Awareness on Rates

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My dear friends, It has become a dream for a common public to own an independant house these days as the real estate prices, construction cost, raw materials cost, plan approval problems, labour charges, borrowed funds costing so dear and the dubious records of a clear title haunting many.

Hence people prefer to go to the real estate builders & choose a flat of their choice according to the budget. Here again there are manyscrupulous builders taking ride of the buyers by indirect charges, at times fake registration titles and many untold sufferings till they are able to take possession of the flats.

It is better to trust reliable builders whose record of constructions, workmanship, cost effective and durability.

Many times we are being cheated / over charged due to unforeseen legal liabilities, ratio of black – white transactions, construction delay, poor infrastructures, hidden charges etc.,

It is always preferable to focus our attention before getting in to a deal by verification of the land records, legal clearances, (Whether the plot on which the building stands is non-agricultural(N/A) and has a clear title.), Whether the building is in the name of the builder, Whether a co-operative housing society has been formed and if yes whether the conveyance of the plot and building in favour of the society has been completed by the builder, The current rate (Rs./sq. foot) of the area, Whether the rate offered to us matches with the area rate and the basis – built up or super built up. Check what is included in “super built up”, What amenities is the builder offering, The ratio of white:black amount. Ensure that the “white” amount is in keeping with the official declared rate for the area for the purpose of paying stamp duty (The amount of stamp duty to be paid. Without paying the stamp duty, the flat is not legally ours), The quality of construction, to ensure that the layout/development has been approved by the Development Authority, Most importantly ensure that all documents are legal.

It is better that we Don’t pay up builder bulk amount in advance. Stagger the payment, and make final payment while occupying the house. This way we can reduce the risk to a great extend. Banks do due diligence before giving away a loan, but, in case there is a problem, they don’t take the risk.

When a building is under construction, a builder will normally demand money in installments, in keeping with the completion of each phase of the construction according to the contract we sign with them.

The point of worry for any investor is that in the absence of regulations, developers are breaking rules with impunity and taking customers for granted. This is the single-biggest reason for loss of confidence among customers, be they investors or end users.

Another vital point is that the buyers get entrapped once they sign a ‘buyer’s agreement’. Developers get this document signed even before construction has commenced.

The agreement papers are unilateral and biased in nature. Buyers are given no exit option — either they sign the agreement or pay a penalty for not signing it. The penalty entails cancellation of the flat and forfeiture of the earnest money deposit (EMD). The EMD is equal to 10 per cent of the cost of the flat that buyers have already paid at the time of booking.

The agreement is couched in such a language that the buyers can not make any representation or object to any of the developer’s sins of commission or omission. Since the agreement is a lengthy document, almost all customers sign it without reading it. It would shock the buyer into disbelief if he were to actually read the document and understand its implications.

A large number of consumers are struggling to get refunds from errant developers. In some cases, developers have refunded buyers’ money after deducting around 20 per cent to 40 per cent of the initial deposit.
To cite one example of customers’ plight, in 2006 Kamlesh Wadhwa, an aged widow, invested Rs 7 lakh to purchase 350 square yards in a township being developed by TDI. Her broker in this transaction was Jyoti Estates. Wadhwa was later shocked to learn that the broker had, with the developer’s connivance, inserted his own name as a joint applicant. Later, the developer not only refused to delete the broker’s name but also refused to refund the money deposited by her.

Similarly, YK Sharma had invested Rs 6 lakh in 2006 to purchase a 250 square yard plot in a township at Panipat to be developed by TDI. In spite of repeated requests, the developer has not refunded his registration money.

There are several instances where developers have escaped after collecting advance money from home buyers. Criminal cases under economic offence are pending against these developers. Some of the developers against whom cases of non-delivery of projects are pending are NR Build Home, Green Builtech, Seven Heaven, Triveni Builders, AJS Builders, U-Turn Housing, Arun Dev Builders, Nitishree Infrastructure, PSG Builders and Dhampur Alco Tel.

Similarly there are many complaints received by AICES against a Gurgaon based builder who has not even constructed a single brick after taking advance registration money from investors for Faridabad & Gurgoan project. There are many builders whose cases are pending with Economic offence Delhi Police & Haryana Police for non delivery of project and some of the builders are behind the bars and also facing criminal cases.

One must take notice that by blindly signing the buyer’s agreement may put us in a disadvantageous position vis- a-vis the developer. Most consumers, do not dig into the fine print of this document and hence end up seeking justice in the courts. It is no wonder, that so many cases are pending in the consumer forum, crime branch and regular courts.

“These developers invariably collect approximately 60 per cent of the cost of the flat from the consumer within the first 11 months of booking. The construction schedule committed to is invariably in excess of three years. They commence construction generally after a year and earn interest on the installments collected from the buyers. When asked for an explanation, developers invariably pass the buck by attributing the delay to delays in receiving government approvals. Nowadays most banks and housing finance companies have linked the disbursal of funds to developers to meeting of construction milestones.”

In an environment where the buyer is waiting to trip us up, buyers need to exercise all the caution that they can and take every step after due deliberation.

Here we must appreciate the dedicated efforts of All India Consumer Education Society which is extremely mindful and active in raising all consumer related concerns and issues in order to protect their very basic rights. And AICES will continue to fight on behalf of consumers and it shall continue to take on this self imposed task as an unfinished battle until we see consumers achieve their legitimate and well deserved rightful place in the society.

All India Consumer Education Society is working in the interest of common consumer. It investigated the project matter post information received under RTI Act 2005 from MCD Building Department that the proposed site land use in Industrial/ IT not for Commercial use in MCD records, the spokesperson said that they will deliver this project within three years as promised to our investors and we are not refunding or transferring any money to any investors as there no such policy. Another real estate flagship company after scrapping their Agra, Chennai, Noida Expressway Grande residential projects has not refunded their deposits in spite of umpteen number of requests. Consumers are facing similar problems with other builders whose list is endless.

It is also necessary that the buyers to opt for loan facilities according to their pay back capacity to avoid unpleasantness. Ensuring the best possible interest rates & EMI can save peace of mind as well as the property.