Any builder developing a real estate project takes land from the city authority on lease or buys the land from it through an auction. In both cases, the developer has to make payments for the land, usually in instalments, to the authority over a period of one-three years. In case a developer fails to make this payment, the authority does not issue the completion certificate. This certificate is issued only after the project is completed and the payment made to the authority. If the developer makes part payment, the authority sometimes issues the certificate for a part of the project.
What is significant for you is that without the completion certificate, you will not get possession of the flat you may have booked in the builder’s project.
A number of projects got delayed in the past few years. Hit by recession, many developers in the National Capital Region were not able to pay to the authority for the land they bought for projects; neither were they able to continue construction. Several buyers got stuck with delayed projects. Some were shifted to other projects or asked to stay invested and continue paying instalments.
While a significant amount of the developer’s revenue comes from sales and bookings of under-construction units, sometimes it also takes loans from banks to finance construction and pay for the land. Often developers sell a portion of the project to a private equity firm to get the construction financed.
What’s your recourse
There’s little you can do apart from going to the civil court, which may take several years before giving a judgement, unless you are lucky. There is no clear regulation to sort out such cases.
If you happen to be stuck in an under-construction project, you can claim compensation or refund of your invested money by filing a case in the civil court.
If the project is complete and the developer has not paid to the authority or the bank, you can even claim possession of your property by filing an appeal in the civil court. Here, you will be required to inform the authority, too, while taking the matter to court.
In the absence of specific regulation, the best policy is to ask relevant questions before choosing a builder. Usually, finding out details about listed companies is not difficult. Among other developers, the key is to look at the company’s track record in terms of delivery and financial stability.