Purchase of Property & precautions - A guide to buyers awareness.

purefriendship
purefriendship / 4 yrs ago /
  14

My dear friends, It has become a dream for a common public to own an independant house these days as the real estate prices, construction cost, raw materials cost, plan approval problems, labour charges, borrowed funds costing so dear and the dubious records of a clear title haunting many.

Hence people prefer to go to the real estate builders & choose a flat of their choice according to the budget. Here again there are manyscrupulous builders taking ride of the buyers by indirect charges, at times fake registration titles and many untold sufferings till they are able to take possession of the flats.

It is better to trust reliable builders whose record of constructions, workmanship, cost effective and durability.

Many times we are being cheated / over charged due to unforeseen legal liabilities, ratio of black - white transactions, construction delay, poor infrastructures, hidden charges etc.,

It is always preferable to focus our attention before getting in to a deal by verification of the land records, legal clearances, (Whether the plot on which the building stands is non-agricultural(N/A) and has a clear title.), Whether the building is in the name of the builder, Whether a co-operative housing society has been formed and if yes whether the conveyance of the plot and building in favour of the society has been completed by the builder, The current rate (Rs./sq. foot) of the area, Whether the rate offered to us matches with the area rate and the basis - built up or super built up. Check what is included in "super built up", What amenities is the builder offering, The ratio of white:black amount. Ensure that the "white" amount is in keeping with the official declared rate for the area for the purpose of paying stamp duty (The amount of stamp duty to be paid. Without paying the stamp duty, the flat is not legally ours), The quality of construction, to ensure that the layout/development has been approved by the Development Authority, Most importantly ensure that all documents are legal.

It is better that we Don't pay up builder bulk amount in advance. Stagger the payment, and make final payment while occupying the house. This way we can reduce the risk to a great extend. Banks do due diligence before giving away a loan, but, in case there is a problem, they don't take the risk.

When a building is under construction, a builder will normally demand money in installments, in keeping with the completion of each phase of the construction according to the contract we sign with them.

The point of worry for any investor is that in the absence of regulations, developers are breaking rules with impunity and taking customers for granted. This is the single-biggest reason for loss of confidence among customers, be they investors or end users.

Another vital point is that the buyers get entrapped once they sign a 'buyer's agreement'. Developers get this document signed even before construction has commenced.

The agreement papers are unilateral and biased in nature. Buyers are given no exit option — either they sign the agreement or pay a penalty for not signing it. The penalty entails cancellation of the flat and forfeiture of the earnest money deposit (EMD). The EMD is equal to 10 per cent of the cost of the flat that buyers have already paid at the time of booking.

The agreement is couched in such a language that the buyers can not make any representation or object to any of the developer's sins of commission or omission. Since the agreement is a lengthy document, almost all customers sign it without reading it. It would shock the buyer into disbelief if he were to actually read the document and understand its implications.

A large number of consumers are struggling to get refunds from errant developers. In some cases, developers have refunded buyers' money after deducting around 20 per cent to 40 per cent of the initial deposit.

To cite one example of customers' plight, in 2006 Kamlesh Wadhwa, an aged widow, invested Rs 7 lakh to purchase 350 square yards in a township being developed by TDI. Her broker in this transaction was Jyoti Estates. Wadhwa was later shocked to learn that the broker had, with the developer's connivance, inserted his own name as a joint applicant. Later, the developer not only refused to delete the broker's name but also refused to refund the money deposited by her.

Similarly, YK Sharma had invested Rs 6 lakh in 2006 to purchase a 250 square yard plot in a township at Panipat to be developed by TDI. In spite of repeated requests, the developer has not refunded his registration money.

There are several instances where developers have escaped after collecting advance money from home buyers. Criminal cases under economic offence are pending against these developers. Some of the developers against whom cases of non-delivery of projects are pending are NR Build Home, Green Builtech, Seven Heaven, Triveni Builders, AJS Builders, U-Turn Housing, Arun Dev Builders, Nitishree Infrastructure, PSG Builders and Dhampur Alco Tel.

Similarly there are many complaints received by AICES against a Gurgaon based builder who has not even constructed a single brick after taking advance registration money from investors for Faridabad & Gurgoan project. There are many builders whose cases are pending with Economic offence Delhi Police & Haryana Police for non delivery of project and some of the builders are behind the bars and also facing criminal cases.

