Monday, July 22, 2013

Era Threatens Consumers to withdraw cases or face cancellation

Below is transcript of a consumer of Era Divine Court Faridabad. The reality is the moment the Home Buyer gets information of the deliberate fraud of the company that he has booked into, the company, irrespective of it's land bank or its reputation in the industry, feels important to initiate action that would ensure compliance to its rules or else it would use the last weapon to terrorize the buyer by sounding the Cancellation threat. Please care to go through the below mentioned para's which evidently prove the intention of the company which called the consumer to settle the dispute and when it saw the consumer is not budging..they used the old weapon of cancellation to guarantee compliance..  God save the consumers.. they have nowhere ..they have no one to support... its a fight of an individual, sadly and remain so unless every consumer gets involved..  

Today i had a meeting with Neeraj Kulshrestha at Noida Office , at 10:00 AM,.
There he raised the issue that what do i want,?
I told him that you dont have License, Land, you are not constructing the project deliberately & you are not responding to our genuine concerns regarding Legalized possession, Penalty,You are sending Cancellation letters to buyers,and threatening them to pay EEDC which has been stayed by the Court. 

He told that we have done agreement with the Licensee, and taken the rights to Construct,Market &sell the project and that is legal thing. I told him that the Haryana Development & regulation of urban areas act 1975 , which is the law that governs this business does not allow this activity. i told him that you are not recognized by the govt. , yet you are asking us to pay the EEDC , by showing the Government Notification. 

He ultimately told that if you have so many doubts than why dont you exit.He even told me that he will not take transfer charges for my unit, if i want to exit. I told him that i have given you money to buy a home, and after investing my Time of two yrs, now you are saying that i exit, even if i exit than i will not get the returns which other projects in neighbourhood are giving. because the image of the company has been spoiled in the market due to your activity in all  projects of your company.

He Told me that if you want to stay in this project , than i can assure you that i will get a fully legalized end product, and what else you want,

I told him about penalty, because of the fact that you are giving various reasons for the delay in development,No body knows what will happen in future also, and if you take your time in building the project than, as per the Builder buyer agreement you should pay me the Penalty Monthly. He told that he cannot pay the penalty in monthly form, but told me that he will pay the penalty at the time of possession. I asked him at what interest will you give me that penalty at the time of possession, he told me that this he will talk with his seniors and tell me in evening.And also told me that mostly it will be done. Also he told that he will send me a email in the evening, Where by he will give in writing that:-

1 How will they give legalized possession?
2 . At what rate of interest he will give me the penalty, at the time of possession.
3. Tentative date of possession.

After this assurance by him, i told him that i will examine your proposal and than i will decide.

And Meeting was over.

In evening I got a Call from Neeraj Kulshrestha , that he will not be able to give anything in writing, and he asked me to believe in his words. I  told him that , in the morning you told me that you will give everything in writing and in the evening you are saying the opposite and still you are asking me to believe you about a thing, that will take place, 2-3 yrs from now. May be in the meantime you may leave this company and join some other company, and a new boss, may not even recognize us.Also you are asking me to withdraw the case. than it is only  possible with written promises.on our genuine Demands. We are not asking you any out of the contract, and the demands can be very easily met by your company.

He told me that he cannot give anything in writing, than i told him that than there is no use of the oral promises. 

He threatened me that if i continue with case than he will cancel my flat and send me the refund. and than cut off the phone.
Mr Kashmiri Lal ji who also received the call of Neeraj Kulshrestha where he threatened that he will cancel flats of all buyers who have done Legal case against them.

Sunday, July 21, 2013


In India, different states have their own rules that govern the principle of FAR. FAR is Floor Area Ratio. It is the quotient obtained by dividing the multiple aggregate covered area on all floors and 100 by the area of the plot .
To put it more simply FAR= Total Covered Area on all Floors X 100
                                                                Total Plot Area

In Haryana the FAR for Group Housing Projects is 1.75. That means if a Builder has 20 Acres of land he is allowed to build 20 Acres X 4046.86 X 1.75 = 1,41,640.1 Sq Mtrs. In Noida, till recently the FAR was 1.5, therefore a builder with 20 Acres of land in Noida, could only build 20 Acres X 4046.86 X 1.50 = 1,21,405.80 Sq. Mtrs.  The less Coverage on identical Acreage gives consumers more open spaces and less density of Population.

