Delayed Projects: What Is The Next Step?

“I booked a flat in a project of a well-known builder. The possession was expected in 2013. And now it is the end of 2014 and it's nowhere close to getting ready. I had made many plans keeping in mind that I will shift to this new flat with my family soon. But now all those plans have become meaningless.”

We get to hear many such stories regarding delays in construction of projects in India. Developers usually include a grace period of 6 months in the agreement but many times the delay extends much longer than the expected tenure. The track record of such project delays is worse in Mumbai, Chennai and Delhi/NCR. Though the regulations and penalties for delays are explicitly mentioned, the lopsided and tweaked agreements take the deal in favor of the developer. There are many reasons why a project may be delayed like mismanagement of cash flow, unrealistic expansion plans and selling of property even before obtaining the license.

As a buyer, you need to be very careful before booking a home in a particular project. Check the track record of the builder for delays in the previous projects. Also, ask for the construction schedule.

But if you have fallen into this delay trap, here is a guide to help you take the next step:

1- If the project delay has been extended longer than the period mentioned in the agreement, you can file a consumer complaint or a civil suit against the builder asking him to refund the amount paid, plus the interest thereon. The percentage of interest varies from place to place. It can range from 9 to 18 percent. For example, in Maharashtra the builder has to refund the amount received along with 9 percent simple interest. Also, you can claim refund only if you have a valid proof of the amount paid to the builder.

2- Sometimes, when a builder has a dominant position in the market, he takes undue advantage of it and takes actions to the detriment of the buyer. He keeps delaying the project and also extorts hefty amounts from the buyer as hidden charges. He also tries to settle the matter forcefully. In such cases, the buyer can file a civil suit against the builder.

One such case was against DLF Limited for delay in its Capital Greens project. The buyers formed the Capital Greens Flat Buyers' Association and filed a complaint with the Competition Commission of India. They contended that the project was expected to be completed in 2012 but the builder couldn't offer possessions to the owners, even in 2014. Also, taking undue advantage of its dominant position, the builder added extra floors to the towers without the buyer's consent. The Supreme Court ordered the builder to deposit Rs 630 crore as penalty.

3- As a buyer, you should also be aware of your responsibilities. Learn about the building by-laws in the area— i.e. whether the height, setback or side setback of the building is in violation of the law. If yes, it is very likely that the possession will be postponed for long.

4- If the building is under-construction, a buyer should ask for the construction schedule, project plan and approval of the drawings. You should also make sure that the building is not erected on a disputed land.

5- You are not alone if you suffer from a project delay. Try getting in touch with other buyers and form a local action group. Having common interests, all the buyers can undertake useful measures and this can go a long way in getting these issues resolved.

6- If you do not want to get involved into these matters, you can purchase the property through an attorney. You can also engage a lawyer to deal with the delay. A lawyer will help you get a better insight of the issue.

For the benefit of the buyers, Confederation of Real Estate Developers' Associations of India (CREDAI) has urged the developers of NCR to complete their ongoing projects before launching new ones. It is a good move for making the developers accountable for their actions. The Real Estate Regulatory Bill also highlights the importance of a project's timely delivery and has proposed to offer 100 refund to the buyers from the builder, in case of a long delay. Buyers need to be aware of their own rights and responsibilities to save themselves from being exploited by the developers.

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