Real Estate (Regulation and Development) Act has been touted as a panacea for all realty sector ills. It is meant to protect home buyers against irregularities, bring transparency, cut delays and enhance the confidence of the buyer.
It has been five months for the Act to come into force and we decided to do a reality check how things have changed on the ground. Our investigation has found developers are still circumventing the customer-friendly law and cocking a snook at the newly-introduced strict rule book.
Fight to finish
Last month Kashmira police station in Dahisar, an extended Mumbai suburbs, booked directors and senior officials of DB Realty and its subsidiary Neelkamal Realtors Suburban Pvt Ltd for the delay in giving possession of apartments and alleged cheating in their residential project – DB Ozone. Construction for this project had commenced in 2009.
"We were to get possession of our respective flats in 2014, with 12 months grace period which got over in December 2015. Then we received an official letter from DB Realty in April 2015 mentioning handover of the complete project in December 2016 in which the developer failed again, only to give another deadline of November 2017. The last intimation of revision was on a plain paper and not a letterhead, without the company's seal on it," claimed Abhijit Dhiwar, who filed a FIR against DB Realty and Neelkamal Realtors.
Dhiwar isn't the only one fighting the developer for years. There have been as many as 32 litigations in various consumer forums against the developer. The scale of this project – DB Ozone – is big with over 3,600 apartments being constructed since 2009.
In a recent development, DB Realty has managed to complete four out of 26 buildings and around 50 home buyers have received 'Fit-Out possession' even when Occupation Certificate (OC) is pending from urban local body, said Dhiwar.
A check on project's completion date the project with Maharashtra Real Estate Regulatory Authority (MahaRera) reveals that 'Revised Proposed Date of Completion: 31/12/2022', which means 13 years for the housing project to be ready since the work started.
There are some buyers who were asked to pay an additional Rs 1,000 per square feet. Some refused to make further payment and are now trying to get "justice". Individuals have paid 89% to 92% of apartment cost to the developer, says Dhiwar.
"We cannot move to MahaRera till our pleas in consumer forums get disposed of as a complainant cannot move two different forums for the same grievance," he adds.
In other words, all those aggrieved home buyers who have moved different courts for justice are unable to approach the respective Rera authorities.
When contacted, the developer did not offer any clarification to queries emailed by DNA Money.
A trap called agricultural plot
Dreaming of having a permanent place for family vacations, Karmale family booked an agricultural plot at Lonere Town (in Raigad district) along the Mumbai-Goa Highway.
Booked in 2012, the Mumbai-based Karmale family is still waiting to get possession of the plot.
"The facilities promised were boundary demarcation and road, for which they needed five years to give possession. Usually, an entire building or a bungalow gets constructed in 3-4 years," said Sarfaraz Karmale.
The Expat Golden Meadows II project is supposed to be spread on 150 acre, with 200 plots within.
During one of their enquiries with the developer for possession, a representative said not all farmers had agreed to sell their plots to the developer, due to which they are unable to complete the project.
As of now, the only project by Bengaluru-based Expat Properties to have received Rera registration number under MahaRera is Expat Genesis in Pune. The developer has taken off the project details of Expat Golden Meadows II from its website and the project isn't being sold, but in reality, this project isn't ready as possession hasn't been given to the buyers.
A company spokesperson didn't accept or deny if the company has defaulted in giving possession, but claimed that "compensation for delay will be paid on handover as per the project offering". However, the project offering does not state anything on delay and its compensation.
The company claimed that the project doesn't fall under MahaRera purview as the "project is agricultural in nature". However, nowhere in the Act is there any mention that agricultural plots are out of MahaRera ambit. The rules only use the word 'plot' and the terms 'agricultural plot' or 'non-agricultural plot' are missing.
When costs hit the sky
The housing regulator has a model agreement that all developers have to put in place while selling their respective projects. For years now, in case of project delays, builders have arm-twisted buyers in coughing up an additional amount due to "rise in raw material costs".
For the existing projects wherein developers have made customers sign an agreement without any mention on 'cost escalation' or allowing them to collect excess amount may continue to extract more money. Buyers who get such a demand or those who have already paid additional charges for builder's inefficiencies have few options for redressal.
"Model agreement is very specific and clear on cost escalation. Only those excessive amounts can be recovered from the buyer wherein the increase is due to additional development charges paid to the competent authority or local bodies or government. But the developer has to prove their excess amount claims from the buyer with the support of the rule or order issued by the authorities," said Vijay Satbir Singh, member of MahaRera on the subject of cost escalations in realty projects.
One date for buyers, one for Rera
Old habits die hard. Among the old tricks, the developers continue to perform while selling a property is verbally committing a certain date and then mentioning another possession date in the sale agreement.
"The developer assured to hand over keys by 2017-end, but agreement states 2018-end. When I sought an explanation, the developer only commented that we will complete the project well before the date mentioned in the agreement, even if there is a delay it may be by a month or two not by a year as mentioned in the sale agreement," said a home purchaser who did not wished to be named.
"Legally not honouring the verbal commitment of an earlier deadline does not amount to delay of a project because on the sale agreement the builder has specified the actual deadline. Either in the court or with MahaRera, the judge will accept the date mentioned in the sale agreement as the possession date," said a property consultant. Thus, the home buyer won't be able to file a complaint till the deadline mentioned in the agreement lapses.
"Home purchaser has to ensure that dates in the agreement are the same as orally communicated. The date mentioned in the agreement will be acceptable in case of a dispute," said MahaRera member Vijay Satbir Singh.
Hiding from Rera, not from buyers
Surely not all realty projects have got registered with the Rera authority. There are some developers who continue to conduct business without any regards for the law.
Builders who haven't registered their realty project with MahaRera are approaching investors with whom they deal often. If half of their inventory has been sold, investors are being approached to buy the balance inventory.
If the investor agrees to the deal, the builder will market it on the investor's behalf. Hence, this would mean it's a resale that will happen and the developer is just a marketing agency. This will help developers avoid stringent Rera regulations and the investor gets to make profits.
Terming such projects illegal, MahaRera member Vijay Satbir Singh said, "Promoters dealing in such projects should immediately stop every marketing and sales activity, or else they are liable to face action under the Act."
REALTY BITES
- Not all realty projects have got registered with the Rera authority
- Some developers conduct business without any regards for the law
- Builders who haven’t registered their realty project with MahaRera are approaching investors with whom they deal often
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