Consumer courts can help in real estate issues too5 min read . Updated: 24 Feb 2011, 10:31 AM IST
Consumer courts can help in real estate issues too
Consumer courts can help in real estate issues too
When a New Delhi-based homebuyer approached a consumer court to file a case against the developer who did not deliver the project on the promised date, she did not know that consumer courts do admit cases involving possession of property or any kind of delay in construction. These cases are taken up by the civil courts. In the above mentioned example, the customer has already paid 95% of the total cost of the property, but is still to get possession. The matter is sub judice.
Like our friend from New Delhi, many homebuyers do not know that such cases do not come under the purview of consumer courts. However, delay in construction is not the only problem that homebuyers face. There are other cases, such as deficiency in services at various points even after possession of flat, where you can seek help of consumer courts. Here’s a list of some such problems in which you can take the developer to the consumer court.
Construction defects and maintenance
There could be variations, from what you were promised, in the final design of the apartment. If you do not get the same design or outlay as mentioned in the advertisements or shown in the sample flat, it is a deficiency in services on the developer’s part.
Even poor construction quality can be the basis of a consumer complaint where you can drag the developer to a consumer court. “For the first year after possession, the builder is liable to take care of damages such as leaks in water pipes or cracks in the walls. If he refuses to do so, you can lodge a complain with the consumer court," says Rajesh Goyal, managing director, RG Group, a New Delhi-based real estate firm.
Also, it is the developer's responsibility to maintain parks, parking spaces, clubs and other such amenities for the first three-five years. However, in case he is not doing the same, you can ask for a refund of the amount that you have already paid at the time of buying the property. If he acts stubborn, you can drag the developer to the consumer court.
The price of the flat can go up, though marginally, during the course of construction. This can happen any time during the construction. If you look at the agreement paper signed with the developer, you will find a rise-and-fall or alteration clause which allows the developer to take a unilateral decision on price change during the course of construction. Though price changes depend on various factors such as demand and supply in the housing sector, home loan rates or prices of raw materials, the clause doesn’t mention the range of price rise. “There is nothing much that you can do about the change if you have signed the builder-buyer agreement," says Snehdeep Agarwal, director, Bhartiya Group, a real estate firm with projects in Bangalore. However, if the developer is not able to justify the reason for a hike in price, you can seek help.
Misuse of common areas
The developer cannot sell the open spaces within the premise for setting shops and offices. Selling of common spaces of the complex may take away the extra space that you have paid for. It has been observed in the past that developers sell common spaces without the permission of the residents welfare association. Even setting up telecommunication towers on the roof of buildings need permission of the residents in writing.
Although the property possession cases are taken up by civil courts, you can approach the consumer court if the developer fails to pay you the delay compensation charges in such cases. Most builder-buyer agreements have a delay-compensation clause. According to this clause, an amount at the rate of, say, Rs5-7 per sq. ft has to be paid to the homebuyer in case the property is not delivered on scheduled date.
The hearing in consumer courts is taken on a fast-track basis. You may get a judgement in a single day if all the necessary documents are in place. If the court finds the developer guilty, it orders a compensation amount that he needs to pay to you. The Consumer Protection Act, 1986, provides a three-tier system of redressal agency—first, at the district level known as the district forum; second, at the state level known as the state commission; and third, at the national level known as the national commission. These forums deal in matters of real estate as well as consumer goods.
“A consumer can file complaint in the district forum of the district concerned where the value of goods, services and compensations, if any, is up to Rs20 lakh. He can approach the state commission for cases involving sums of money between Rs20 lakh and Rs1 crore, and the national commission for more than Rs1 crore," says Sunder Khatri, a Delhi-based lawyer practising in the Supreme Court.
There is provision for appeals against orders of a particular forum by the aggrieved party before the next higher forum/commission and even from the findings of the national commission before the Supreme Court.
How to go about it
Approaching a consumer court is fairly simple. In fact you do not even need a lawyer for filing a case in a consumer court. You can write your problems in a piece of paper and send it to the court through post. In your note, you need to mention the problem and the name of the person who is responsible for the deficiency in service. Says Khatri, “While writing, you should address the particular court and mention the subject in one line at the start of your application. Following this you should mention all the facts of your complaints under section 12 of the Consumer Protection Act."
Most importantly, it is must to mention the compensation amount in terms of money that you want as refund from the developer. However, you need to justify the amount with proper documents, adds Khatri. If you name the developer, the court will summon the same.
The developer may appoint a representative to appear in the court on his behalf.
If your case is an old one, you can ask for an increased amount of compensation based on the fact that property rates have also increased over the period.
However, before you approach the consumer courts, discuss the issue with the developer. In most cases, developers would want to avoid legal battle and would want to solve the matter outside the court.