Most people will be spending money to buy a house. But if the developer doesn’t deliver an apartment within the promised time period, the dream of owning a home can quickly become a long-term legal and financial battle.
The recent National Company Law Appellate Tribunal (NCLAT) decision regarding the slow progress of Supertech projects has again brought the issue of delayed housing projects into focus. Supertech is only a single example of this. There are many small real estate projects that are still under construction in India, and thousands of homebuyers have been waiting for months or even years to get their house after paying a large amount (or in some cases the whole amount) for their apartments.
So, what can an aggrieved homebuyer do when a builder fails to deliver a property on time?
Venket Rao, founder of Intygrat and former legal adviser to UPRERA, describes the rights and steps homebuyers should take when experiencing possession delays.
Homebuyers Can Claim Compensation for Delay
As Rao explains, a homebuyer who chooses to proceed with a delayed project is generally entitled to compensation for the delay, according to the law and facts of the case.
If there is any delay— whether it’s one day or one year— the allottee is always entitled to compensation for delay if he wants to continue in the project. It’s also known as delay possession interest. It is an established right that the allottee has,” Rao says.
This compensation is known as delay possession interest. A buyer who is adversely affected by delayed possession can then seek the assistance of RERA (Real Estate Regulatory Authority).
And as Rao notes, buyers may go to the consumer forum, depending on the circumstances and relief they are seeking.
Keep All Property Documents Ready
Before filing a complaint, homebuyers need to collect and organise all documents associated with the transaction.
The complaint should state clearly the situation, including what the developer promised, the agreed possession date and the circumstances of the delay.
Important documents may include the builder-buyer agreement, payment records and details of the promised delivery date.
Rao advises buyers to ensure that the complaint and formal communications are drafted carefully, preferably with the assistance of a qualified legal professional. An individual has the right to appear in person and argue their own case; however, property disputes can involve complicated legal and contractual issues, so lawyers are useful.
Can a Homebuyer Ask for a Refund?
Homebuyers with long delays may also have another option - withdraw from the project and ask for a refund, subject to the legal framework and circumstances.
Rao describes the buyer's choice between continuing with the project and seeking a refund as an important right. If a buyer decides to withdraw, the decision should be communicated to the developer formally.
The compensation or interest payable in such cases depends on the applicable law, regulatory provisions, and judicial decisions. Rao also refers to Supreme Court jurisprudence on delayed real estate projects, including the Kolkata West project.
In several cases, interest calculations have been linked to the lending benchmarks, and MCLR plus an applicable markup is used in relevant circumstances. However, the exact amount payable can vary depending on the project, agreement, applicable RERA rules and the facts of the individual case.
RERA has made some progress in transparency, but implementation is still in question.
Rao believes that the introduction of RERA has brought about a greater level of transparency in India's real estate sector, which has been historically seen as opaque and poorly regulated.
The legislation has given homebuyers a formal means to complain to developers about the system and seek relief. But the effectiveness of the system also depends on the execution and enforcement of orders.
Rao believes enforcement of RERA orders is still an area that needs more attention. He believes that better implementation and accountability at the execution level are needed to ensure homebuyers actually get relief.
He believes that the framework may need further amendments to address practical concerns that have arisen since RERA came into force.
What Should a Homebuyer Do When Possession Is Delayed?
When a buyer is waiting for possession, the first thing they should do is document the whole transaction and establish the promised possession timeline.
A homebuyer should:
- Check the builder-buyer agreement and promised possession date.
- Keep records of all payment receipts and transaction records in your possession file.
- Keep in contact with the developer about the delay in the project.
- Determine if they want to continue with the project or to seek an exit and refund.
- Consider contacting the RERA authority for relief.
- When the dispute involves complex contractual or regulatory issues, seek professional legal advice from a lawyer.
Delayed possession can cause huge financial and emotional stress, especially when buyers are also paying rent, home loans, home-loan EMIs, or other costs at the same time. RERA has strengthened the legal framework for protecting homebuyers, but enforcement is still needed to protect them.
As a result, the rights of millions of affected buyers will be recognized, and action will be taken at an early stage to resolve a long-standing dispute with a developer.
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