One must take notice that by blindly signing the buyer's agreement may put us in a disadvantageous position vis- a-vis the developer. Most consumers, do not dig into the fine print of this document and hence end up seeking justice in the courts. It is no wonder, that so many cases are pending in the consumer forum, crime branch and regular courts.

"These developers invariably collect approximately 60 per cent of the cost of the flat from the consumer within the first 11 months of booking. The construction schedule committed to is invariably in excess of three years. They commence construction generally after a year and earn interest on the installments collected from the buyers. When asked for an explanation, developers invariably pass the buck by attributing the delay to delays in receiving government approvals. Nowadays most banks and housing finance companies have linked the disbursal of funds to developers to meeting of construction milestones."

In an environment where the buyer is waiting to trip us up, buyers need to exercise all the caution that they can and take every step after due deliberation.

Here we must appreciate the dedicated efforts of All India Consumer Education Society which is extremely mindful and active in raising all consumer related concerns and issues in order to protect their very basic rights. And AICES will continue to fight on behalf of consumers and it shall continue to take on this self imposed task as an unfinished battle until we see consumers achieve their legitimate and well deserved rightful place in the society.

All India Consumer Education Society is working in the interest of common consumer. It investigated the project matter post information received under RTI Act 2005 from MCD Building Department that the proposed site land use in Industrial/ IT not for Commercial use in MCD records, the spokesperson said that they will deliver this project within three years as promised to our investors and we are not refunding or transferring any money to any investors as there no such policy. Another real estate flagship company  after scrapping their Agra, Chennai, Noida Expressway Grande residential projects has not refunded their deposits in spite of umpteen number of requests. Consumers are facing similar problems with other builders whose list is endless.

It is also necessary that the buyers to opt for loan facilities according to their pay back capacity to avoid unpleasantness. Ensuring the best possible interest rates & EMI can save peace of mind as well as the property.

Subbu

This blog was written in the interests of social awareness & to ensure the buyers awareness before venturing out in to purchase of property.

Courtesy :  Web sources for additional inputs.


Ncragent / / 4 yrs ago
Ncragent

Generally all the people like to live in their own home rather then in rental house. Many times it happens that people who invested in property, have to face many problems because of unlicensed property builders.

So, all should be careful enough before indulging in any property dealing because many times innocent people gets cheated, have to pay extra-amount(hidden at the time of dealing).

At the time of meeting with a dealer, certain things should be ensured such as rate of the plot/flat is right. Loan facilities can be taken from the banks or not?
Agreement should be signed. Etc. For fair property dealing in Delhi/NCR contact at: 0120-4338222.

http://www.ncrdealer.com/


Dr Arun Mehra / / 4 yrs ago
Dr Arun Mehra

This was a useful guide, Subbu ! Thanks !
Regards,
Arun


sridharaa / / 4 yrs ago
sridharaa

Dear Subbuji,

Very informative and full of facts. These things happen in reality and people must take precautions against being duped. But unfortunately most people aren't aware of the procedures and the formalities that need to be completed before buying a house and get trapped with their EMD. its high time that awareness is built around this.
Cheers


Krishnan Bala / / 4 yrs ago
Krishnan Bala

Dear Subbu,
I am happy to see you furnishing useful information in relation to real estate deals.

I just want to mention four points that have come to my notice recently:

1. The promoters have included a clause for compensatory monthly payment to off-set the inconvenience/loss incurred by the customer when the flat is not handed over as per the dead line incorporated in the original buyers' agreement subject to the buyers paying all the scheduled instalments on the prescribed dates. Due to recession that the promoter did not fore-see and their being not enough buyers at the inflated price, the promoters slow down the pace of construction and elongate the instalments by proportionate reduction of EMIs. Though no additional expense is incurred by the buyer in the total amount payable to the promoter, his repayment of the capital component commences to the banker (in case of loan) much before the house is taken possession.This is a legal loop hole that the promoters have devised while they penalise the buyer for delayed payment of instalments at the rate 2 % per month !

2. The bankers, as per the agreement while granting a loan stipulate payment of Pre-EMIs only which is a small component till the possession of the property, but start demanding repayment of capital and interest (actual EMIs) at the end of 18 months from the date of sanction of the loan to the astonishment of the loanee ! Hence any delay in the date of completion of a project impacts the buyer at both ends !

3. In the case of NRIs availing a bank loan (even a fraction of the total cost) the Indian banks do not accept indian rupees and insist on Dollar payment routed through their franchisee over-seas ! If NRIs are under the impression that they can rent the flat on completion and repay the loan amount, they will be sadly mistaken as the indian rupee transaction is not valid !

