I take you to a real incident where buying the property had become a nightmare for a family. It was a story of a joint family living in an 85 sq yard house in old Delhi popularly known as Delhi - 6. The joint family has four small families.
Due to increased commercialization of the place and lack of ideal atmosphere, they planned to buy a new house by selling the one in old Delhi in which they were living. So they got the valuation done and agreed to sell the house at 1.90 Crore and simultaneously they agreed to purchase four new flats worth Rs.1.90 Crore in a society which is under construction.
As per the plan, the flats were to be allotted in the month of March. So they also agreed to leave the current house in the month of March itself so that they can directly shift to that new house.
However, March came but not the possession as the flats were still under construction. Finding no other way, they have to leave the existing house and had to go to a separate place on rent of Rs.25,000 per month because their flats were not ready to be possessed. Months passed by, but no response was there from the builder and when they enquire it informally, to their surprise they got the information that the flat will take another 1 year to be ready because construction work was suspended due to lack of funds as the builder was running three different projects.
The four families were not earning much and hence with each passing day it is getting difficult for them to survive and ultimately they have cancelled their agreement and had to sell off their flats before construction at a lower price and bought some cheaper flats in some D grade areas of Delhi.
The above incident does not happen very rare rather they are very often and hence, you must know these 10 points where an imperative to read when you are planning to buy the new house:
#Point No.1 - Each Developer Promoter to be registered: As per the new Real Estate development Act, each promoter shall have to register themselves with the authority of the real estate projects before initiating the project. Hence, before going for investment into the house, first make sure that the society, in which you are buying the flat, must be a registered one.
You can check that on the website of the company because as per law, they have been mandated to supply all information online on their website.
#Point No.2 - Reading the prospectus: You may have read the prospectus of flats many times but this time we will like you to read it with an eagle eye and make sure that prospectus contains the following items:
- The promoters shall at the time of booking make available to the allottees the sanctioned plans, layout plans, along with specifications approved by the competent authority.
- He should also provide the stage wise schedule of completion of the project including the provisions for civic infrastructure like water, sanitation, and electricity etc.
- He shall be responsible for providing and maintaining the essential services, on reasonable charges till the maintenance is taken over by the association.
- He is also responsible for paying all outgoings until he transfers the physical possession of the real estate project to the allottees which he has collected from the allottees.
- Further, the developer/promoter cannot cancel the agreement of sale arbitrary.
#Point No.3 - False Advertisement by promoters: It happens many times that flat you buy on the basis of prospectus eventually very different in the reality. In that case, if a person wants to withdraw from the offer, then he shall be returned his entire investment along with the interest and the compensation as may be calculated.
#Point No.4 - If property is not delivered on time: If the promoter failed to provide the property as agreed in the agreement to sale to the allottees, then he shall be liable to refund (if allottees demands refund) the amount received by him in respect of that apartment, plot, building along with Interest and compensation.
Further, if the allottee does not wish to claim a refund, then the promoter shall pay the interest for every month of delay.
#Point No.5 - Take possession within two months: Once the flats are completed and occupancy certificate is granted, then allottees should take possession within a period of two months from the date of issuance of occupancy certificate.
#Point No.6 - Taxation Benefits: As per the Income Tax act, 1961, if you have invested in a house property then you can claim principle paid on loan as a deduction under section 80C up to Rs.1.50 lakh and further deduction of interest paid up to Rs.2 Lakh under section 24. However, to claim the new exemption under this section, you must e-file your Income tax return (ITR) properly.
#Point No.7 - Choose the Real Estate agent properly: It has been seen that real estate agents are the real culprits who fool the people very often with wrong advice. Hence, the government has also mandated for each real estate agent to get registered and follow the proper guidelines.
Hence, always remember to take the advice of registered agents.
#Point No.8 - No Funding Problem: As per the guidelines, the developers will have to keep at least 50% of the money received from the buyer in a separate bank account and this money shall be used only for the construction purposes.
This has been done to make sure that construction completes on time.
#Point No.9 - Make sure you pay the installment on time: Now, if you failed to fulfill your promises made to the promoter via agreement then you shall be liable to pay interest on the installment and developer/promoter may also file an official complaint against you with the authority.
#Point No.10 - What if promoter/developer don't comply with above terms: In that case, you can make a direct complaint with the real estate authority directly and the authority shall take strict action against the promoter/developer.
About the Author
CA Paras Mehra is a thinker, writer, reader and speaker. He has a sound knowledge of the real estate act and he is also professionally associated with hubco.in, a brand for private company registration and other related services. Connect to him:
Twitter Handle: @IamParasMehra
The author can also be reached at firstname.lastname@example.org