With an increasing number of cases of delayed real estate projects in India, it is important for homebuyers to know their rights and the legal course of action to uphold the same. Here are some legal measures a homebuyer can pursue in case the project is inordinately delayed.
A delayed real estate project is the biggest nightmare for a homebuyer since it results in huge monetary loss and mental agony. While earlier, the absence of standard regulations led to years of litigation and thus, delayed possession timelines, the scenario has significantly improved after the enforcement of the Real Estate (Regulation and Development) Act, 2016 (RERA).
RERA has not only enabled a regulatory framework and provided an avenue to fast-track dispute resolution, but has also infused the much-needed transparency into the sector. This has resulted in reduced incompetence and delays and established a pan India model for construction practices. The Act also hypothesises builders’ accountability towards consumers and categorically defines a series of actions a homebuyer can take in case a builder refuses to handover the project within the stipulated time or perpetually extends the possession deadline.
Primarily, the word delay means that a promoter/builder in the agreement of sale has agreed to complete the project and give the possession of the property within a period but has failed to do so.
Sudhir Reddy, Founder, Reddy and Reddy Law Firm, avers that in case a builder delays the project delivery beyond a period as agreed upon in the agreement for sale, then the aggrieved homebuyer can take legal action against the promoter.
Legal recourse for delayed projects under RERA: Filing the complaint
- As per section 31 of RERA, an aggrieved consumer may file a complaint with the Authority or adjudicating officer, appointed under the legislation. Apart from the builder, a homebuyer can also file a complaint against the real estate agent in the form or manner provided under the Act.
- As per section 79 of RERA, civil courts are barred from entertaining disputes (suits or proceedings) in respect to matters of Real Estate Regulatory Authority. Only the adjudicating officer or the Appellate Tribunal is empowered under the Act to deal with disputes in real estate projects. However, the consumer forums (National, State or District) have not been barred from the ambit of the Act. Section 71 proviso permits the complainant to withdraw his complaint as regards to matters under section 12, 14, 18 and 19, from the consumer forum and file it with the adjudicating officer appointed under the Act, shared Reddy.
“RERA allows a homebuyer a choice of seeking either interest on delayed possession or a complete refund of the money paid along with interest thereon. However, if the builder fails to provide the desired compensation, severe penalties have been rolled under RERA ranging from imprisonment to registration cancellation,” shares, Vineet Naik, Senior Advocate, Bombay High Court.
- As per section 18(1) of RERA, in the events where the promoter delays the possession of a property or fails to complete the project within the agreed time as mentioned in the sale agreement, he shall be liable to return the amount received from the buyer in respect of the apartment/property or plot, along with the due interest. The interest imposed is 10 percent of the amount invested by the buyer. In case of non-compliance, a builder might face imprisonment for a term which may extend to three years or a fine up to 10 percent of the estimated cost of the real estate project, or both.
- If the builder unilaterally changes the possession date of the project, then the buyer has a right to withdraw from the project and claim refund of the invested amount within 45 days.
- If the buyer does not withdraw the possession of the apartment/property, he/she retains the right to be compensated for the delay in the form of monthly interest till the date of handover. The monthly interest would be paid as per the rates prescribed under the legislation. The interest must be automatically initiated by the builder or the promoter when the delay commences. However, in case of a grievance, the allottee may approach the Authority.
Legal recourse outside the ambit of RERA
Under the Consumer Protection Act, 1986, a homebuyer can register a complaint under Section 2(1) (c) for deficiency in services. The term deficiency in services refers to any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance, which is required to be maintained as per the law.
As per the latest ruling by the National Consumer Disputes Redressal Commission (NCDRC), buyers can seek refund from the developer if the possession of the house or a flat is delayed beyond one year. Depending upon the value of the property, buyers can approach NCDRC in the following courts:
- For properties worth Rs 20 lakh complaints should be filed with the District Commission
- For properties valuing between Rs 20 lakh and Rs 1 crore grievances should be listed with the State Commission
- For claims more than Rs 1 crore, a homebuyer should approach the National Commission
Additionally, the Domestic Building Contracts Act, 1995 also protects homebuyers’ rights in case a builder inordinately delays the possession of the property. The Act oversees if the project construction is as per the approved plan and is completed within pre-decided time or not. Besides, it also administers the construction quality of the project.
Overall, the execution of RERA has eased out the process of complaint registration in case of a delayed project. Homebuyers are also confident of faster and fair resolutions under the law. However, it is imperative to do due diligence. One must only invest in a project by a credible builder with an excellent past record and market reputation and stay abreast of the latest changes in the rules and regulations of the real estate sector.