4. The state was collecting service tax from the builder(which was added to the customer's instalment) till august last year when it was held to be illegal by the Karnataka High Court and this amount is substantial and held by the state without any sign of repayment.Buyers should be wary of these devices employed !


purefriendship / / 4 yrs ago
purefriendship

Latest Round up from Central Chronical...An Infrastructure Company named Distinct Infrastructure Ltd cheated Customers who invested their lakhs of rupees for making the dream of owning residence. Customers claimed that its Managing Director, Ramakant Vijayvargiya and Directors Archana Vijayvargiya, Gope Naini and Shahzad Khan fraud them by making fake assurance to allot a plot.

In this context customers cum victims, organised a press conference today in which, KL Malviya, one of the customer leading the conference, said that office of the aforesaid company is situated at DIL (116,117,118) in Airport road, Bhopal and 21/1 DM towers, Race course Indore.

Company signed an agreement with nearly 247 customers in the name of allotting fully residential plot namely Panchwati Enclave and stated that within 3 years the plot will be registered in the name of customers in which the company accumulated nearly 40 crores rupees within 2005-08. But the company did not develop the plot neither did register any of the plots. The company supervisors Anil Nayar, Suresh Vijayvargiya, Santosh Somani and Shabbir Ansari when approached, assured of registering the plot soon but to no avail. 

Seeing the delay in registration, some of the customers asked for the refund as per the contract agreement, they were given cheques, which after depositing in the bank, get bounced, he added.

Malviya further said that when we went to the Nazul office for getting the information we were told that some of the Plots are already in the name of someother persons and some are govt. owned. In the meantime we contacted Company's MD and Directors but no one was present in the office and even on phone. The office was demolished and the land sold by the company.

We (victims) had been urging Chief Minster, and various letters have been send to police dept after which an FIR been lodged at Kohediza Police Station, but nothing could be achieved by the police as such, he added.

M.S.Parihar, P.N.Dubey and many victims were present in the conference.

Let the investors beware of fraudsters in real estate business.

subbu


purefriendship / / 4 yrs ago
purefriendship

Thanks to our Smita di for the kind visit, observations and feed backs.

We must be cautious while disposing / purchasing any property...be it a new one or a second hand house.We should not regret after investing our hard earned money while making purchases.





Owing a house is a dream of every person and is very important in one’s life. However, we need to be careful while buying any kind of property, so that we may not fell into any legal trouble. Before purchasing land, we need to verify that whether the land has a marketable title or not.

The legal status of the land we are planning to buy is the foremost thing that we should consider before taking any further step.

Make sure that the land is in the name of the person selling us that property and he also possess the right of selling that property without the consent of any other person.

Get the original deed checked by the lawyer for legal confirmation.

We can also ask for the previous deeds of the land for our verification.

Before registering ensure that we get release certificate from all the other persons owning that land in partnership.

Do not forget to take a sales deed from the seller for conveying the property to the purchaser. With this document we can ascertain that the property we are buying doesn’t belong to any society, builder, development authority etc.

Before making final payment make sure that the previous owner has cleared all dues like property tax, electricity bills, water bills etc. and there is no outstanding payment. Make enquiry in government and municipal offices for assuring that all the tax receipts and bills are duly paid.

There are chances that the land we are buying is mortgaged to the bank in lieu of any loan. Ensure that the seller has paid back all his loans and also ask for releasing certificate from that bank, which is required for releasing the land against all the debts.

We advise every one to measure the land before making registry in their name. We can also take the help of reliable and authorized surveyor for measuring the land accurately. Survey sketch of the land can also be taken from the survey department for comparing its accuracy.

Once we settle down all the financial and legal matters with the other party, then it’s the right time to give an advance payment or write an agreement. With this we ensure that the owner does not change his previous commitment regarding the cost of the property and also doesn’t sell that property to someone else for more money. Write the agreement on Rs.50 stamp paper that should state the actual amount, advance given, time span within which the actual sale will take place and also how to proceed in situation of any default from both the parties. It’s better to take the services of lawyer and both the parties should sign the agreement with two witnesses. In case of any default made by any of the parties, the legal action can be taken.

Registration is the proof of the transaction that has taken place between the two parties. Register the agreement with the Sub-Registrar of Assurance under the provisions of the Indian Registration Act, 1908 within four months from the date of execution of the document. Ensure that the details mentioned by us in the agreement are true. All the previous deeds, house tax receipts, original title deeds, etc. along with two witnesses are required at the time of registration. Make sure that we register the deed within the time frame mentioned in the agreement.

