Legal action to be taken against the builder for delay in possession

Last Updated at: June 24, 2020
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Action to be taken against the builder for delay in possession
On 9th June,2020, the UP Government provided interest relief to builders in Noida and Greater Noida in view of the COVID-19 pandemic. There will be no interest for delay on land dues which were to be cleared between March 22 and June 30 if payment is made by June 30.

 

Infra development will especially be critical for the success of the Make in India programme as manufacturing competitiveness critically depends on infrastructure, the final report of the task force submitted to Finance Minister.

 

As a means to protect the interests of innocent home-buyers, the Real Estate Regulation and Development Act, 2016 (RERA) has brought in new laws which will result in hefty penalties in case of any misdemeanour. These laws will make compliance with RERA norms a necessity for all builders. Making it easier for the governing body to weed out dishonest builders who populate the housing sector. Several provisions outlined in the Act will help build a more transparent system for transactions within the real estate sector. 

Here’s a look at everything buyers need to know about the RERA and how it safeguards their interests.

New penalties listed in RERA

Offence: Non-registration of project

In case builders fail to register the project, RERA has recommended up to three years imprisonment and fines up to 10% of the value of the project. 

Structural defects in the building land the buyer in jail for up to five years, and the company will have to rectify the defects without making the buyers incur any additional cost.

Offence: Delay in completion

Delays in completion will lead to a 10% interest-based fine which the company will have to pay the buyers rather than the old penalty, which was Rs 5 per sq. ft. Since several builders charge buyers interest at rates as high as 12% or even 36% for delays in payment, this verdict looks more than fair.

  • Also, a minimum of 70% of the money gained from investors must be maintained or utilised for the project in hand.
  • RERA has also called for the setting up of a specialised real estate tribunal that can mete out justice at faster paces. These Appellate Tribunals would have the power to adjudicate cases within 60 days, and this would help buyers receive timely justice. 
  • In the same light, the National Consumer Disputes Redressal Commission has ordered developers. They ordered to repay with interest money lost by buyers who filed cases against them.

Six provisions to prevent delays

Written affidavit

The developer’s word will be more than just a word from now on as they have to provide a legal affidavit citing the same. This affidavit must be submitted along with the rest of the necessary documents. And will clearly outline the stipulated time of completion and handover.

Sacrosanct possession date

The sale agreement too will now contain a possession date. And also specify the interest rate that the builder will pay the buyer in case of any delay. For new projects, the date of delivery is left to the developer. And so the customers will need to analyse the time themselves and choose accordingly.

Land title

If the land acquired for the project gets caught in a dispute, the developer must provide a written affidavit containing documents. Moreover, the documents should prove the authenticity of the land’s ownership. 

Register your Property

Encumbrance-free

The developer must provide a written affidavit stating and proving that the land acquiring for completion of the project is free from encumbrances.

Separate account

Over 70% of the funds collected for a project from buyers must be deposited in a separate account to be used for the completion of the project. Indeed, this account must be audit and verify by a Chartered Accountant every six months.

Offence

Any form of non-compliance to these above-mentioned rules can lead to severe penalties. It includes even the cancellation of the builder’s license and registration. Moreover, other punishments include imprisonment up to three years and fines up to 10% of the project cost.

Penalties for promoters

  1. As per Section 59, if a project is not properly registered, the fee to be paid by the promoter will be 10% of the total estimated cost of the project. Furthermore, failure to pay the fine will result in imprisonment up to a maximum of three years.
  2. As per Section 60, if a promoter provides false information regarding a project, he or she will have to pay a fine amounting to 5% of the total estimated cost of the project.
  3. Section 61 states that any default or delay will lead to the promoter having to pay up to a maximum of 5% of the total estimated cost.
  4. As per Section 64, if the promoter does not obey the orders of the tribunal, it can lead to a prison term up to three years, along with a prerequisite fine.

