Remedy for delay in construction of residential projects
Delay in construction or possession for residential projects is a common problem across India. The problem is not just limited to small local builders but even some of the bigger pan India companies have been associated with delayed or cancelled projects in the past.
Why projects get delayed?
Before we enter into the realm of handing delays, it is important to understand the possible reasons behind real estate construction delays. While most people believe that all delays are directly related to the builder, some of delays are triggered by a shortage of material suppliers, lack of adequate skilled workforce and bureaucratic delays. Such delays are usually cleared by the builder since the stakes are far too high for the builder and can affect their reputation.
Unethical Business Practices by the Builder: The dark underbelly of Indian real estate is the deliberate delays in construction due to unethical business practices by the builders. Usually there is a six to twelve month delayed clause in the builder-buyer legal agreement. Most builders take the liberty of using this as clearance for delays. While this is a legal loophole, there are far more unethical business practices currently being adopted by builders across the country.
Builders who delay construction work deliberately usually eye the gradual appreciation of unsold flats. Since real estate prices in most of these delayed projects are quite lucrative for the builder, the delay is more out of financial greed. If the prices of land in the region are stagnant or undergoing some sort if a correction, builders usually divert the money collected from the buyers (sometimes to the tune of 70-80% of the total cost) to other lucrative projects. If the prices continue their downward trend or if the market overview is sluggish, builders eventually cancel their project and force buyers to invest their money in some newly developed project.
Checklist for Buyers to Avoid Delayed Projects
While there is no certain rule that can help a buyer safeguard his or her interest completely, here is a small checklist that can help buyers choose projects and builders wisely to avoid unnecessary complications in the future.
Background Check of the Builder: As buyer one must do a quick background check of the builders past projects and delivery record. Most developers with good credibility are unlikely to adopt any unethical practices to deliberately delay projects. Talking to the buyers in previous projects of the builder is also recommended to understand the nature and credibility the developer.
Scrutinize Builder’s Property Documents: As a potential buyer, one must check the documentation of the builder with the concerned land authorities including municipal corporations, declaration and sale deed from previous owners to other financial details of the project. A good reputed builder would be more than happy to share such documents with his clients in order to bring transparency.
Legal Protection under the Consumer Protection Act: Unless the government approves its proposal of introducing a real estate watchdog to supervise such complaints, taking a legal course in the consumer disputes redressal commissions at the district, state and national levels is the best remedial measure. It is important to understand that refunds of payments can be claimed only if the project gets delayed beyond the extension period stimulated in the agreement.
Out of court settlement: Good reputed builders often work out an out of court settlement to avoid any bad publicity, some small time builder may take up the legal route with some legal loopholes to prolong the dispute unnecessarily. Lately the consumer courts have been delivering a good number of cases in favor of the harassed buyer and a lot of builders offer an out of court settlement.
