The unfairness of developers to buyers with the rise of complaints

The increasing trend of litigation

The relationship between the buyer and the builder was always governed by the agreement between them. In that, the past experience of the experts says that the builder always had an upper hand. The builder was said to have an upper hand in all the spheres right from the bookings of the properties, handing over possessions, and in all other chores. The experts say that the builders have a clause in the agreement that states the owners of the apartments have inspected every detail and the apartment or the house is delivered as per the agreed specifications. This clause naturally leaves the buyers very little scope for challenging or complaining against developer on any discrepancies in the court of law.

The unfairness of Developers towards Buyers

Statistics says that the court cases and the disputes relating to real estate and that too relating possession related issues have risen in the consumer courts. The trend watchers say that it’s not only a fact that it is happening due to increasing consumer awareness but simultaneously the cases of cheating by developers, defaults and delays are on the rise as well. The statistics say than since January 2016 about 2,041 cases have been launched for the disputes arising from housing related issues with NCDRC. This is of course close to the number of the complaints that was lodged in 2015. The statistics further point out that there were 2, 495 house related cases in last year and in 2014 about 1, 063 cases were lodged. This is also a fact that in 2013 a meagre 104 cases were lodged as per the government data. The government data points out that insurance grievance topped the list of complaints till last year and from recent times housing related issues have increased exponentially putting insurance related cases at the back seat.

The problem areas:

Recent survey data from Liases Foras pointed out that the issues and disputes between the buyer and the developer can get even worse if one looks at the increasing number of unsold units. The data says that unsold stock increased by 22 percent in the eight major cities of India in comparison to last year. According to the research data the increase in the unsold stock outnumbered that of sales. The inventory across the major cities of the nation stands at an alarming 42 months of average stock. This made the stock rise by 13 percent in one single year. The yardstick is that an efficient market maintains an inventory level of eight to twelve months.

The trend watchers opine that the developers have been struggling with the rising inventory since the recession struck in 2008. In this, the delay in completion of the projects is one of the most common grievances that the buyers have. When enquired, the developers normally put the blame on issues like delay in the approvals from the state and the central governments, agencies and the ministries. The other cases as per the data are the poor quality of constructions, deviation from plans, etc. The trend watchers say that in the past there were instances where the developers and the builders intentionally took to slower pace of construction if the larger parts of the projects were not sold or the sales were slow. They may have taken the capital generated from one project to another project in the pre-launch state or otherwise.

The outlook with RERA in force

The experts are of the opinion that once the real estate regulation Act came into being things will change diametrically. Once the RERA is implemented the developers who will be able to play the rules will be able to survive. The Act provides such clauses that once the law is in force the developers will have to register their projects even if it is under construction and they must disclose accurate information about the projects. To prevent the developers siphon funds the law also mandates that 70 percent of the buyer’s money has to be deposited in the escrow account to secure the common buyers. The experts and the veterans of the realty sector opine that the law maintains a level wherein a balance is maintained between the motives and intentions of the developer and the buyer.