itself in a 2010 verdict where it was clearly held that any open spaces usable as parking cannot be sold separately as they are common areas. Ironically, despite the verdict, as Chetan’s experience clearly shows, this practice has not subsided at all, with harrowed consumers across the country forced to pay exorbitantly for what is rightfully theirs! For a detailed analysis of this point, see Don’t Pay for the Parking Space, It is Illegal!
2. Delay in Handing Over The Possession- One of the most commonly reported issues, with innumerable consumer forum verdicts against it–delay in handing over the possession of the houses continues to be the proverbial thorn in real estate consumers’ lives. The wait for the consumer can sometimes be as long as 10 Years, and even then it takes a harsh consumer forum verdict to ensure the handover. Is it allowed? Of course not. As we said earlier, consumer forums across country have been relentlessly taking a stance against such delays, the most recent one being a verdict by a Mumbai Consumer forum Consumer Forum Penalises Builder for Delay in Handover of Flats. But the vicious cycle refuses to break, being repeated by some other builder, in some other place.
3. Delay in completion of the project and resulting fiscal setback borne by the consumer- What is worst in case of the delay by builders in completion of a housing project is the inevitable, resulting fiscal setback which is ultimately borne by the consumer. The builder-buyer agreements have penalty clauses but they are not mandatory. The fiscal implications of delay have not gone unnoticed and Maharashtra State Commission in a landmark verdict clearly noted the insufficiency of the 9% interest rate that the builder was liable to pay on the refunded amount and the fact that the consumer in question has invested their lifetimes’ savings when they invested in flat and at the existing rates, it would be impossible for them buy a flat, even with the refunded amount. The result is often exorbitant compensations and interest rates granted by consumer forums in cases that come before them. But has it changed things? That is a cruel rhetoric.
4. The wide chasm between the promised and the delivered- It isn’t very un-common place to find consumers cribbing about the layout and designs being different from what was promised or shown in the catalogue. What is worst is when the this habit of denying the promised extends to denial of basic amenities, leaving a bunch of frustrated consumers in its wake- with houses that leak, doors that creak and windows that rattle. Is it allowed? Do we even need to answer this? And of course you can drag your builder to the consumer court- trust us, it is really worth the effort.
5. Bounced Refund Cheques- This is the kind of innovation we had been talking about. One of the complaints that landed on our desks was from a consumer whose builder obliged and refunded the entire amount with interest when the project was delayed. The catch-the refund was in the form of a cheque that eventually bounced. What made us do a double take on this complaint was the fact that this builder’s act was so wrong at so many levels, not just legally but also professionally. It just made us wonder how easy it was for these builders to get away with harassing consumers. So much for an honest builder!
6. Denial of basic amenities- Denying electricity and water supply is a fairly regular practice for the builders. The consumers are forced to pull strings, pay money and resort to all sorts of tactics to ensure they get two things that are an absolute must and their primary right for survival in modern times. The builders get away with it, mostly- till someone gets a consumer court into picture and then, all hell breaks loose. As was seen in the case where Thane Consumer Forum sentenced a builder to two years of imprisonment along with fine for denying a building water and electricity supply. For details, see Consumer Forum Convicts Builder For Denying Water And Electricity Supply.
As we had mentioned earlier, the horrifying reality of the real-estate sector from a consumer perspective is far too gory to be summarized in a list—any list. And there is some good reason behind the analysts and industry-watchers across country crying hoarse about the need for a Real estate Regulator to be brought into place. A bill is pending and from what we gather, has some promising provisions like hefty penalty in case of default, establishment of a State level regulator and compulsory registration for builders with the Regulator.
Our only question is when? And till then, what?
We really hope that this bill turns into a legislation soon, giving the real-estate consumers at least some hope of redemption. Consumer courts have been filling this gap for too long now and while they are effective, they really cannot replace a system of regulation that ensures that grievances do not arise in the first place.
Till then, and probably even after that, awareness is the key. The entire objective behind this list was to enhance awareness and let the consumers know what is wrong and that consumer forums are indeed of help in several cases. What is essential is knowledge of what is certainly not allowed and this is a weapon which every consumer must possess!