Search the Internet          Tips  Sites: Finance, Investment

Recent Specials

Are pension fund      schemes bad ideas? Strong rupee adds      to IT firms' woes Chance to get state      finances back on track The small screen sees      a big battle Why you need personal      accident insurance 'RBI should deregulate      savings rate, cut CRR' Reforms: One step      forward, two      steps back The state governments'      precarious finances

What to do if the builder tricks you?

At is a story that unfolds all too frequently. A middle-class couple go in search of their dream home.

They meet a builder who shows them a blueprint of a palace in the making and they start paying instalments.

Disillusionment day is when they step inside the new home that has drained their life's savings.

The entrance faces southwest instead of northeast; the green area facing the terrace in the brochure is now about to become a building site.

Most commonly, the carpet area of the house or apartment has shrunk dramatically. What should the homeowner do at this stage?

In the bad old days, the answer would probably have been nothing. Houses and flats were in short supply and people bought anything that was going.

Today, however, that shortage situation has evaporated and buyers are in a position to pick and choose.

That's all the more reason for taking more precautions than ever before and ensuring that you get everything that was originally promised.

"There have been innumerable cases of builders and developers changing approved project plans at the expense of unknowing buyers," affirms Indiaproperties.com CEO, N R Malkani.

He says there have been cases of fraud such as not providing basic amenities like water and electricity, or building on land with no clear titles, leaving buildings incomplete and even using the sold properties as a collateral with finance companies.

Encouragingly enough, every deviation from the signed deal is justiciable. Builders are routinely penalised by the courts for going back on their promises.

Rajesh Arora, CEO, Arora & Associates, says there have been cases in south Delhi's Greater Kailash and Vasant Vihar where builders were penalised for altering specifications.

In one instance, the builder had to pay compensation for failing to put in marble flooring as agreed. Most such cases go unreported because the buyer is duly compensated and the builder does everything to avoid publicity.

Some cases, however, are etched in the minds of industry watchers - 22, Barakhamba Road and 9, Kasturba Gandhi Marg are two addresses in Delhi that consultants remember because the builders in both cases were ordered to pay back the buyers with interest.

Now that the builders can be taken to court for every little violation - which must be proved, of course - it is imperative that buyers exercise every precaution to steer clear of the dream home trap.

Sanjay Verma, executive director, Cushman & Wakefield, hands out a tip when he says, "It is quite common for smaller players to cut corners by fraudulent practices whereas established builders generally don't indulge in such things."

Get a legal eagle to scan the documents: Once you are satisfied with the builder and the project ratings with CRISIL and ICRA, get a lawyer to read through the documents.

In most cases, you'll be surprised to see how the lawyer's opinion will differ from your optimistic reading.

Never sign on the dotted line before your lawyer explains the essentials of the project. Make sure the land is either in the name of the developer or the developer has a clear power of attorney for the project.

Then, find out if the plan has the requisite sanction of the authorities: if you are buying an apartment, make sure the builder has the sanction for a residential complex, fire clearance and so on.

Also find out how the buyer of an apartment would have ownership of the land in case of an eventuality - as Verma explains, in case of an earthquake, for instance, which razes the building to the ground, the buyer should know how he's going to recover his money.

If there are, say, 80 apartments, the land ownership could amount to the proceeds of the sale of the land divided by 80 for every apartment owner.

Ascertain specifications, like materials and finishes and the extent of finishes at the signing stage itself. The builder may not be able to commit to details like colours, but the broad specifications must be available and agreed to.

Call in a certified surveyor: Get a certified surveyor to measure the flat once it is ready.

For a nominal sum, a surveyor approved by the government will give you a stamped certificate which can prove any deviance from the agreement on part of the builder.

Watch the progress: It is a good idea to keep an eye on the project as it develops. Regular visits, interaction with the construction staff and a watch on the materials and the finishes will save some nasty surprises.

Hold back a part of the payment: Arora advises that nothing works better than holding back a part of the payment.

He says buyers can make the builders deliver on all promises - like a swimming pool, club and so on - if they hold back, say, just 10 per cent of the money.

If things do go wrong... If you have followed all the steps mentioned above, you are unlikely to run into rough weather. But if the builder does go back on his promises, and you have the documents to prove that, point it out as soon as possible.

If you are getting a smaller apartment, for instance, you must negotiate to pay a lower amount because the price is normally per square foot.

Any builder who has several projects going would like to settle with you quietly instead of being dragged to the courts or, equally worse, have other owners in the same project getting wise to the discrepancy in the original commitment and the actual deal.

Consumer courts work faster than civil courts: If there is no alternative, you can always drag the builder to the courts.

But, as Malkani says, the procedures in the civil courts are very tedious, expensive and time-consuming, which is why consumer courts are a better alternative.

Consumer courts take months to resolve cases as opposed to civil courts which take years or decades.

Arora, however, says there have been cases where buyers have approached the civil courts because consumer courts didn't penalise the builders sufficiently.

Whichever way you prefer to proceed, remember: as long as you have the documents to prove the violation, there is hope for redressal.

Powered by

ALSO READ:
More Specials
More Money Headlines