The advantage of fixing this parameter, as opposed to others such as height, width or length, is that Floor Area correlates well with other considerations relevant to the Zoning Regulations of the state or development authority, such as density of population per acre, total number of dwelling units per acre, total services such as EWS flats, STP, and other community and municipal services. The quantity of these services remain constant for a given floor area ratio, regardless of how the area is distributed horizontally and vertically.It however does not mean that this system does not have flaws. In a country like India where the checks and balances are not properly implemented and Laws are loosely followed, it becomes increasingly difficult to protect the violations, as the interpretation of FAR can easily be skewed and hence not easy to measure as easily as the other traditional methods of design.

In Haryana, there is no definition of the Covered area of a floor, in any of the Acts that govern the Building rules/provisions/regulations in the state. Over and above this flaw, which helps builders create their own interpretation of the Covered Area, there are areas that are not covered under FAR or are FAR free. For Example, the basements for parking plus other services like generator room/Air conditioning plant, the Projections such as Canopy, sunshade, Chhajja, Balcony, or an architrave cantilevered from the face of the wall etc, which all areas further create confusion towards easy calculations of the FAR.

The Definition of Covered Area can only be ascertained from the Bureau of Indian Standards (IS 3861: 2002). Category 4.1 states, " Plinth Area shall be the Built up covered areas measured for the categories mentioned in 3.2 and shall include such area as given in 4.1.1 and exclude the areas given in 4.1.2.". For the Purpose of Plinth Area, following shall be included: (4.1.1)
a) Area of the wall at the floor level excluding plinth offsets, if any; when the building consists of columns projecting beyond cladding, the plinth area shall be taken up to the external face of cladding ( in case of corrugated sheet cladding outer edge of corrugation shall be considered);
Note- In case, a common wall is owned jointly by two owners, only half the area of such walls shall be included in the plinth area of one owner.
b) Shafts for sanitary, water supply installations, garbage chute, telecommunication, electrical, fire-fighting, air-conditioning and lifts;
c) stair case;
d) in case of open veranda with parapets:
 1) 100% areas for the portion protected by the projections above, and
 2) 50% area for the portion unprotected from above.
e) 100% area of the balcony protected by projection above and 50% area of the unprotected balcony; and
f) in case of alcove made cantilevering a slab beyond external wall:
 1) 25% of the area for the alcove of height up to 1 meter,
 2) 50% of the area for the alcove of height more than 1 meter and up to 2 meter, and
 3) 100% of the area for the alcove of height more than 2 meters.

4.1.2. The following shall not be included in the plinth area ( see 2.1):
 a) Area of the loft;
 b) Area of architectural band, cornice, etc;
 c) Area of vertical sun breaker or box louver projecting out and other architectural features, for example slab projection for flower pot etc;
 d) open platform;
 e) Terrace;
 f) Open spiral/ service stair case; and
 g) Area of mumty, machine room, towers, turrets, domes projecting above terrace level

Therefore it is clear that BIS is saying one thing while the Acts that govern FAR, have adopted an ambiguous  and contradictory meaning to the calculation of FAR. Which makes it easy for builders to play around and fool the public of these states with varied forms of floor area calculations. If we see flats constructed in Gurgaon in early 2000, we will find within the FAR of 1.75 the area sold to home buyers is less dense and more open, where as today, though the FAR is unchanged the flats have become smaller and the open spaces have shrunk considerably. Where is the area disappearing when the quotient still remains the same. who is eating up all the area which was previously in plenty??? The answers to these growing concerns are to be found at the office of Director General, Town & Country Planning Haryana or with the CEO Noida Authority or any other authority that is regulating and sanctioning the lay-out plans of the Builders.

We have to remember that land is a very precious asset, like so many other natural resources and therefore it is only natural in a country like ours, where systems fail to deliver; that land owners/builders would leave no stone upturned to maximize their return by selling and constructing areas well above the FAR in connivance with the authorities, who are more then willing to turn a blind eye to this growing menace, for a packet that gets delivered to their accounts in chilly hills of Switzerland.

Friday, July 12, 2013


In the last topic we scrutinized the term "Pre-Launch" and then The Builder Buyer Agreement. In the series to reveal the meaning of various jargon's used in the Indian Real Estate, we would today take a look at the meaning of "SUPER AREA". What is Super Area. Does it have any meaning in the eyes of the law makers, Do Competent Authorities define Super Area, who calculates this Area and for what reason, lastly why there is a need for a term like Super Area??


