Sometimes, (and in some places) the lack of regularization of the real estate sector and given the poor state of management by the Municipal Authorities, individual property buyers carry great risks even with the better known builders. Here are some ways in which the builder can hoodwink the gullible buyer and deliver much less than what is promised. And, I am not referring to builders who have abandoned projects and absconded or have abandoned projects midway due to forced upon litigation and a variety of reasons, but builders who are here to stay but carry on with their projects with a strong legal deterrence for the buyers due to the nature of agreements individual vulnerable buyers enter into in the very beginning.
- The Brochures and Advertisements: If one has been monitoring the advertisements and brochures which appear all too frequently and take up an individual case,one can come across serious changes in project specifications throughout the duration of the project implementation and that too without involvement of the buyers.The buyer has simply to accept it as a fait accompli and live with the reduced specifications in spite of the fact that he may have paid his share of the apportioned price for the said specification.
Remedy: Only through legal route if builder does not agree for compensation due to the reduced specification. Buyers have to get together and approach the builder for compensation. It may be a long drawn battle and buyers should be ready for associated legal costs.
- Agreement of sale: This is an elaborate document and prepared on a common platform for all buyers.It generally specifies all aspects of the relationship between buyer and seller even beyond the exit of the seller from the project and the owners trust or welfare society is formed.Well known law firms are involved and often the agreement is heavily skewered in favour of the seller and the agreement seeks to protect the seller from major changes in the project configuration even when the buyer may have paid an apportioned cost of such facilities.As an individual you have less chance to change agreement clauses to make it less adversely skewered towards the individual buyer.Investors buying in bulk are favourable placed to negotiate a more equitable deal.
Remedy: Often the builder seeks to assuage the damage through compensation which only partly redeems the damage.More often the builder takes shelter against an agreed clause to protect itself.Legal recourse is the only way out of this and is best enacted by a residents group of aggrieved individuals.
- Hype created by builder: Typically a social welfare project in the vicinity is fully leveraged to increase the price.A typical example is the builder taking full advantage of an announced metro project to double the price in two years.When last heard, the metro project is as good as shelved and the buyers are left sucking their thumb.
Remedy: Buyers have to see through the hype and decide judiciously
- Prices:A trend in price rise over the last several years in different city locations is a clear indicator as to how the prices have been rigged by cartelised builders. Builders have been increasing prices while cost have remained largely in control for items like steel, cement, bricks ,sand and aggregates. It smacks of cartelisation to fleece the hapless buyer.
Remedy: Increasing buyer awareness
- Saleable area and livable area: These new terminology for superbuilt up area and carpet area is recently introduced . The saleable area-livable area ratio vary between projects and even within projects, different phases have different ratio.This ratio rises to 40-45 % in certain developments to the detriment of the buyer.The buyer finds substantially reduced living space compared to what was evident from model flats of from exhibited drawings
Remedy: One has to do thorough calculation with approved drawings before committing oneself to a property
- Common facilities:No details are available for garages, open parking spaces, community halls, clubs and playgrounds except some photo shopped glossy images while booking the flat.This is one area where the builder makes a greater killing by reducing specifications at their own free will and buyer has no recourse to know what was paid for and what is received.
Remedy: Buyers or group of buyers (if they can get together) can seek greater details and incorporate these in the agreement
- Project delays: This is by far the most serious issue and buyers suffer on account of rent and EMI burden and also adverse tax implications.Builders launch many projects at the same time.They cross fund projects and projects which have poorer cash flows are made to suffer
Remedy: Meticulous study of the market before deciding on the project.Only the name of the builder is never enough.
- Reduced open spaces by building more:Open spaces which appear in the initial specifications and product launch brochures progressively diminish with the ageing of the project.Typical examples with even better known national level builders have seen full football grounds in original specification finally replaced with a tennis court or a basket ball court.Full fledged hospitals are reduced to another residential tower with a modicum of a health facility
Remedy:Quickly forming owners representative committee and monitor the builders activities as the project progresses.
- Inferior construction workmanship and material:You may be surprised by the very poor quality of the woodwork , sanitary fittings, quality of tiles, even electrical fittings even from reputed builders .The contract never includes a detailed material specification and this is left to the discretion of the builder as the project unfolds. Also, steel, cement ,their proper ratios, quality of bricks are all hidden within the construction.Not much is disclosed of decipherable.
Remedy: Difficult to remedy in the absence of a detailed contracted specifications.
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