Penalties for real-estate agents

  1. As per Section 62, failure to comply with the rules mentioned in the Act can result in fines which add up to either Rs. 10,000 a day, and may even go up to 5% of the total cost of the project.
  2. Also, according to Section 65, failure to comply with the rules mentioned in the RERA can result in daily fines which may even go up to 5% of the total cost of the project.
  3. Furthermore, as per Section 66, failure to comply with the orders of a tribunal may result in imprisonment for a year.

Penalties for allottees

  1. As per Section 67, failure to comply with the rules mentioned in the Act can result in daily fines. It may add up to a total that amounts to 5% of the total cost of the project.
  2. Moreover, according to Section 68, failure to comply with the orders given by a tribunal may result in imprisonment for up to a year.

Moreover, it is safe to say that such stiff penalties will help in raising the standards of the real estate sector in India. Not only does RERA help in increasing the expectations and of buyers. But it also goes a long way in improving customer satisfaction and ensuring the timely completion of projects.

When to take legal action?

  • Use of substandard construction materials
  • Lack of necessary permits
  • Use of illegal land/land in dispute/wrongly acquired property
  • Booking Frauds
  • Abrupt changes in layout and design without the client’s consent
  • Hidden charges
  • Unfair Cancellation
  • Large delays
  • Creation of third party interest 
  • No Completion Certificate 

Legal action against builders

  1. Send a legal notice in case there is an excessive delay in getting the property. This may can be doing via a property lawyer. And if the builder does not reply to it, a case may be filed.
  2. As per the Consumer Protection Act, 1986, file a case in the Consumer ‘Court under the ‘deficiency of service; clause.
  3. Claim compensation for the delay or undue cancellation.
  4. Also, for compensation up to INR 20 lakhs, approach the District Commission
  5. Between INR 20 lakhs and 1 Crore, approach the State Commission
  6. The National Commission handles all claims that exceed Rs. 1 Crore
  7. Also, claim both a refund on interest on the amount paid.
  8. If all else fails, buyers also have the option of filing a criminal case for fraudulent booking.

 

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Legal action to be taken against the builder for delay in possession

978
On 9th June,2020, the UP Government provided interest relief to builders in Noida and Greater Noida in view of the COVID-19 pandemic. There will be no interest for delay on land dues which were to be cleared between March 22 and June 30 if payment is made by June 30.

 

Infra development will especially be critical for the success of the Make in India programme as manufacturing competitiveness critically depends on infrastructure, the final report of the task force submitted to Finance Minister.

 

As a means to protect the interests of innocent home-buyers, the Real Estate Regulation and Development Act, 2016 (RERA) has brought in new laws which will result in hefty penalties in case of any misdemeanour. These laws will make compliance with RERA norms a necessity for all builders. Making it easier for the governing body to weed out dishonest builders who populate the housing sector. Several provisions outlined in the Act will help build a more transparent system for transactions within the real estate sector. 

Here’s a look at everything buyers need to know about the RERA and how it safeguards their interests.

New penalties listed in RERA

Offence: Non-registration of project

In case builders fail to register the project, RERA has recommended up to three years imprisonment and fines up to 10% of the value of the project. 

Structural defects in the building land the buyer in jail for up to five years, and the company will have to rectify the defects without making the buyers incur any additional cost.

Offence: Delay in completion

Delays in completion will lead to a 10% interest-based fine which the company will have to pay the buyers rather than the old penalty, which was Rs 5 per sq. ft. Since several builders charge buyers interest at rates as high as 12% or even 36% for delays in payment, this verdict looks more than fair.

  • Also, a minimum of 70% of the money gained from investors must be maintained or utilised for the project in hand.
  • RERA has also called for the setting up of a specialised real estate tribunal that can mete out justice at faster paces. These Appellate Tribunals would have the power to adjudicate cases within 60 days, and this would help buyers receive timely justice. 
  • In the same light, the National Consumer Disputes Redressal Commission has ordered developers. They ordered to repay with interest money lost by buyers who filed cases against them.

