How to fight an errant builder

Home construction is a service under the Consumer Protection Act, hence it falls under the jurisdiction of consumer courts. Besides taking all possible precautions before purchase, purchasers should be vigilant even after paying the entire sales amount to the builder. They should not get complacent and think that the builder will deliver a defect-free property.

As for the builder, he will be held responsible for all defects in the building, and for delays in handing over possession. Consumer Courts and the Apex Court have awarded damages whenever they have found defects in the home. Let us study a few cases where the courts have awarded damages and held builders liable for their negligence.

In Ms. Ruchita D Mirchandani vs. Godrej Properties and Investment Ltd., the purchaser entered into an agreement with the builder for the purchase of a flat. But due to family problems, the purchaser sought to terminate the agreement. The builder informed that the purchaser had no right to terminate the contract.

The builder contended that he alone was entitled to exercise the option of terminating the contract. Hence, he said, if the purchaser did not pay the balance amount, she would have to forego the amount deposited by her.

The State Commission in its order observed that the right to terminate the contract should be made available to the purchaser too. In its absence it is unfair on the builder\’s part to retain the amount paid by the purchaser. It amounts to \”unfair trade practice\” and also \”deficiency in service\” under provisions of the Consumer Protection Act.

Similarly in the M.P. Housing Development Board versus Virendra Kr. Garg case, the Apex Court observed that public authorities like Housing Boards do not deserve any sympathy. It said that in case of defective service the Board should pay compensation and also make good the loss to the purchaser.

In this case the MP Housing Development Board sold a defective flat to a purchaser. The Board failed to repair the flat even after the architect confirmed the defects. It was also found that the defects were serious and could lead to the collapse of the building. After examining the relevant file, the District Forum directed the payment of damages worth Rs. 50,000, and cost of Rs. 1,000. It also ordered a departmental inquiry for punishing the officials who had failed to discharge their duties.

The State Commission, after noticing the condition of the flat, directed the refund of the deposit amount with 18 per cent interest. It also enhanced the compensation amount to Rs 60, 000, and costs to Rs 5000.

The National Commission set aside the order pertaining to the compensation but awarded interest @18 per cent from the date of deposit.

The Apex Court in its order observed that the authority does not deserve any sympathy, and directed the allottee to keep the flat if he so desired, and use the compensation of Rs 60,000 to get it repaired. If not, the Court directed, the Authority should refund the deposit amount from the date of deposit @ 18 per cent interest.

In the Haryana Urban Development Authority (HUDA) versus Sitaram case, the purchaser applied for a flat to HUDA in 1982 and paid all dues to the authority. But possession was given to him in 2000. The District Forum awarded interest on the amount deposited by him at the rate of 15 per cent after the expiry of two years from the date of deposit.

The State Commission confirmed the said order. The National Commission increased the rate of interest from 15 to 18 per cent. The matter reached the Apex Court and the Hon\’ble Court observed that the National Commission has awarded interest on the higher side. It also confirmed the District Forum\’s order.

The courts have also held consumers liable if there is any delay on their side. In Hari Govinda Sharma vs. Punjab Urban Planning and Development Authority, the complainant deposited registration fee under a scheme for MIG house on hire purchase after seeing an advertisement issued by the Punjab Urban Planning and Development Authority.

The authority allotted a house to the complainant under a different scheme and demanded the balance money. The complainant contested, and took time to reply. As a result the liability swelled with the addition of interest and penal interest. The NCDRC observed that the complainant was duty bound to pay the said penalty.

The above decisions clearly show that consumers should bring defects to the notice of the authorities concerned immediately after it is detected. Consumers/ purchasers should keep all the relevant documents and other correspondence so that they are able to prove their case. Remember the maxim that the law protects only those who are vigilant.

Courtesy : Times of India

How to pursue errant builders

Bringing fraud builders to book

• Title certificate of the project land should be made available to the buyer before signing the agreement.
• All sanctions like approved plans should be made available to the buyers at the time of signing the agreement.
• The developer should only start bookings after all the sanctions for beginning construction have been obtained.
• The sale agreement should be made as soon as the deposit or token money is recieved by the builder.
• The price of flats cannot be changed once agreement is made.
• The agreement should mention the carpet area and built up area.

