Their performance breach should be treated as a criminal offence

The three basic needs of man are: food, clothing and shelter; in India, millions are denied these basic needs. Even those who are able to eat well and wear decent clothes find owning a house a major task. The main reasons are the policy of the state governments and the unholy nexus between the builders and politicians.

Irrespective of which political party is in power, this equation between the vested interests hardly changes. I want to focus on the plight of hapless flat-buyers who are victimised by builders.

It is sad, but not surprising, that anybody can set himself up as a builder/developer and start collecting ‘booking amount’ from prospective buyers. Even to become a clerk and draw a small salary, a person has to be a graduate and prove some competence; while a builder not only needs no qualification, but also does not need to have any registration from the government. Consequently, all sorts of persons have entered the business and are selling illusory dreams to hard-pressed buyers. To compound the situation, it is not only the fly-by-night builders who lead buyers up the garden path, but even among the so-called ‘reputed’ builders, there are several who let their customers down.

The transaction between a builder and a buyer is simple. A builder advertises or announces his project offering different sizes of apartments at a particular location with certain amenities. Ironically, the brochure issued by the builder normally mentions in fine print that the plans may be changed at any time without reference to the buyer. A builder then enters into an agreement for sale with the prospective buyer specifying the stage-wise payment, correlated to the progress of the work. There are several other terms and conditions in the agreement which mean that any failure by the buyer would attract penal interest and even cancellation of the agreement, while the builder can get away with murder without even being obliged to say sorry, though that by itself would mean nothing.

In fact, a buyer has to sign with a builder one of the most one-sided commercial agreements one can come across in the world of business. It contains elaborate conditions that would enable the builder to get away with any defect in construction or delay in possession—that has to be suffered by the buyer.

Nobody denies that an aggrieved buyer can always take recourse to legal action, but are we not aware of the inordinate delays in seeking justice from the courts? Such delays invariably work in favour of the defaulters. In the few cases that have managed to reach conclusion, courts have rarely imposed exemplary costs on builders; imprisonment is not even considered. In such a scenario, why should a builder bother about the buyer from whom, in any case, he collects almost 95% of the total consideration much before the building is completed?

It is a fact that the relation between a buyer and a builder is totally unequal and one-sided in favour of the builder. The situation demands that the government should protect the interest of buyers not only by making strong laws, but also by making any breach by a builder liable to serious punishment. Defaulting builders should be made to pay heavy costs and, in case of failure to give possession within a reasonable time, they should be made to pay replacement cost that would enable buyers to purchase a flat at the prevailing price in the same locality. Any failure in this regard should be treated as a criminal offence entailing severe punishment, including imprisonment.

Unless government wakes up to the virtual fraud being committed by a large number of builders, lakhs of buyers will continue to suffer and be cheated by builders.



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  • Originally Posted by MANOJa

    Their performance breach should be treated as a criminal offence

    The three basic needs of man are: food, clothing and shelter; in India, millions are denied these basic needs. Even those who are able to eat well and wear decent clothes find owning a house a major task. The main reasons are the policy of the state governments and the unholy nexus between the builders and politicians.

    Irrespective of which political party is in power, this equation between the vested interests hardly changes. I want to focus on the plight of hapless flat-buyers who are victimised by builders.

    It is sad, but not surprising, that anybody can set himself up as a builder/developer and start collecting ‘booking amount’ from prospective buyers. Even to become a clerk and draw a small salary, a person has to be a graduate and prove some competence; while a builder not only needs no qualification, but also does not need to have any registration from the government. Consequently, all sorts of persons have entered the business and are selling illusory dreams to hard-pressed buyers. To compound the situation, it is not only the fly-by-night builders who lead buyers up the garden path, but even among the so-called ‘reputed’ builders, there are several who let their customers down.

    The transaction between a builder and a buyer is simple. A builder advertises or announces his project offering different sizes of apartments at a particular location with certain amenities. Ironically, the brochure issued by the builder normally mentions in fine print that the plans may be changed at any time without reference to the buyer. A builder then enters into an agreement for sale with the prospective buyer specifying the stage-wise payment, correlated to the progress of the work. There are several other terms and conditions in the agreement which mean that any failure by the buyer would attract penal interest and even cancellation of the agreement, while the builder can get away with murder without even being obliged to say sorry, though that by itself would mean nothing.

    In fact, a buyer has to sign with a builder one of the most one-sided commercial agreements one can come across in the world of business. It contains elaborate conditions that would enable the builder to get away with any defect in construction or delay in possession—that has to be suffered by the buyer.

    Nobody denies that an aggrieved buyer can always take recourse to legal action, but are we not aware of the inordinate delays in seeking justice from the courts? Such delays invariably work in favour of the defaulters. In the few cases that have managed to reach conclusion, courts have rarely imposed exemplary costs on builders; imprisonment is not even considered. In such a scenario, why should a builder bother about the buyer from whom, in any case, he collects almost 95% of the total consideration much before the building is completed?

    It is a fact that the relation between a buyer and a builder is totally unequal and one-sided in favour of the builder. The situation demands that the government should protect the interest of buyers not only by making strong laws, but also by making any breach by a builder liable to serious punishment. Defaulting builders should be made to pay heavy costs and, in case of failure to give possession within a reasonable time, they should be made to pay replacement cost that would enable buyers to purchase a flat at the prevailing price in the same locality. Any failure in this regard should be treated as a criminal offence entailing severe punishment, including imprisonment.

    Unless government wakes up to the virtual fraud being committed by a large number of builders, lakhs of buyers will continue to suffer and be cheated by builders.



    Real Estate: When builders don't deliver - Moneylife Personal Finance site and magazine




    Great idea.

    I also want government should put limit for number of houses for one person.

    Not more than 2 house should be allowed to one person.

    Why government is not putting limit?

    Every transaction in real estate should be track by UID.

    Tracking mechanism should be very strong.

    I don't know why have they stopped UID?

    It was great mechanism to stop corruption and black money.
    CommentQuote
  • UID has not been stopped. A good amount of fund has been allocated to Aadhaar this fiscal year. Also, not many would know, when implemented completely in all transactions, it would have asset information for complete family as well. This would help identify people who divert their black money earnings and book properties on their family members name.
    CommentQuote
  • Official date of possession of 'The View - Sector 37D' by Ramprastha Builders was Aug 2012. Ramprastha is delivering project after a long delay of 5 years and they are showing smartness by changing additional things unaware to buyers, increasing area and not paying delay compensation in the name of one sided Agreement. My General Question related to all such builders of NCR is "Any government body is responsible for monitoring by their own for such duping or open fraud ? "
    CommentQuote
  • Originally Posted by Designer
    Official date of possession of 'The View - Sector 37D' by Ramprastha Builders was Aug 2012. Ramprastha is delivering project after a long delay of 5 years and they are showing smartness by changing additional things unaware to buyers, increasing area and not paying delay compensation in the name of one sided Agreement. My General Question related to all such builders of NCR is "Any government body is responsible for monitoring by their own for such duping or open fraud ? "


    They couldn't even pass the original RERA bill, the government played into hands of greedy builders and diluted it so much that it's of no use to buyers, and that to after so much delay, must be busy negotiating the bounty!.

    Only hollow talks from the government (worse of the kind)!!
    CommentQuote
  • Yogi Adityanath atleast showing some leadership in this regard in Noida!
    CommentQuote