Buying an under-construction apartment? Keep this in mind.
This article is for all those who are buying under-construction apartments for the purpose of living in it. Based on my bad experience over the past 6 years, I’ve put together some crucial points that will help ensure that your investment is safe and you get what you are promised. Such apartments typically come under a wholesaling homes list, and can come off as shady to an extent.
There has been a trend to “book” an apartment, which a builder would construct over time and deliver to you. Normally, builder promises 36 months as the time required to complete the construction but in most cases, this gets extended. If the delay is minor, you should accept it but if it’s significant, it makes sense to drag the builder to a consumer court. Also, builders make wild promises to lure customers for luxury apartments for rent in but fall short on the delivery. They’ll promises swimming pools, clubhouses with all possible features, green gardens etc. and just hand over a building full of apartments.
You don’t have much choice, almost every builder is the same, seems nice when you’re booking the apartment but will show their true colors when all the apartments are sold. You must remember that such a “booking” does not make you the owner of the apartment till you get a proper registration down with the government. Since the builder retains the rights to cancel the booking at any point of time, it makes sense not to fight with the builder till such time that you take possession of the apartment.
The old concept of “Caveat emptor” – “Let the buyer be aware” has now changed to a situation where the courts, specially the consumer courts in India, take positive action even if the Apartment Buyer Agreement is totally one-sided in favour of the builder. To be on the safe side, however, you need to take certain precautions from the time you decide to book an apartment. These points, followed strictly will ensure that you are protected to a maximum extent.
1. Video record all meetings with sales representatives and safely store for 5 years
When you visit the office of a builder, their sales representatives presents you a fancy layout of project highlighting all the facilities and shows you a sample apartment. Ensure that you video-record every word that they say. Also ensure the video recording shows you and your family mentioning the name of the sales representative. Hold up the day’s newspaper in the video to register the date.
2. Pick up extra copies of all brochures and store them till you get possession.
Courts recognize brochures that highlight features and project delivery dates to be valid documents for the project, in addition to the Apartment Buyer Agreement. If you do decide to book the apartment, keep visiting the builders office every few weeks to pick up their latest brochures till all apartments in the project are sold. You might notice promises are changed in the brochures over time.
3. Ask for specific details of infrastructure being promised.
Swimming pool – What size? How many? Clubhouse – with what facilities? Jogging track- How long? Central Garden – How big?
Try to get all answers in written form, even if it is in email. If builder is not willing to give in writing, here’s a way around – write emails from your side to all involved people about your understanding of features based on discussions. If they want to reject or correct your understanding, they will respond, otherwise you can assume you are correct.
4. Keep copies of ALL newspaper / magazine ads related to the project.
If the builder releases any newspaper or magazine ads, keep the entire newspaper or magazine. This proves that promises were made to the general public, including you.
5. Keep information/brochures/advertisement of related or nearby projects to your location
If other projects, launched around the same time in nearby areas are completed on time or before your, it will help cancel any force majeure clauses in your Apartment Buyer Agreement. It is important to keep track of features, size and prices of nearby projects along with their brochures, advertisements etc.
6. Monitor actual construction from time to time – visit the site and click pictures
This is very helpful later on to nail builder’s lies. It makes sense to just store the pictures in an online blog or Facebook page, so that other buyers can see.
7. Before making any construction-linked payment, visit the site to ensure construction has happened.
Keep track of actual construction, you should be able to answer in which year and month the 5th floor roof of the building was cast. Keep as many pictures as you can, you never know what can help.
8. Write letters to builder from time to time seeking information about the progress of construction.
Ensure that you get written replies. Store as evidence. Also send emails from time to time asking the builder about status of construction and progress of external work such as creating clubhouse etc. Specially write these letter before a payment is due, it’s likely the builder will provide answers when they expect money from you.
9. Join Yahoo / Google / Facebook groups related to the project to interact with other owners.
If you can’t find these groups, set them up. It’s easy to do, let other buyers in the same project join and share with them whatever promises were made to you. If enough buyers join together, try to register a Residents Welfare Association for the project under The Societies Registration Act 1860.
10. Ensure there is clause in agreement that gives you penalty for delay.
While you can’t control this, builders often bend rules for some apartment buyers and add specific clauses in their agreement. Try to get a penalty clause for delay. Penalty for delay should be irrespective of any other clause in agreement. I have been trapped by this oversight wherein the builder wrote that penalty would be paid for a period of 5 months of delay, if the delay was more than that, contract could be canceled. The actual delay was 35 months.
11. If not satisfied, take the builder to court.
If there’s been delay or all promised facilities are not provided, it’s very easy to fight the builder in court. Just hire any lawyer for a consumer court and hand over all documents. It’s not expensive to fight in consumer court; most lawyers take a fixed fee that can be negotiated. Try to find a lawyer who has done a similar case against a builder and won. The decision might take between 2 to 3 years but if you have all the proof, it’s likely the builder will try to settle out of court. If they don’t, let the case take it’s own turn. I’ve seen people recover significant amounts as compensation from builders.