Before we try to understand any thing about this word, let me assure you that nowhere in the world-any property is sold on Super Area. This is an indigenous phenomena, fabricated by Indian Builders to gain exponentially by selling an area that does not exist. To create confusion they have created a definition that does not find any mention anywhere else in the world but only in our Indian context it has relevance. The definition propagated says that SUPER AREA = COMMON AREA +  BUILD UP/COVERED AREA.

To the RTI filed to Noida Authority, Ghaziabad Development Authority and Directorate Town & Country Planning, Haryana to provide the definition of Super Area. The reply received were similar, "That the department has no such information on Super Area".

That means that the regulatory body which is essentially granting the builders the plans to construct the group housing projects are not even aware of the term Super Area. The Bureau of Indian Standards, the agency which defines the weight, measurement etc of the products in India also does not define the Super Area for buildings. Yes, they have definition for Build-up area, Carpet area etc. So how do we find out the definition for super area.

The fact is that there is no way to find it out. A case investigated in Haryana, where the builder has 28.433 Acres of land, the permissible construction allowed by the DTCP according to the plans passed was 17.70 lakh sq. ft. where as the area charged by the builder to its allottees was 23 lakh Sq. Ft. Amost 5.29 lakh Sq. ft. over and above the prescribed limit. which is almost 30% of the approved area...maybe that is why they call it SUPER AREA as it is neither on the ground nor in the is Nowhere.

Lets see this using another method of calculation, the total land area is 28.433 acres that means it is 115064 Sq. Mtrs. on this land the Builder is constructing almost 1695 flats of two types (Two Bedroom and three bedroom) the total area of which is approx 23 lakh Sq. Ft. which is equal to 2,13,754 Sq. Mtrs. The FAR used by the Builder is only 1.43, so the sanctions of plans for all construction in the said land can only be for 1,64,542 Sq. Mtrs. which means the area over the area of construction sold to the consumers is approx 49,212 Sq. Mtrs or almost 12 acres on a 28.433 Acre land. Wonderful, now please access the amounts he has made selling this additional area, it is a whopping Rs. 71,48,53,512/- only. The total land costed approx Rs. 11 Crore and the total project's construction cost was approx Rs. 141.63 Crore, therefore for a project which costed a total of Rs. 153 Crore the Builder has made half of it just by selling an unknown area. WOW!! Now we know why Businessmen across different industries are wanting to have their own real estate company and why Builders need Super Area....naturally that is why, even the Finance analyst say that Private Real Estate Companies are non-transparent, even they get goose pimples trying to understand their balance sheet, as every thing is skewed.

That is why Super Area exists in India, so that Builders can loot without providing any calculations for this Super Area, knowing pretty well that the Consumer would not be able to find this area in any of the Competent Authorities Books. Sadly it is not the builder alone who enjoys and makes profit on selling this non-existent area its also the Revenue department that gains, as they register the flat on Super Area. The reason prescribed by the Revenue secretary is that they register the flat on the plan submitted by the Builder and as the flat is sold on Super Area it is therefore duly registered on the same.

Stupid Argument. Plots are registered on Actual Size of the plot, why not on super area of the plot. Plots are not registered on the permissible Construable area or the Super Area of the Construction beyond the FAR, as is the case in Group Housing. True that all construction on the plot is in ownership of the landowner, so its easy to register the Area of the plot in one/ two name. But the plot holder also enjoys common areas of the said Plotted Colony, similarly as the buyer of a flat in group Housing. The builder constructs parks, club etc in plotted colony too. But why this area is not included, the Builders say it is not done, as the said consideration of all common Areas is inbuilt in the cost of the Plot on actual size.

Similarly when one buys a flat in a group Housing colony then the Cost of the land, construction other common areas & facilities is inbuilt in the cost of the flat, so why should the builder be allowed to charge the same again for a non existent Area and the Registrar coolly register it. The builder knows all the costs of the plant, Machinery, lifts, sewerage treatment plants, rain water harvesting, water tanks, guard rooms, toilets, EWS, Service Apartment etc that he would build within the group housing, the Cost of which he duly assign's to each flat proportionately to arrive at the cost of the flat in the project. That is how the Per Square Feet is determined. Therefore when all area and its construction is already computed within the cost of the flat, then it is criminal to add some excess non existent areas at BSP rates and justify the same as Super Area.

