Personal Finance

How to take action against errant builders

Meera Siva | Updated on October 07, 2018 Published on October 07, 2018

Home owners can take different routes to seek remedy for issues with developers

“I am glad I ran into you,” said Lousie, who has many sad stories on property buying and ownership. Housie, a young techie, dropped his plan to window-shop at gadget stores, put up a cheerful face, and sat on the park bench to listen.

Buyer’s dilemma

Lousie started narrating the tale of his neighbour’s cousin who had a terrible experience with a builder. “The project was delayed, plans were changed willy-nilly, and the flat and the facilities they finally got were sub-standard. The maintenance currently done by the builder is very poor,” he said. “Tell me, why do they not complain about these?” he asked.

It may have been a redundant question, but Housie answered it. “One reason is that investors don’t want the project to be seen as a controversy as it may affect their resale value and chances. Two, end-users also do not want to give the impression that there are issues as it will deter tenants. Three, many buyers do not want to antagonise the developer and prefer to give them the benefit of doubt and hope for the best,” he said.

“Yes, they continue paying their dues, and it works out to the benefit of the developers. But honestly, there is no use in complaining anyway, or going to court,” said Lousie.

Keep records

“Not quite. If buyers air their views over social media, other home owners in the same project may find this, and they can take collective action,” said Housie. He added that a home-owners association is formed only after the project is handed over. But owners often get together online before completion, to take up issues.

“And rather than just vent feelings online, home buyers must communicate with the developer and keep a record of these. For example, if there was a phone call, capture the points in an email or in a document so it is not forgotten,” he said.

“It is futile. There is no point in expecting the developer to take steps to remedy the situation,” said Lousie. “You must anyway follow due process and keep records. This will help build a case and show that you had raised the problem to them and followed up,” said Housie.

“Having all the data will be handy when you file a case in consumer court. For agreement-related disputes or other major issues, you must file in the civil court. But this, too, is futile. I know people who had filed cases, which have not progressed for years,” said Lousie.

Go to RERA

“It is bleak, but not dark. There have been many cases where home buyers have collectively won against developers. Also, now home buyers can file a case with the RERA (Real Estate (Regulation and Development) Act) authority in their State. RERA is a special judicial body and it is required to hear and complete the cases in a much shorter time compared with consumer court or other courts. Section 29 of RERA requires complaints to be disposed in no later than 60 days from the date of filing. So, even if you had filed a complaint earlier, you can still lodge it under RERA and indicate the status of the case,” he said.

He explained that the case can be filed online in many States, through the State’s RERA website.

“You have to file some basic details — about you, the project, the nature and details of the complaint. There is also a fee for the application, which varies with State. For example, it is ₹1,000 in Karnataka, ₹1,600 in Tamil Nadu and ₹5,000 in Goa. Payment can also be made offline through cheques. The status can be tracked online,” said Housie.

He added that in States that have not yet set up the mechanism online, the application can be downloaded and submitted along with payment. “You can file under RERA even if the project was not registered under RERA,” he said.

IBC option

“But you assume that the developer has the resources to fix the issue. What if they are bankrupt?” asked Lousie.

“If the developer has defaulted, home buyers can initiate proceedings under the Insolvency and Bankruptcy Code (IBC). They will get representation on the committee of creditors, which decides on the resolution plan for the defaulter.

“This route also has a faster resolution time-frame,” answered Housie.

“RERA is the preferred route for a home buyer. You can consider IBC if you are unable to get a remedy with RERA and the issue is within the ambit of IBC,” said Lousie. “And rather than go alone, if there are more buyers in the same project with similar problems, it is helpful to take up the issue as a group,” said Housie.

The writer is co-founder, RaNa Investment Advisors

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