But since CREDAI cannot legally do anything to its members violating the rules, there are other options that the buyer can go for…..

• Cancel the booking.
  Most people are not aware that house purchase makes the builder liable to the Consumer protection act. Not only that, in Maharashtra,all sales of flats are governed by MOFA (Maharashtra ownership of flats act).According to this act, the builder has to refund the amount if the delivery is delayed along with interest. Most builders think that by wording the sale agreement in their favor they have managed to fool the buyer., but little do they know that if the buyer took them to court, they would fall flat. Forget about builder deducting a percentage if you cancel the booking, he is actually liable to pay you for the delay. In some cases you can also get compensation for the harassment and interest together along with legal costs.
• Forming a flat buyers association
  This is a better option as it brings together the resources of many people who can then join hands and take on the builder. Two people can join and make and association and get it registered to grant it legitimacy. To register an association one needs basic documents like pan card, address proof etc., and a copy of the bylaws of the association. Bylaws specify why the association has been formed, who can become members, what its objectives are, membership charges, frequency of the meetings, rights and duties of the board, various committees of the association etc. You can also get an auditor to audit the accounts of the association.
  Total cost could work out between 3000-8000 rupees and take 20 days to complete the formalities.
  You can get members to join by using social media like facebook and by visiting the site personally or by advertising in newspapers once you have the basic members.You can also post on dedicated opinion sites like mouthshut and indian real estate forum.

Once an association is formed, you can approach the consumer courts (no lawyers or expensive fees required) or take the legal route. You can also file a complaint with the competition commission of India if the builder has stated unjust or anti competitive one sided sale agreements. Recently, DLF was at the receiving end of such a judgement in Gurgaon. A penalty of 630 crores has been imposed on DLF.DLF has appealed and the final judgement is pending. Kolkata west international city is also embroiled in a similar case. The builder had charged Rs. 4.20 per sq ft maintenance with 3 yrs advance payment. But once the association was formed, he quickly reduced it to 1.75 per sq ft with 2 yrs advance payment.

Housing construction is a service under the consumer protection act

Interest has to be paid for delayed possession

Buyer can opt out if there is a delay in delivery

Buyer can withhold payment if construction does not proceed.

Buyer can move court despite signing one sided agreements.

The first step is sending a legal notice. Even if he does not recieve it, it is considered delivered if sent via speedpost or registered mail. Preserve all brochures/catalogues and website page printouts to prove what was promised.

Ref: Economic times Wealth

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Govt falters on 5 lakh affordable houses scheme.

Courtesy:TIMES OF INDIA

Tomorrow, it will be exactly two years since Maharashtra Chamber of Housing Industry (MCHI) and the state government inked a Memorandum of Understanding (MoU). The intent was to develop five lakh affordable homes in Mumbai and the Mumbai Metropolitan Region (MMR). However, in a recent statement, MCHI has claimed that nothing has been accomplished in the last 24 months. According to the builders’ body, the proposal to create five lakh houses as part of the Homes for All initiative between the real estate industry and the Maharashtra government is gathering dust in Mantralaya.

Distant dream
“The overall objective of the initiative was to address the yawning housing demand-supply gap and to provide affordable homes to the economically weaker sections, lower income group and middle income group,” Paras Gundecha, president of MCHI-CREDAI said. In this whole initiative the builders were going to develop the affordable homes on their projects and lands. MCHI also claims that the availability of these five lakh houses would have eased the demand-supply mismatch and kept the market rates under some kind of check. “But unfortunately, today, Mumbai has emerged as the costliest real estate market in the country,” said Gundecha. Gundecha claims the government usually doesn’t give clearances and the few ventures that get the nod are stopped midway. If the same situation persists, then nothing will happen even in the next five years, they say.

High-rises, high prices: Builders say if the project had come to fruition, the demand-supply mismatch in Mumbai, which has emerged as the costliest real estate market in the country, would have been checked to a great extent.

