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How to safeguard yourself from builder violations

 

Aug 13, 2014

With rising number of builder violation cases coming in light, the fear of being caught in a similar debacle is increasingly gripping homebuyers these days. Reports have indicated that while most homebuyers dread such a fate, they also do not know how to avoid falling in the trap of a legally unsound property.

 

Well, the key is to be an informed customer. Here’s a checklist of “to-dos”, by Pawan Jasuja, Director, Finlace Consulting, before buying a property and on discovering violations of the builder-buyer agreement on purchasing one.

*CCI- Competition Commission of India

 

 

While the checklist holds true in almost all cases, it’s always good to learn from others’ mistakes. Given below are some famous cases of builder violations, the actions taken by affected people and some tips for you.

 

Case 1

Emerald Court, Supertech Ltd

City – Noida

 

What happened? – The builder was found flouting construction norms by building more floors than the approved numbers. On finding out the wrongdoing, residents of Phase I of the same project filed a petition in the Allahabad High Court. 627 flats of the planned 857 were already sold and as of today, the two towers are ordered to be demolished. The builder is liable to either refund each buyer’s money along with 14% interest compounded annually or transfer them to any other ongoing project.

 

Learnings from this case

  • Check for all the approvals and legalities of the project before investing
  • Check for FAR approvals and the maximum number of floors which can be constructed
  • Make sure the builder-buyer agreement has a satisfactory clause in case any of the stakeholders, including you, defaults in any way
  • Take timely action on discovering the builder flouting builder-buyer agreement

 

Case 2

Campa Cola Compound

City – Mumbai

 

What happened? – The compound was built with seven high rise buildings in 1980, by Pure Drinks Pvt Ltd and Yusuf Patel, B.K. Gupta and P.S.B Construction Co. While there were approvals for only 6 floors, developers violated the rules in all its floors and made up to 20 and 17 floors in two of its towers. While penalty was paid to Brihanmumbai Municipal Corporation (BMC) during the construction, the authority turned blind eyed during the occupation of the buildings.

 

In the due course of time, neither the Occupation Certificate (OC) was handed over to the residents, nor the Deemed Conveyance to the society. After several hearings against BMC, the Supreme Court has now ordered to raze off the illegal building, leaving 96 families homeless after 25 years.

 

Learnings from this case

  • Check for all the approvals and legalities of the project before investing
  • Find out about project approvals from the concerned authorities
  • Do not take possession of a property without Occupation Certificate. Absence of OC is the first alarm of wrongdoing as authorities issue this document only after checking if the builder has complied with all by-laws
  • Make sure the developer transfers the land ownership in the name of the housing society. This will ensure that in case of a need for redevelopment, the FSI and right to develop the society remains with the buyers
  • Do not settle for illegal properties at lower prices

 

Most of these cases throw light on the importance a clear project Title, builder-buyer agreement and the need to take timely action. However, the cases also reflects that in the absence of a real estate regulator, there are irregularities even in the legal checks conducted by banks and city authorities. In that case, it is advisable to seek the services of private lawyers. The miniscule fee may add to the total cost of owning a property, but it could save you from running into a much bigger risk.

 

 

 

 

 

Source: 99acres

 

 

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