LEGAL REMEDIES FOR HOME BUYERS IN CASE OF DELAY IN POSSESSION BY THE BUILDER

October 5, 2022

LEGAL REMEDIES FOR HOME BUYERS IN CASE OF DELAY IN POSSESSION BY THE BUILDER

Every time a person makes an investment in immovable property, a builder and a buyer sign a builder-buyer agreement. This Agreement specifies the time frame within which the buyer must receive the property or other possession. Delivery by the buyer is delayed when the builder does not transfer or deliver possession to the buyer within the allotted time frame (in some situations, even after an extended period). But only when the function Object () is at fault for the delay does he become liable. The buyer would not prevail in a lawsuit against the builder if the delay was caused by a disaster or other circumstance that was beyond human control.

Where to go in case of delayed Possession?

Under civil, criminal, and consumer laws, a buyer may pursue a number of legal remedies in the event of delayed Possession. However, the buyer has recourse under the NCLT, the Real Estate Regulation Act of 2016, and the Consumer Protection Act.

Consumer Protection Act, 1986

The Home Buyer may file a complaint under the Consumer Protection Act citing the builder’s service deficiencies or the delay in taking possession of the home. It is not necessary to hire an advocate in order to submit a complaint because the processes are so straightforward. The applicant must submit his complaint and the required supporting documentation. Any Consumer or Group of Consumers with the Same Cause of Interest may File the Complaint.

In order to provide relief to harmed homebuyers, the relevant Consumer Forum may issue an Order requiring the builder or developer to restore the funds and pay damages for any losses or harm that the homebuyers may have suffered as a result of the builders’ or developers’ poor service.

Real Estate Regulation Act, 2016:

The Real Estate Regulating Authority (RERA) was established by the RERA Act to control and advance the Indian real estate market. However, it also makes sure that real estate developments, including plots, apartments, structures, and buildings, are sold quickly and openly. The act is a comprehensive package that addresses all the issues currently plaguing the real estate industry.

The Act calls for the creation of an adjudicating framework for prompt dispute resolution. The Act’s features don’t stop here. However, it also calls for the creation of an Appellate Tribunal to hear appeals from the real estate regulating authority’s orders, directives, and judgments, as well as the adjudicating officials designated in their place.

According to the law, if a real estate agent disobeys or shows a tendency to disobey any instructions from the Authority, he will be subject to punishment for each day that the default continues. The sale or purchase of real estate property aided by the Authority may also increase cumulatively by up to 5% of the projected cost of the plot, apartment, etc.

If the real estate agent disobeys the Appellate Tribunal’s order, he might face up to a year in prison or a daily fine for each persistent infraction.

However, it may total up to 10% of the anticipated cost of the apartment, the plot of land, the building, or whatever else is being offered for sale, purchase, or both.

The protection of the interests of the buyers is the sole emphasis of this law. Under RERA, a complaint or claim of any kind may be made. However, there is one exception to this rule: a complaint cannot be brought if an occupancy certificate is issued. The act entitles the buyer to a 100% refund as well as daily, weekly, or monthly interest until the delay is resolved. A RERA matter must be resolved within 60 days, but in this instance, the cost of the legal proceedings is slightly higher.

Any customer, regardless of the state, can lodge a complaint here. According to the RERA Act of 2016, the buyer has the option to issue a legal notice to the builder or even transfer their case from the State Consumer Dispute Resolution Committee to the State Real Estate Regulatory Authority.

National Company Law Tribunal (NCLT):

It is preferable for you to handle the situation on your own if the developer is delaying the delivery of your home or apartment as a result of a lack of funding. The best course of action in this circumstance is to contact NCLT. In a recent ruling, the Supreme Court also supported a home buyer’s right to file a bankruptcy petition against a property or apartment developer or seller. If the seller is unable to complete the project, the buyer may turn to NCLT, file an insolvency petition against him under the Insolvency and Bankruptcy Code, and seek any sum equal to or greater than Rs 1 lakh. The average period to resolve the case, as per the act, is to be within 9 to 12 months.

The NCLT is an appeal authority that has emerged as a more preferred option for homebuyers looking for rapid relief from the builder in situations involving registered firms and a disputed value of more than Rs 1 lakh. It makes it possible for the company’s owners to obtain their shares throughout the liquidation process.

The Supreme Court ruled that the buyer turns into a financial creditor. Therefore, the purchasers are currently entitled to receive their portions of the seller’s or developer’s assets just like the other creditors.