Decision deficit?
According to MCHI, in spite of repeated reminders to the authorities at various levels, nothing has been accomplished, though, as per the MoU, the state government was to extend all necessary cooperation. The MoU envisaged government steps like including revamping legislation, offering incentives to developers, and authorising the nodal agency to provide for a single-window clearance to projects comprising affordable homes. The pact was signed between the then chief minister Ashok Chavan and the then MCHI president Pravin Doshi. Even other ministers and several bureaucrats were present in the meeting. However, with the new CM and the change in bureaucracy, builders say things have changed dramatically.

The government claims that it’s unfair on the part of the builders to play this blame game. “We had meetings with the builders, there were engagements with the chief minister – both the past and the present one. However, some of their demands were practical, and others weren’t. Hence, not everything could be accepted. We did try to accommodate the builders and if the projects didn’t start then it’s not just our fault,” said Sachin Ahir, state housing minister.

April 28, 2010
Maharashtra Chamber of Housing Industry and the state government inked a Memorandum of Understanding (MoU) with the aim of developing five lakh affordable homes in Mumbai and the Mumbai Metropolitan Region (MMR).

Kharghar golf course finds no ‘muhurat’ for innauguration

It seems like the opening of Kharghar golf course is jinxed. The ambitious project of Cidco which was to be inaugurated yesterday by chief minister Prithviraj Chavan has been cancelled again due to the election code of conduct. The project has been waiting for opening for quite some time now. Earlier, Cidco officials were planning to open the golf course on March 17, that is on Cidco’s foundation day but it didn’t happen as the chief minister could not confirm his availability due to the budget session. According to sources, the Cidco administration wanted both the chief minister and the deputy chief minister to be present for the function. In the first week of April, the planning agency had to cancel the inauguration programme due to unavailability of the chief minister. According to officials, “The planning agency wanted that its ambitious project be inaugurated by the chief minister. Since the budget session was going on, the CM was busy and the authorities were waiting for the right time.” Now, that the code of conduct is on, the officials will have to take permission from the election commission. The code of conduct is in force due to the election of member from Raigad ZP to the legislative council. The project, which began in 2008, was supposed to be completed by December 2011.

Kharghar Golf Course Rate Chart

However, it faced several hurdles delaying its scheduled target of completion. The 11-hole golf course will have a permanent club facility along with a practice driving range that would function as a training academy for golf enthusiasts. It will also house a five-star hotel. However, all these facilities will be available only in the second phase. After the opening, Cidco will start ‘pay and play’ scheme at the golf course. Till the appointment of a permanent club facility and adhoc club will manage the affairs at the golf club. The work of the golf course has been carried out under the supervision of famous golf player Phil Rayon. The golf course project, spanning an area of 103 hectare, had landed in trouble after the forest department lodged offences of encroachment of forestland against the planning agency in September 2010. Due to certain issues with the forest department, the golf course could not be completed as per the schedule. Initially, it was planned as an 18-hole course but had to be reduced to an 11-hole course, which was a major setback. The planning agency had to redesign the entire architectural plan of the golf course because of which the project delayed. The construction of the golf course had commenced on January 31, 2008. Meanwhile, residents were of the view that there is no need to wait for the chief minister or the deputy chief minister to inaugurate the project. The same can be done by a freedom fighter or any defense personnel who has fought wars for the country.

Courtesy:DNA

Database of land use in Maharashtra under way

The revenue department has begun the process of creating a data bank on all government land in the state.
This measure follows a stricture in the recent CAGs report that data on land given on lease is not available with the department.
Swadhin Kshatriya,principal secretary,revenue and forests department,said they had taken the CAGs comment seriously and wanted to ensure that the government had a data bank of its land.
The data bank will be created at various levels such as the village,tehsil,collector and sub-division,he said.
The long-term aim,he said,was to monitor how the land was being used and whether the terms and conditions set by the government were being followed.
During the recent legislative session,speaker Dilip Walse-Patil had directed the state government to order a CBI inquiry after it was brought to the notice of the House how the city collectorate had woken up 17 years after the lease agreement for a 75,000 sq feet plot in Mazgaon had expired.
On Monday,the department issued a circular to all departments dealing with land to update their records on land given on lease,the status of lease,the rent being charged and whether the lease conditions had been violated.
The CAG report brought out irregularities in land allotment to various educational institutes promoted by politicians.It was critical of the government for failing to collect rent from these leased plots.