It is also often seen that at advance stage of Construction the Super Area of the flat is increased by the builder, without any increase of the Acreage of the plot. which also indicates that there is no term as Super Area, as by their own definition the Super Area= Build Up Area + Common Area, so if this is true than with any increase in Build Up Area, the Common Area would in direct proportion decrease, if the land acreage of the said colony does not increase. That means that when builder increases the Super Area of the flat without proportionate increase in the Acreage of the land, he is not considering the effect of decrease in common area. Therefore it is easy to establish that the Super Area is not what the Builder wishes us to believe as the Common Area or Build Up Area do not have any impact on its computation, it is just a lie that has been fed to the citizens of the nation and since has been accepted by our people as preamble.

The Government has to look into this very very diligently and make sure that this loot is stopped immediately. Various RWA's and RTI activists are consistently in touch with the Ministry of Urban Planning & Development to get relevant changes in the prospective legislation's which would ban sales or registry of flats on Super Area. Hope very soon, the desired changes are made and Super Area becomes a non-entity.

Wednesday, July 10, 2013


Dear Friends,

This is in continuation of  understanding the Jargon's used in Real Estate Industry. One of which is the Builder-Buyer Agreement. In essence the Builder Buyer Agreement is a Contract between the Builder to provide services as specified for a consideration and the Buyer for fulfilling his end of the promise to pay for the services rendered by the Builder as promised and accepted by the Buyer. Ideally the Agreement should be made available to the Buyer at the time of booking of the said property but in Haryana this good practice is not adopted by any of the Builders, the main reason for this is that 100% of the times the property on sale is on Pre-Launch, therefore the Builder can not get into any legal contract with its Buyers.This acts to the detriment to the interest of the Buyer, as often, at the time of booking the sales staff of the Builder assures that the said project would be complete within 30 months of 36 months, but when the Builder finally proposes the Agreement to the Buyer, already 1 or 2 years have gone by and thus the dream home remains a distant dream for which the Buyer is compelled to pay extra costs in terms of increased cost of material, Govt. Taxes, enhanced EDC etc.

At the time when the Builder finally proposes the agreement to the Buyer, the Buyers generally do not go through the clauses of the agreement which form the basis not only of the way the transaction between the two parties would be concluded but also which defines the character of the ownership of the Buyers in the said residential colony. Thereby, surrendering all rights and interest in favor of the Builder even before a brick is laid in the project. That is why it is most important to go through the agreement carefully or by taking assistance of a lawyer. A small amount of professional charges of the lawyer would help you save the lakhs of hard earned rupees that you have agreed to pay for availing services from the Builder.

A typical Builder Buyer Agreement Should be one, which safeguards the  interest and title of all the parties to the agreement. It should be balanced and not favoring any one party or putting onus on only one party to comply with terms and conditions and sparing the other from any contractual obligations, it should be equitable, transparent and enforceable by law. Since we are discussing only the Builder Buyer Agreements for properties in Haryana, the Agreement should further be consistent with provisions of the Haryana Apartment Ownership Act, 1983, Haryana Development and Regulations of Urban Areas Act, 1975 and rules framed therein and the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963 and rules framed therein. These Acts provide for all necessary sanctions and
 permissions the Builder needs to construct the group Housing Colony or Plotted Colony. These Acts define the Population Density per acre for each category of urban estate of Haryana, according to which the Builder can present his plan for approval from the Competent Authority, which is the DTCP. The Apartment Ownership Act defines all Common Areas and facilities and the rights and liabilities of the owners of the colony. Therefore the Builder Buyer Agreement should be Consistent with these Acts and Rules that govern the urban development in the state of Haryana.

Most of the Builder Buyer Agreement Prepared and presented by the Builders to the Buyers are Void Contracts as they are heavily loaded in favor of the Builder and against the Buyers. They do not give ownership rights of all the common areas and facilities, they are inconsistent with the prevailing laws and provisions. For example a case where the Builder says that In a group Housing Project the area of the dwelling unit sold is tentative and could increase by 10% or more and for which increase in area the Buyer would be liable to pay at the present BSP or on the Rate in future. This clause in not enforceable by Law. As in Haryana, the maximum a Builder can build over the approved plan is only 5% for group Housing and 10% for plotted colony. Therefore when the Competent Authority does not allow any increase in area beyond 5% then to make the Buyer agree on an increase in area beyond which the law of the land does not sanction is unlawful. The reason why the Builder chooses to put this clause is that at the stage of presenting the Agreement to the Buyers, its plan are still not approved and it fully knows that the size of the apartment it is going to get approved would be more than 10% of the area sold to Buyers 1 or 2 years back. The Builder sold the apartments at a ticket size which would lure middle class people to buy into his project. Once it is all sold and the Builder has collected 25 to 40% (in some cases the Builders before executing the agreement have even taken 50% from the Buyers) it becomes easier for the Builder to dictate its terms which are only aimed at gaining exponentially at the cost of the allottee. Hence such clauses are suppressio veri and the Buyer should be weary to sign the dotted lines, where such clauses are a part of the Agreement.