Written Petition in High Court or Civil Action:

No buyer may file a case before a civil court or a writ petition before High Courts in States where Regulatory Authorities have been established. It has been seen recently that certain High Courts have misdirected cases that were brought before them, instructing the buyer to contact the proper Regulatory Authority in that particular State. Since RERA is a new statute, the buyer may still have the opportunity to initiate a civil lawsuit if there is no such Authority.

When appropriate, a civil case should be launched in the district where the property is situated or where the defendant/respondent (builder) conducts business.

Arbitration:

If there is an arbitration clause in the contract, the buyer should submit the dispute to the arbitrator rather than take it to court. A disagreement is resolved through arbitration with the aid of one or more arbitrators, who are neutral third parties. The outcome is communicated through an award. Through this, the arbitrator(s) would determine whether or not the builder had violated the contract.

The arbitrator will determine if there has been a builder default and, if so, how much compensation the builder must pay to the buyer. However, this order could need to be implemented by going to a civil court.

Criminal Case:

In some situations, such as when the builder or developer purposefully refuses to turn up possession of the property in order to keep the money, a criminal case may also be initiated. Under the Indian Penal Code, he or she could be legally sued for deception and/or criminal breach of trust, among other offenses. If the builder is found guilty in a criminal prosecution, he may be imprisoned and there is no guarantee that the buyer will receive financial recompense.

Remedies that can be obtained in action(s) against the builder for delay in possession:

The buyer/complainant may use legal means to request the following reliefs. To understand what remedy should be pursued in light of the facts and circumstances of the buyer’s situation, the buyer should, however, always consult a lawyer.

1. Compensation: If the builder is to blame for the delay and there is no acceptable explanation, the buyer may be entitled to compensation of up to 10% of the purchase price. A buyer may pursue compensation even in a consumer dispute.

2. Refund: If the construction hasn’t started or is still in the planning stages, a full refund of the money paid may also be requested. If you got a refund, you could purchase a different house. The builder may be ordered to repay the entire price and be responsible for the full expense of the case if the court determines that the builder is at fault and that the buyer has suffered hardships as a result. Builders are required by RERA to keep the payments received from buyers in a designated account. The money may only be used for the stated purpose.

3. Punishment: When there is a delivery delay, the builder faces the possibility of losing the project’s registration as well as the possibility of going to prison.

4. Project Completion: In accordance with the terms of their contract, the buyer and the builder may also ask the builder to finish the project’s construction. The builder may also be given additional time by the court to finish the project. This is typically a relief that courts grant in civil cases.

5. Damages: The court may order the builder to pay the buyer this penalty if your agreement has a clause indicating that a specific fixed penalty must be paid in the event that the builder delays in giving the buyer ownership. Even if the agreement does not contain such a clause, you are still entitled to damages and compensation for the mental anguish you have experienced. Damages may also be sought for the rent that a buyer could have received but was unable to do so due to the delay, up until the property is transferred into their possession.

6. Interest: A buyer may also request interest be applied to any payments they have already provided to the builder. A few States also have provisions to guarantee buyer protection. As an illustration, consider the Maharashtra Ownership Flat Act, 1963, which mandates that the builder must refund the buyer’s money plus 9% interest if he or she cannot adequately explain the delay in giving them possession of the property.

The Supreme Court ruled that there was no force majeure event in the current case since delays in getting building approval are a typical occurrence that developers should take into account when setting a timetable for turning over possession. The Court concluded that additional compensation should be awarded at a rate of 6% per year until the delivery of possession is made to the flat buyers, in addition to the agreed contractual rate, based on the basis established in Wing Commander and Pioneer. Additionally, the Court ruled that the flat buyers would still be eligible to receive additional compensation even though exit offers had been made to them.

The Supreme Court helped flat buyers who lack the ability to negotiate the contractual rate of compensation by granting them the right to sue developers for additional pay as a result of delays in giving them ownership of their apartments through the aforementioned ruling. The ruling would punish developers who refuse to provide appropriate compensation to apartment buyers who have been delayed in moving in.

The Supreme Court of India intervened on behalf of the flat buyers in the DLF Case, DLF Home Developers Ltd. v. Capital Greens Flat Buyers Association [4]. The Court had taken a harsh stance against the developers and ordered that even if they made exit offers to the owners of the apartments, they would still be entitled to compensation from the developers for the delay in giving them possession of the apartments.

The complainants in Anuj Biswas and others v. Kapstone Construction Private Limited paid an earnest amount for a 750 square foot apartment on the 12th floor of Rustomjee Urbania Azziano, and then in 2013 they made additional payments totaling 90% of the sale consideration through a bank loan and other sources.

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October 5, 2022