Before You Pay Any Money to a Builder be alert and How to minimise risks

Check the following things

1.      Scrutinized the agreement for buying the property by the help of a lawyer or a knowledgeable person, so that the builder does not include clauses that are to his advantage and your disadvantage. If it contains any such unacceptable clauses, please have them struck out or suitably modified before you sign the agreement. Do not make any payments unless this is done.

2.      Agreement must not contain any illegal clause.

3.      It Should mention all costs and charges up front

4.      It should mention actual measurable dimension of the flat

5.      The dimension and specifications of the entire building, common amenities must be mention

6.      COPIES OF THE BUILDER’S PROPOSALS AND PLANS, AND ALL PERMISSIONS AND CERTIFICATES from the licensing authority. Depending on the stage of construction, you should get the below outlined documents.

a)    PROPOSAL / LETTER OF INTENT (LOI) submitted by builder to licensing authority

b)    INTIMATION OF DISAPPROVAL / INTIMATION OF APPROVAL (IOD/IOA) given to builder by the Licensing Authority. Legal conditions that the builder must fulfill are mentioned in this document. [Note: Builders start booking flats at this stage itself, without getting any further approvals. They fence off the plot of land, put up banners and advertise in newspapers, and collect tokens and advance payments from investors. In case the project fails to materialize, this money is unlikely to be returned.

c)    NO-OBJECTION-CERTIFICATES (NOCS). NOCs specified in IOD/IOA must be collected by the builder from several authorities such as police and fire brigade, and submitted to the licensing authority.

d)    COMMENCEMENT CERTIFICATE (CC) is received by builder from licensing authority after the IOD/IOA conditions are fulfilled. CC authorizes the builder to commence excavation and foundation work. He can build upto plinth level i.e. ground level, even before getting approval of the plan layouts. [Sometimes, builders continue to put up slabs for 1st floor, 2nd floor etc. even without getting their plan layouts approved. They are confident that it will be regularized afterwards.

e)    APPROVED PLAN LAYOUTS. The plan layouts submitted by the builder and architect are studied by the licensing authority. After required changes are made, these layouts are approved.

f)    AMENDMENTS TO APPROVED PLAN LAYOUTS. The builders commonly submit amendments after getting plans approved, and thus they add extra floors to the already submitted layouts. [Much mischief is played at this point. In the initial plans submitted, the builders adhere to Development Control Regulations concerning Floor-Space-Index and the ratio of open-spaces in the compound, which should be one-third the height of the building. Through the amendments, they break the DC Regulations with the connivance of licensing authorities. Builders also use amendments to alter the common amenities promised to buyers at the time of booking; spaces initially shown as clubhouses or playgrounds may be used for putting up another residential wing in your compound, and flat owners come to know only after they have been built and sold.]

g)     COMPLETION CERTIFICATE FROM PROJECT CONSULTANT. Quite often, an “independent” project consultant is appointed by the licensing authority to oversee the architectural, financial and legal aspects of the project. This agency is however paid for by the builder himself.

h)    BUILDING COMPLETION CERTIFICATE (BCC) FROM THE LICENSING AUTHORITY. This is issued after receiving the Project Consultant’s completion certificate. [Often, buyers on the lower floors are allowed to move into the building even while construction is in progress. Not only illegal, but also dangerous!

Construction delay – Options for the property buyer

A delay in the delivery of possession of a building is one of the most commonly faced and annoying problems for a property buyer.Any person can file a complaint against the builder, developer, housing with the consumer court under the following circumstances:

1. Delivered a house that does not comply with the specifications agreed upon.
2. Did not provide for free parking space within the compound / complex.
3. Charged higher than agreed amount.
4. Did not provide for enough ventilation and light.
5. Did not provide for water storage tank.
6. Did not form co-operative housing society and handed it over to its members.
7. Did not give a receipt against the paid amount.
8. Delivered a poor quality construction.
9. Did not deliver the house within the agreed time limit. If time limit not mentioned, it is assumed that the construction will be finished within maximum of 2 years from the date of start of work.
10. Did not give accounts for the expenses against which the builder has collected money

 Legal Remedies

1. If the builder delays the completion of the construction beyond the stipulated time, you are entitled as a property buyer to seek a refund from the builder. As per the law, you are entitled to take action for delays.
2. If you are buying the property for personal use, you can file a case in the consumer dispute redressal commission. Any dispute over 20 lakhs can be directly filed before the State Commission and any dispute over 1 crore can be filed before the National Commission in New Delhi. Any dispute for a value lower than 20 lakhs has to be filed in the District Commission in your District.
3. There are special provisions in some states for the benefit of consumers. For example, if you are in Maharashtra, you can get remedy through Section 8 of the Maharashtra Ownership Flat Act 1963, which makes the builder liable to refund the money obtained from a consumer with interest if he is unable to justify non-completion or delaying possession of his project.This section clearly works to safeguard the interest of the consumer and it is the duty of the builders to complete the construction on time.
4. There are some additional provisions which you should be aware of. For example, the Domestic Building Contracts Act 1995 states that the builder has given the following warranties –

(a) That all the work would be completed on time

(b) That  all work will be carried out in accordance with the plans and specifications set out in the contract

(c) That all material to be supplied by the builder will be of a high quality (d) That the work will be done in a legal manner with reasonable care and skill, and

(e) when the work is completed, the home will be fit for occupation.

Send a legal notice to builder demanding refund of the advance amount paid, interest, damage and legal cost. Once a legal notice is sent, the builder may take action to solve the problem, and you can save the needless time and expense involved in going to court

Common ASQ & Replay in Real estate matters – Indian Law

Common ASQ  & Replay  in Real estate matters – Indian Law