Facing Delays in Property Possession? Know Your Legal Options
The journey of buying a property is a significant milestone in life. However, for many homebuyers in India, the dream of a new home can turn into a nightmare due to unforeseen delays in possession. Builder delays have unfortunately become common, leaving buyers in difficult situations. But what can you do if you're caught in this situation? Here’s a comprehensive guide to understanding your legal options if you’re facing property possession delays in India.
Understanding Builder-Buyer Agreements and Delays in Possession
When purchasing a property, the builder-buyer agreement outlines the expected date of possession. This document specifies the timeline by which the builder is supposed to hand over the property. However, sometimes builders fail to meet this deadline, which could be due to various reasons—genuine or otherwise. If the delay is not due to uncontrollable factors like natural disasters, the builder can be held accountable.
Legal Recourses for Buyers Facing Delays
Thankfully, there are several laws in India that protect buyers in cases of possession delays. Let’s explore each option to understand how you can seek relief.
1. Real Estate Regulatory Authority (RERA)
The Real Estate (Regulation and Development) Act, 2016, popularly known as RERA, was established to protect homebuyers and bring transparency to the real estate sector.
Key Provisions Under RERA:
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Compulsory Project Registration: Builders must register their projects with the state RERA authority before starting any sales or marketing. This ensures that only compliant builders can operate in the market.
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Project Details and Timeline: Builders are required to publish details of their projects, including timelines, on the RERA website. Any delay beyond the stipulated time could lead to legal consequences.
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Compensation or Refund: If the builder fails to deliver the property within the promised time, buyers can withdraw from the project and claim a full refund with interest. Alternatively, if the buyer wishes to continue, they can seek monthly compensation for the delay.
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Complaint Filing: RERA allows buyers to file complaints if builders refuse compensation or fail to meet deadlines. RERA courts are mandated to address complaints within 60 days, although appeals can be filed if buyers are unsatisfied with the judgment.
If you’re considering filing a complaint under RERA, ensure that your builder and project are RERA-registered. Each state in India has its RERA authority, and the process for filing complaints may vary slightly.
2. Consumer Complaint for Delays in Possession
Another option available to buyers is filing a complaint with the Consumer Forum. If the property was purchased primarily for residential use, it qualifies as a consumer service, and buyers can seek compensation if there is a deficiency.
Steps to File a Consumer Complaint:
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Send a Legal Notice: Before filing a complaint, send a legal notice to the builder, specifying your grievance and giving them an opportunity to resolve it.
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Prepare Your Complaint: If the builder fails to respond satisfactorily, draft a detailed complaint including the builder's details, contract terms, and proof of payment.
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File the Complaint: Depending on the amount of your claim, file the complaint with the appropriate Consumer Forum (District, State, or National level).
Consumer courts tend to address such issues faster than civil courts, and they can provide relief such as refunds, compensation for losses, and monthly interest on delayed payments. Consumer courts are a reliable option if RERA authorities are not yet fully operational in your state.
3. Filing a Civil Suit or Writ Petition
In states where RERA authorities have not been established or are not fully functional, buyers may file a civil suit or a writ petition in the High Court. However, civil cases often take longer to resolve than consumer cases.
A civil suit may be filed in the court with jurisdiction over the area where the property is located or where the builder conducts business. Courts may order the builder to pay compensation, expedite project completion, or provide other relief as per the buyer’s demand.
4. Arbitration as an Alternative
Many builder-buyer agreements include an arbitration clause, allowing disputes to be resolved through an arbitrator instead of a court. Arbitration can be quicker, less formal, and is often less costly than litigation.
If arbitration is part of your agreement, you can approach an arbitrator to resolve the dispute. However, keep in mind that the arbitrator’s decision may still require enforcement through a civil court if the builder refuses to comply.
5. Criminal Action Against Fraudulent Builders
In severe cases, where the builder has fraudulently withheld possession, buyers can file criminal cases. Under the Indian Penal Code (IPC), offenses like fraud, criminal breach of trust, and cheating can be applied. Criminal cases might lead to severe penalties or imprisonment for the builder, although they don’t guarantee monetary compensation.
A criminal complaint is usually filed if there is clear evidence that the builder intentionally deceived buyers, misappropriated funds, or falsely promised possession. Buyers may file an FIR with the police or approach the magistrate if the police fail to act.
6. Insolvency Proceedings Through the National Company Law Tribunal (NCLT)
If a builder is financially unable to complete the project, buyers can initiate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. This process is conducted through the National Company Law Tribunal (NCLT), where buyers can claim their investments if the builder’s assets are liquidated.
To file an insolvency petition, buyers typically need to have a disputed amount of over Rs. 1 lakh. While this process is legally complex, it provides buyers a way to retrieve their funds if the builder’s company goes bankrupt.
Consumer Court, RERA, or CREDAI: Which One Should You Approach?
Consumer Court
If your case involves primarily monetary compensation or a refund, and RERA authorities are not yet fully functional in your state, the Consumer Court may be the best choice. The Consumer Court has extensive experience dealing with consumer disputes and generally provides quicker relief.
RERA
Where available, RERA authorities are highly recommended for property possession disputes. RERA focuses on consumer protection within the real estate sector and has strict timelines for case resolution, often faster than consumer courts. Moreover, RERA can revoke a builder’s registration if they repeatedly fail to meet timelines.
CREDAI
For builders registered with CREDAI, buyers may approach this industry association, which has a grievance redressal mechanism. CREDAI aims to resolve disputes amicably and promote fair practices within the real estate sector.
Key Challenges Faced by Homebuyers Due to Possession Delays
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Financial Losses: Buyers who rely on bank loans face dual financial burdens when possession is delayed—monthly EMIs for the under-construction property and rental expenses for alternate accommodations.
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Emotional Distress: Delayed possession can cause significant stress and uncertainty, especially for those eagerly awaiting a new home.
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Changes in Plans: Some builders may make significant alterations to the property layout or features without the buyer’s consent, further frustrating the purpose of the purchase.
Tips for Buyers to Protect Themselves Against Delays
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Thoroughly Review the Builder-Buyer Agreement: Ensure all terms, including possession deadlines, penalties for delay, and exit clauses, are explicitly mentioned.
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Check Builder’s Credibility: Research the builder’s track record, especially regarding project completion and delivery timelines.
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Understand Your Rights Under RERA: RERA provides various buyer-friendly provisions that ensure transparency and accountability from builders.
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Send a Legal Notice Promptly: In case of a delay, send a well-drafted legal notice to the builder. This establishes your intent to take legal action and may expedite a resolution.
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Hire a Lawyer for Legal Recourse: A qualified property lawyer can guide you through the complexities of the legal process, whether it involves Consumer Court, RERA, or other legal avenues.
Conclusion
Facing delays in property possession is an unfortunate reality for many homebuyers in India. However, with a clear understanding of legal options like RERA, Consumer Court, arbitration, and even criminal complaints, buyers can protect their investments and hold builders accountable.
Before deciding on a legal course of action, it’s wise to consult a property lawyer who can evaluate your case and guide you on the best course of action. With the right legal recourse, homebuyers have the power to secure justice and even claim compensation for the hardship caused by builder delays.