Make sure that we address these obligations before making any confirmation about the property. Following these steps will not only assure that the land we are investing in is in good shape as well as officially ours but also restricts the chances of any kind of legal chaos in future.

Ensure that the rates of the house are in accordance with the market value.



If you are a stranger to the place where you have planned to buy your house, conduct a casual search of the neighboring properties. Consult your friends and ask for referrals.

Ensure that the construction of the property is done in compliance with the property laws provided by the government. Also, make sure that you have a No objection Certificate issued by the concerned authorities...

Subbu





atims / / 4 yrs ago
atims

very informative, and useful for me at a time when I am house hunting..

Could you give us some do-s and don't-s about resale flats as well?

Smita


purefriendship / / 4 yrs ago
purefriendship

Our dear Ghazala di,

Thanks for the kind observations and feed backs. Here are few tips from the experts on real estate business:

Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, Previous deeds, Property/House Tax receipts, Future Plan (optional) etc plus two witnesses are needed for registering the property- Nitin Saxena

Measuring the land

It is advisable to measure the land before registering the land in your name. Ensure that the measurements of the plot and its borders are accurate. You can do this with the help of a recognized surveyor. This will avoid a lots of problems in the future. You could also take the Survey Sketch of the land from the Survey Department and compare for accuracy. 

More than one owner

In some cases, the land will be owned by more than one people. So before registering, check if there is more than one owner, and if there is, get release certificate from the other people involved. 

Buying land from NRI land owners

A person staying abroad can also sell his land in India by giving a Power of Attorney to a third person authorising him the right to sell the land on his behalf. But in such cases, the power of attorney should be witnessed and duly signed by an officer in the Indian embassy in his province. There is no legal support for Power of attorney signed by a notary public. 

Agreement

Once all the matters, financial/otherwise are settled between the parties, it is better to give an advance and write an agreement. This ensures that the owner does not change his word regarding the cost as well as make a sale to someone else who offers more money. The agreement should be written in 50 Rs stamp paper. The agreement should state the actual cost, the advance amount, the time span within which the actual sale should take place and how to proceed in case of any default from either parties, to cover the loss. The agreement can be prepared by a lawyer and should be signed by both the parties and two witnesses. After signing the agreement if one of the parties make a default, the other party can take legal action against him. 

Registration 

The land can be registered in a sub registrar office, after preparing the title deed including all the relevant information. You could get the title deed written by a government licensed Document writer. Even lawyers can prepare the deed, but the document can only be computer printed or typed, not handwritten. Handwritten documents can be prepared by only those who hold the scribe license.

A draft should be prepared before actually writing the document in stamp paper. Make sure all the details mentioned are accurate. If there is incorrectness in the document after registering, a secondary document with the correct details has to be registered and depending on the incorrectness, the registration expenses will be repeated.

Make sure that the deed is registered within the time limit mentioned in the agreement. Original title deed, Previous deeds, Property/House Tax receipts, Future Plan (optional) etc plus two witnesses are needed for registering the property. Future plan is a detailed plan of the property prepared by a licensed Surveyor which will have accurate details of the measurements including width, length, borders etc. This plan is needed only in some specific areas. For land costing more than five lakhs, the seller should submit either his Pan card or Form Number 16 during registration.

The expenses involved during registration include Stamp Duty, registration fees, Document writers/ lawyers fees etc. The stamp duty will depend on the cost of the property and varies from Municipality to Corporation to Panchayat. In Panchayat the stamp duty will be 4% of the cost of the land whereas in Municipality it is 5% and in Corporation 6%. Two percentage will be charged as the registration fees. Document writers fees also depend on the cost of the property and varies with individuals. There is a percentage prescribed by the government as Document writers fee and they cannot charge more than the prescribed limit.

After registration, the registered document will be received after 1-2 weeks, from the registrar office. 

Changing the title in Village office: 

The whole legal procedure of buying the property will be complete only if the new owners name is added in the village office records. An application can be made along with the copy of the registered deed to the Village office to get this done.

Subbu


purefriendship / / 4 yrs ago
purefriendship

Thank you our dear Smt.Sujatha Karthikeyan for the kind observations and encouraging gestures. Glad to note the purpose of the blog reached the readers thoughts.

