Builder Delaying Delivery of Possession? Here are the Remedies

Last Updated at: October 20, 2020
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Forcing homebuyers to pay interest in the range of 18% per annum for the delay in payment of installment while the builders themselves pay a paltry 1.5-2% for delay in the project amounts to an unfair trade practice which cannot be enforced, the apex consumer commission has ruled.

 

The delay in possession of their homes has been the biggest concern for the buyers of the real estate properties. For many of the homebuyers, across locations and with almost the builders, the delay has extended to almost six years or more now, with no possession in sight. In the absence of a regulator and with no rules in place, the builder-buyer battle appeared one-sided.

 

As a mortal who has paid money to a developer or builder who has then not handed over the attribute, you have the right to a solution to your problem. Under a new legal philosophy passed by the government known as the Real Estate (Regulation and Growth ) Act, 2016, you have the right to filing cabinet an ailment before a special body set up for real estate labor known as the Real Estate Regulatory Self-confidence.

 

There was a time when real estate builders could delay possession with impunity. But after the Real Estate Regulation Act was passed in 2017, the rules have become tighter. This post illuminates when a case can be filed against the builders and what may be the results of it.

Undoubtedly, the most stressful bit of purchasing an under-construction property is the uncertainty of possession. While builders often make tall claims about the early grant of possession and often have sample houses ready to lure you into committing a certain amount, the wait is often long and tiring. There was no specific statute that provided for a punishment until the passing of the Real Estate Regulation Act in 2017. An understanding of contracts and property law along-side decided cases establishes the base for not just compulsory possession but often compensation including the cost of litigation. Mentioned here are a few pointers to guide you in your suit for the delay in possession;

Browse through our articles on services provided at Vakilsearch, and just let us know if we can help you with your company registration or tax filing or trademark registration.

  1. Check what your contract says about it

Most property contracts provide an estimated stipulation of the time period for construction. Give your contract a thorough reading to figure out the duration. You must also be mindful of clever clauses that builders are often known to insert, such as those that shirk off their liability in case of a delay. Due to recent RERA provisions, all contracts for the sale of property have to mandatorily mention the date of delivery of possession, to enable buyers to reject the deal in case of longer construction periods.

2. Figure reasons for such delay and what the courts deem ‘justifiable’

In the cases where courts reject claims arising out of delayed possession, the builder may be given the advantage of compelling reasons. For example, the recent demonetization was held to be a valid reason causing delay. Other factors such as shortage of labour, unavailability of construction material or changes in governmental regulations have also been allowed. A builder may also seek the benefit of being a first-time defaulter, or procedural delays which couldn’t have been controlled. However, the reasons for commercial hardship such as an increase in prices of inputs, rejection of construction plans by municipality etc have largely worked to the disadvantage of builders.

3. Payment of compensation as per RERA rules

If the delay has been caused by the builder with no justification that is deemed appropriate by the court, you can expect to receive a compensation of up to 10 per cent of the property price. This will also override any other clause in the contract, which often includes a very minimal penalty for delay.

Ask a Free Legal advice

4. Refund of money deposited & Cost of Litigation

In several cases where the construction has not begun or is still at primitive stages, the court also offers a complete refund to enable buyers to invest their savings in buying another property. Moreover, under RERA, Builders are under an obligation to keep the funds received from buyers in a special account which cannot be utilized for any other purpose, making the process more efficient. The Court, when satisfied that the complaint of the buyers was genuine and that it caused hardship may also order the builders to pay the entire cost of litigation.

5. Punishment to Builders

In case of a delayed delivery, builder stands not only to lose the registration of the project but may also be liable to imprisonment for a term which may extend up to three years or with fine which may extend up to ten per cent of the estimated cost of the real estate project, or both.

RERA

What is the appropriate forum?

The Tribunals constituted under the RERA are functional in most states and can be approached for any disputes relating to delay in possession. However, in those states where the RERA is still under process, it is the District or State Consumer Disputes Redressal Forum which will have jurisdiction (on the basis of the location and the price of the property).

To wind it up, always check what your contract says about possession date. Then find out why it was delayed and if it is ‘justifiable.’ If your cases hold, you will get payment of compensation as per RERA rules, a refund of money deposited & at times the cost of litigation too.

