Steps to a secure real estate transaction Part 2

Home Buyers oftentimes find themselves paying for things they do not require or locked into defective properties. The real estate industry of India is notorious for its lack of transparency. 

The Government of India is setting up a regulator along with a Bill towards this end. Till the regulator or the bill become a reality, property buying remains a highly risky task .To avoid this, knowledge of common tricks property developers use can come in handy.

Plans of development:

 

Any and every construction within the country have to be undertaken as per the National Building Code. Although almost all developers strictly adhere to the protocols, there are few who do not get their plans cleared by the authorities.

 

Vikas Malpani, co-founder and vice president (communities), CommonFloor.com, a real estate portal says, “in most cases, the building is not built according to the plan submitted to the governing body. The violations range from the height of the building to margins (open spaces).” In certain cases, builders wrongly believe that the respective urban local bodies would regularize their buildings even if they violate the rules.

 

Property specifications:

 

The structural and finishing specifications that are detailed out during the project’s launch and marketing, should be monitored by the buyer. Howbeit, the projects progress should be supervised by the buyer. This can be done by frequently visiting and inspecting the site to ensure that specifications as shown in the sample flats, are strictly adhered to.

 

In case, there are any variations or deviations from the original specifications, buyers can avail their options of either approaching the consumer court or filing a complaint with the developer through a formal written letter.

 

Flat area:

 

The area of the apartment should be checked by the buyer. Generally, the marketed area which is sold includes the super built-up area which is in turn used to actualize the apartment’s cost.

 

Developers price their projects on the basis of built-up area. This includes areas of the apartment which are enclosed by the walls as well as the area occupied by the walls. However, the area within the walls called as carpet area is the actual usable area.

 

Layout and design:

 

In order to evaluate the work quality, the buyer should find out about the architect, contractor and structural engineer.

 

Value addition:

 

In the present market scenario, buyers are obligated to pay for amenities such as recreational clubs, gymnasiums as well as any other amenities supplied by the project. Developers indirectly compel the buyers into purchasing these amenities buy simply by offering club membership as a packaged deal rather than marketing them separately. Legally, it is unethical and should be avoided, however, these days builders have made this a common practice.

 

Even worse is in the case of some projects/townships which promise a grand lifestyle, the ownership of facilities along with commercial value, like club house, tennis court, gymnasium etc, is not transferred to the resident associations by the developer. Rights over such facilities are retained by the builders in the builder-buyer agreement.

Commonfloor’s Malpani says “in such an arrangement, residents end up paying for maintenance while the builder enjoys ownership rights.”

 

External Development Charges:

 

‘External development charges‘ (EDC) is levied on developers by the government for providing civic amenities like roads, electricity supply, water supply, drainage and sewerage, etc. Local authorities fix the rate of EDC which is in turn passed on to buyers in proportion to the their property’s built-up area. Usually the EDC is not a cause for concern, as developers deposit the EDC amount with the local authorities. However, there have been numerous cases wherein projects had run into trouble due to the developers mistake of not paying the collected amount to the authorities. In such cases, a penalty is imposed due to the late deposit of EDC, which in turn is passed on to the buyers by some developers. The EDC rates can be verified by visiting the local town planning authority.

 

“Builders are not allowed to charge more than the government-approved rate,” says Malpani of CommonFloor.com.

 

Parking Space :

 

A prime example of the realty sector’s obsession with maximizing profits is parking space. In accordance to a Supreme Court verdict, parking spaces within the building premises should not be sold separately, as they are categorized as common spaces. Ideally, the parking space needs to be relinquished to the society for management.

 

Few builders have began including the parking space cost in their quoted price and mention the same in the sale deed. But in majority of cases, buyers are charged extra for parking, that too without proper documentation and in cash.

 

Although builders are not supposed to separately sell parking spaces, they still allot it to buyers. This permits them to charge an additional Rs 1 to 15 lakh per parking lot. Even after this allocation, the housing society which is the rightful owner of all common areas does the actual allocation.