In most Agreements the terms of payment are also skewed in favor of the Builder. Lets take an example where the Buyers of a project have paid 30% to the Builder before executing the agreement, the rest 65% is demanded by the Builder after executing the agreement therefore binding the Buyer Contractually to pay by the end of internal  or external plastering of the said flat  or by the time of laying of the roof slab. Which means that Builder would pocket 95% payment with respect to the said unit while the work executed by such time would not be even 60% on the project. it is important to understand that the Buyer is being charged at Super Area, therefore it means that when the Buyer has paid 95% of the payment the Builder should have completed 95% of the construction and development work at the site.  Therefore such type of payments plans that help the Builder to amass 95% payment without proportionate work on the site, favor the Builder and are against the interest of the Buyer. The Buyer should insist that the Builder should  have a payment plan that reflects the work done on the whole of the project after all the Buyer is not buying four walls of the apartment but paying for other areas within the project as well. Such a plan would be beneficial not only cause the cost paid by the Buyer is reflecting the true work done on site but also will  help in timely execution of the project with all facilities by the time possession is offered and balance 5% is demanded.

Another Financial Implication could be the Delay Clause. The parties in the contract should be on the same level field. If the consumer delays in fulfilling its part of the contract then he should be charged at the same rate at which the Builder when he defaults in meeting the possession date. It has been observed that generally the industry practice is to charge 18% to 24% for delay in payment by Buyers but when it comes to paying for delay in Possession the Builders agree to pay only Rs. 5 per sq. ft. which is totally one sided and hence should not be agreed by the Buyers.

Often the Builders put the onus on Buyers,of knowing all relevant documents, title deeds,sanction plans etc  of the project. Even when the Builder has never shown them even a single document with regards of any approval or sanction of the project. Buyers should be averse to signing such clauses. These have serious consequences at a later stage when after years the Buyers get to know the plans shown in the Brochure etc were not the plans approved by the Builder but a totally different plan was presented for sanctioning by the authority. Buyers have to realize that purchasing a home is one of the biggest transaction in a persons life, to sign an agreement without going through it thoroughly would result in grave consequences. A person paying lakhs of rupees for the property has every right to get copies of all relevant papers that the Builder is saying in his agreement the Buyer has already satisfied himself with. These papers should be the Land ownership papers of the Builder of the said land on which the project is coming up, the license of the colony to be developed, The LC-IV (A) in case of group Housing projects and LC-IV(B) in case of plotted development, The copies of clearances from the Ministry of environment and forests, Commencement of Construction work BR-III, sanctioned lay-out plan of the colony, etc. These papers are a must for each Buyer to get, even if it means paying an additional Rs. 500/- for a set of copies to the Builder. If the Builder is not providing these then the Buyers should be aware that even while getting the Agreement executed the Builder is willfully deceiving the Buyers.

The list of what should be an Ideal Agreement is long as is the case with any such draft which is usually of about 30 odd pages. So for sake of brevity only a few points have been elaborated upon here which I feel should take care of creating awareness about the subject. One Final aspect of the Agreement should be, an even and equitable exist plan for the Buyer. In most cases the Builders put such clauses where the onus of Builder of not providing the promised facility is shifted on to the Buyer and therefore the Buyer is stuck into paying further installments even if the Buyer wants to withdraw from the scheme as the clause of forfeiture of earnest amount and further clause of Builder cancelling the unit at its own discretion acts as a detriment to allow the Buyer save and secure exit. Therefore it is very important that the Agreement should not allow such clauses which would empower the Builder at the cost of the Buyer and the Buyers either collectively or separately ( with the help of a lawyer) should go through the entire agreement in its completeness and  make all efforts to have only such clauses in it, which put the Buyers at the same level as that of the Builder and enjoy same rights and liabilities so that no clause is prejudicial to either party and both parties rights are protected and the responsibility defined in clearest of manner.

The Haryana Apartment Ownership Act, 1983...

The Haryana Development & Regulations of Urban Areas Act, 1975

The Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963