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Builder Delaying Delivery of Possession? Here are the Remedies

3526
Forcing homebuyers to pay interest in the range of 18% per annum for the delay in payment of installment while the builders themselves pay a paltry 1.5-2% for delay in the project amounts to an unfair trade practice which cannot be enforced, the apex consumer commission has ruled.

 

The delay in possession of their homes has been the biggest concern for the buyers of the real estate properties. For many of the homebuyers, across locations and with almost the builders, the delay has extended to almost six years or more now, with no possession in sight. In the absence of a regulator and with no rules in place, the builder-buyer battle appeared one-sided.

 

As a mortal who has paid money to a developer or builder who has then not handed over the attribute, you have the right to a solution to your problem. Under a new legal philosophy passed by the government known as the Real Estate (Regulation and Growth ) Act, 2016, you have the right to filing cabinet an ailment before a special body set up for real estate labor known as the Real Estate Regulatory Self-confidence.

 

There was a time when real estate builders could delay possession with impunity. But after the Real Estate Regulation Act was passed in 2017, the rules have become tighter. This post illuminates when a case can be filed against the builders and what may be the results of it.

Undoubtedly, the most stressful bit of purchasing an under-construction property is the uncertainty of possession. While builders often make tall claims about the early grant of possession and often have sample houses ready to lure you into committing a certain amount, the wait is often long and tiring. There was no specific statute that provided for a punishment until the passing of the Real Estate Regulation Act in 2017. An understanding of contracts and property law along-side decided cases establishes the base for not just compulsory possession but often compensation including the cost of litigation. Mentioned here are a few pointers to guide you in your suit for the delay in possession;

Browse through our articles on services provided at Vakilsearch, and just let us know if we can help you with your company registration or tax filing or trademark registration.

  1. Check what your contract says about it

Most property contracts provide an estimated stipulation of the time period for construction. Give your contract a thorough reading to figure out the duration. You must also be mindful of clever clauses that builders are often known to insert, such as those that shirk off their liability in case of a delay. Due to recent RERA provisions, all contracts for the sale of property have to mandatorily mention the date of delivery of possession, to enable buyers to reject the deal in case of longer construction periods.

2. Figure reasons for such delay and what the courts deem ‘justifiable’

In the cases where courts reject claims arising out of delayed possession, the builder may be given the advantage of compelling reasons. For example, the recent demonetization was held to be a valid reason causing delay. Other factors such as shortage of labour, unavailability of construction material or changes in governmental regulations have also been allowed. A builder may also seek the benefit of being a first-time defaulter, or procedural delays which couldn’t have been controlled. However, the reasons for commercial hardship such as an increase in prices of inputs, rejection of construction plans by municipality etc have largely worked to the disadvantage of builders.

3. Payment of compensation as per RERA rules

If the delay has been caused by the builder with no justification that is deemed appropriate by the court, you can expect to receive a compensation of up to 10 per cent of the property price. This will also override any other clause in the contract, which often includes a very minimal penalty for delay.

Ask a Free Legal advice

4. Refund of money deposited & Cost of Litigation

In several cases where the construction has not begun or is still at primitive stages, the court also offers a complete refund to enable buyers to invest their savings in buying another property. Moreover, under RERA, Builders are under an obligation to keep the funds received from buyers in a special account which cannot be utilized for any other purpose, making the process more efficient. The Court, when satisfied that the complaint of the buyers was genuine and that it caused hardship may also order the builders to pay the entire cost of litigation.

5. Punishment to Builders

In case of a delayed delivery, builder stands not only to lose the registration of the project but may also be liable to imprisonment for a term which may extend up to three years or with fine which may extend up to ten per cent of the estimated cost of the real estate project, or both.

RERA

What is the appropriate forum?

The Tribunals constituted under the RERA are functional in most states and can be approached for any disputes relating to delay in possession. However, in those states where the RERA is still under process, it is the District or State Consumer Disputes Redressal Forum which will have jurisdiction (on the basis of the location and the price of the property).

To wind it up, always check what your contract says about possession date. Then find out why it was delayed and if it is ‘justifiable.’ If your cases hold, you will get payment of compensation as per RERA rules, a refund of money deposited & at times the cost of litigation too.

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Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.