How to deal with builders' delays and scams

The buyers have had a rough time whenever a builder has delayed the project or the project turned out to be a scam or a non starter.

Realty The unprofessional attitudes of many builders have been a curse of the Indian real estate sector.

During its booming phase, a lot of new builders entered the market to make a quick buck, but only to understand the indifferent market dynamics much later, leading to delayed projects, missed deadlines and false promises.

Builder delays and scams were not limited to new entrants but even some of the well established names in the industry were guilty of delays both consciously and otherwise.

The buyers have had a rough time whenever a builder has delayed the project or the project turned out to be a scam or a non starter.

Since real estate prices have been constantly on the upswing, a number of people lost substantial money in various delayed projects leaving them with no option but to either rely on the mercy of the builder or hope to fight a legal battle with the mighty and powerful nexus of the builder and real estate developer lobby.

The lack of any real estate industry watchdog like in insurance, financial markets and other sectors like Telecom has meant that number of cases of delays and small and big scams have been a constant with each passing year.

Earlier the buyers were usually not aware of their rights and things they needed to do to avoid falling into such a position.

Buyers today are far more conscious of their rights.

Let us look at various options available with the buyer in case the builder is delaying the project unnecessarily or not starting construction as promised.

Insist on penalty clause in buyer's agreement: Prevention is always better than cure goes the famous cliché and the same is true for the real estate sector.

Many developers pride themselves on the fact that they deliver what they promise and give colourful advertisements.

In fact, the builder agreement should have a penalty clause specifically mentioning the penalty the builder would be liable in case the project is delayed due to any reason.

Such a clause gives the buyer a legal protective cover while making sure that the builder would also be under pressure to complete the project under the given timeline.

In case you are about to finalise a new property or planning to purchase one in the future, make sure to check a draft of the agreement prior to giving advance.

The buyer is well within his right to ask for a penalty clause in the agreement.

Most well known builders offer such a clause as it allows them to have an x-factor compared to other dubious developers out in the market today.

Cancellation: If the builder has already gone back on his word and has delayed the project, one option always available with the buyer is to cancel the agreement.

The buyer has no legal obligation to wait for the delayed project and can cancel his agreement with the builder.

The builder would have to refund the booked amount or the amount given by the buyer initially after a small deduction as listed in the pre-approved buyer builder agreement.

Before cancelling your contract, however, make sure about the reason for delays.

If the reason is genuine and the delay is not very extensive, cancellation may not always be a good idea.

Form a group: In case the delay has been extraordinary and/or the builder has not even started construction activity as it has happened in various cases across India, it is better for all buyers to form a cumulative group to take the process forward.

The developers have a strong nexus or lobby and fighting them alone may not always be the besto.

Builders usually have a well paid legal team that takes care of all such delayed projects.

Make sure to counter the builder’s team by having a group of all co-buyers to talk with the builder at equal footing.

Even if one has to take a legal action, the chances of speedy justice are higher in case of cumulative case done by all buyers together rather than by an individual buyer.

Legal action: Legal course of action is a good way to make sure justice is delivered and the builder if found guilty will face fine and a public acknowledgment of such dubious development work.

Buyers can file a complaint in the consumer courts or file a lawsuit in the civil or criminal court against the concerned builder.

It is good to consult with a good lawyer to file a suit in the most effective manner.

Use the Power of Social Media: The use of social media has be a great asset when it comes to fighting the guilty builders who have been deliberately delaying various real estate projects.

There are many community driven real estate forums and groups that can be used to spread real time information about the delayed projects.

This can not only help future buyers to avoid the builder but would also put added pressure on the builder to resolve the dispute to save its reputation.

Talking to local print media is also a good idea as if such news is published others who are in the same line may join you to form a group.

Also, as it is a matter of the builder’s reputation, they are forced to take action immediately.

Even if they don’t take action, the local authorities or consumer court is pressured to take action, which will be helpful for you.

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