Here is an example of how the investors in real estate being duped by the real estate firm at Delhi....Real estate firm leaves consumers in lurch

reported by Karn Pratap Singh | New Delhi...A Delhi-based real estate company, which had offered allotment of flats to investors at Shirdi in Maharashtra at cheap rates, has left consumers in lurch. The company had swindled over Rs 1 crore in this exercise. Police sources said Asian Developers Private Ltd, a real estate firm at New Friends' Colony in southeast Delhi, had sought Rs 1 lakh as initial deposit for getting a flat.

The police have received more than 50 complaints stating that the firm was neither providing them possession of the flat nor refunding the money.

On the basis of the complaints, New Friends' Colony police have registered a case under Section 420 (cheating and dishonestly inducing delivery of property) and Section 406 (breach of trust) of Indian Penal Code against the managing director and director of the real estate firm.

Police sources said the matter came to light after they received over 50 complaints against Raj Kumar Malhotra, the managing director of the company, and Saurav Jain, the director. "Till date we have received complaints from 52 investors who are mainly from Delhi and NCR. We have registered a case and investigating the matter. The way victims are approaching us indicates that the builders have cheated over hundreds of people," said a senior police official.

As per the FIR (No-22/2010) registered on the complaint of Dharmendra Kumar, president of Shree Sai Sewa Samiti, the firm had launched the scheme in 2007.

"Kumar had booked one flat measuring 580 sq-ft with the firm and deposited a sum of Rs 1.1 lakh through a cheque (No: 112111) on November 1, 2009. The company had promised to give the possession within nine months. The company had even promised that they will refund the invested money with an interest of 18 per cent per annum, if it failed to keep its promise. The company had published all the terms and conditions of the deal in newspapers," said the senior official.

The investors got wind of the fraud when they encountered the company on the location of proposed flats in Shirdi.

"When Kumar made an enquiry about the scheme of the company, he learnt that the company is not going to provide any flat as it has not got a licence to building or allotting the flat in the said area. It was also learnt that the company has no licence from the Government and thus they cannot build a flat or allot the same to an investor. Subsequently, Kumar contacted the managing director and director of the firm and mounted pressure to refund the money. After repeated requests, the company issued him a post-dated cheque but it bounced. He again contacted the company and was told to deposit the cheque again, however, it bounced again," the senior official added.

On smelling rat, Kumar started visiting the office of the firm to get back his money. Instead of refunding the money, the company threatened him and his family with dire consequences. Left with no option, he lodged a complaint against the managing director and director of the company.

The senior official said that they are verifying the claims of the complaints and looking into the matter. Asian Developers Private Ltd. is located near Community Centre in New Friends' Colony.


This is only a sample of how the investors can be duped.

subbu


Asirthomas / / 4 yrs ago
Asirthomas

Dear Subbu Sir,

In your Avatar of blogs, this time you popped up as a Real Estate adviser to the public. This field is one of the worst hit fields of the society where top cheaters mint more money by thrashing innocents in the name REEL estate. Please read here after in any genuine field of the nation the exact spelling of Real is Reel. Like real doctor- reel doctor,real medicine-reel medicine, real politician-reel politician, real pastor-reel paster and thus list goes on.So I Reelly speak, just replace A into E.

Reading of your writing took me for horrific remembrance of my past pathetic conditions under Reel estate demons.

The uniform of the real estate brokers resemble with political peers. The gold chains around their neck and a large pendant of Amma or Ayya and a Ring of their political leader covering all the five fingers will kindle our " would be thought" of "An Alien of Mars or Jupiter". They decide the price of land. Their professionalism can convert plots of a sleepy village into bustling city.

Some pastors of few religion prove that they are REEL in both spiritual activity and real estate. I found a widow shedding tears in the name of Lord in a live Tv telecast show, saying one pastor cheated me for an allotment of plot of Paradise Nagar by huge amount of my hard earned money.( To her it is, Paradise Lost ) So all social evils and ills are spreading in the name of real estate.

Although I am a Proud owner of a house in the capital city of Tamilnadu, my conscience would mock me Not a proud owner but a Raped owner of a house. The cheating remind me ever the entire episodes of Ramayanam and Mahabharatham from the very moment of purchase of plot and construction of the building. Every where I feel "being exploited". An English Saying "When rape is inevitable, Enjoy it", had been moral supporter of me in becoming a proud owner of a house.

All of your blogs are REALLY touching the fabric of common man's toils and tears. Sir I swear, I am Really speaking

Wishing you all the best with your e-going.............(e-awareness). I wonder a dedicated blogger even in the hectic schedules of domestic activities.....

Thomas



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