Six provisions to prevent delays

Written affidavit

The developer’s word will be more than just a word from now on as they have to provide a legal affidavit citing the same. This affidavit must be submitted along with the rest of the necessary documents. And will clearly outline the stipulated time of completion and handover.

Sacrosanct possession date

The sale agreement too will now contain a possession date. And also specify the interest rate that the builder will pay the buyer in case of any delay. For new projects, the date of delivery is left to the developer. And so the customers will need to analyse the time themselves and choose accordingly.

Land title

If the land acquired for the project gets caught in a dispute, the developer must provide a written affidavit containing documents. Moreover, the documents should prove the authenticity of the land’s ownership. 

Register your Property

Encumbrance-free

The developer must provide a written affidavit stating and proving that the land acquiring for completion of the project is free from encumbrances.

Separate account

Over 70% of the funds collected for a project from buyers must be deposited in a separate account to be used for the completion of the project. Indeed, this account must be audit and verify by a Chartered Accountant every six months.

Offence

Any form of non-compliance to these above-mentioned rules can lead to severe penalties. It includes even the cancellation of the builder’s license and registration. Moreover, other punishments include imprisonment up to three years and fines up to 10% of the project cost.

Penalties for promoters

  1. As per Section 59, if a project is not properly registered, the fee to be paid by the promoter will be 10% of the total estimated cost of the project. Furthermore, failure to pay the fine will result in imprisonment up to a maximum of three years.
  2. As per Section 60, if a promoter provides false information regarding a project, he or she will have to pay a fine amounting to 5% of the total estimated cost of the project.
  3. Section 61 states that any default or delay will lead to the promoter having to pay up to a maximum of 5% of the total estimated cost.
  4. As per Section 64, if the promoter does not obey the orders of the tribunal, it can lead to a prison term up to three years, along with a prerequisite fine.

Penalties for real-estate agents

  1. As per Section 62, failure to comply with the rules mentioned in the Act can result in fines which add up to either Rs. 10,000 a day, and may even go up to 5% of the total cost of the project.
  2. Also, according to Section 65, failure to comply with the rules mentioned in the RERA can result in daily fines which may even go up to 5% of the total cost of the project.
  3. Furthermore, as per Section 66, failure to comply with the orders of a tribunal may result in imprisonment for a year.

Penalties for allottees

  1. As per Section 67, failure to comply with the rules mentioned in the Act can result in daily fines. It may add up to a total that amounts to 5% of the total cost of the project.
  2. Moreover, according to Section 68, failure to comply with the orders given by a tribunal may result in imprisonment for up to a year.

Moreover, it is safe to say that such stiff penalties will help in raising the standards of the real estate sector in India. Not only does RERA help in increasing the expectations and of buyers. But it also goes a long way in improving customer satisfaction and ensuring the timely completion of projects.

When to take legal action?

  • Use of substandard construction materials
  • Lack of necessary permits
  • Use of illegal land/land in dispute/wrongly acquired property
  • Booking Frauds
  • Abrupt changes in layout and design without the client’s consent
  • Hidden charges
  • Unfair Cancellation
  • Large delays
  • Creation of third party interest 
  • No Completion Certificate 

Legal action against builders

  1. Send a legal notice in case there is an excessive delay in getting the property. This may can be doing via a property lawyer. And if the builder does not reply to it, a case may be filed.
  2. As per the Consumer Protection Act, 1986, file a case in the Consumer ‘Court under the ‘deficiency of service; clause.
  3. Claim compensation for the delay or undue cancellation.
  4. Also, for compensation up to INR 20 lakhs, approach the District Commission
  5. Between INR 20 lakhs and 1 Crore, approach the State Commission
  6. The National Commission handles all claims that exceed Rs. 1 Crore
  7. Also, claim both a refund on interest on the amount paid.
  8. If all else fails, buyers also have the option of filing a criminal case for fraudulent booking.

 

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