Today the real estate industry is one most flourishing industry in India. The demand for residential and commercial property is increasing constantly and so is the number of builders and developers who offer special features to attract prospective buyers. A very important role is played by builders and developers in the redevelopment of housing societies.
The increase in the demand and the offered promises does not ensure that the promises will fulfilled on time. Non delivery of possession on time is one of the major areas of conflict between the developers and the buyers. There are numerous cases where builders have taken more than the required time to finish projects while leaving home buyers to suffer financial loss. Late government approvals, getting the completion certificate, delay in getting raw material, cement and steel procurement, manpower delay etc are some of the major factors that contribute to the delay caused in handling over the possession to the buyers. Whatsoever be the reason, the delay in completion of the project affects the overall budget of a developer and has a direct impact on the buyer. If the buyer has secured a home loan for the flat, its repayment schedule is treated as pre-EMI till the buyer gets the property's possession. A buyer is entitled to tax rebate under sections 24 (b) and 80 (c) of the Income-Tax Act 1961 only after securing possession of the property and thus commencement of EMI. Till then, he gets no tax relief on the pre-EMI. Thus, the buyer has to pay the EMIs of the bank and also the rent for his current residence. The financial loss and mental agony that the buyer has to face cannot be compensated except by giving him the physical possession of his house.
Besides the late delivery of the possession a number of other malpractices are complained against the builders. Deficiency in service, improper amenities, ceiling leakage, improper drainage system, incomplete fire safety system, low quality of electrical wiring, improper water provisions, not providing the occupation certificate, etc are some of the major complaints against the builders.
Insertion of a penalty clause which is biased in their favour is also one of the unfair practices committed by the builders. In most of the cases, the agreement contains a penalty clause in which the buyer is charged a penalty @ 18% for delayed payments in the purchase of a flat, when the builder delays the delivery of the same flat, the rate at which the builder pays is only about @ 1 -2 % showing an unfairly loaded contract.