Friday, December 13, 2013

GET UP...STAND UP... GET READY FOR A FIGHT TO RECLAIM OWNERSHIP!!

Dear Friends,
As we all know that the Supreme Court has in a recent judgement given Developer's, the ownership rights of community and commercial facilities, which is going to make life difficult for all apartment owners. The impact on us is devastatingly huge; the real purpose of owning a flat in a township is defeated if all common areas and facilities would be owned by the Developer, who would just pass on usage rights to apartment owners, therefore as an absolute owner, the Developer would for life maintain those areas by charging apartment owners at his whim & fancy.
Both Hindustan Times and TOI have covered this sad story today. I request you to kindly go through it and please come forward to fight for your propriety rights, if we do not stand up now to fight than we might allow the Builders to remain perpetual owners of our land. We should not concede defeat just yet, lets get united and fight to RECLAIM OWNERSHIP...

A BATTLE LOST FOR APARTMENT OWNERS?
The recent Supreme Court judgment giving a developer ownership rights over community and commercial facilities is going to make life difficult for lakhs of apartment owners in Gurgaon
We are of the view that the High Court has committed an error in directing the DTCP to decide the objections of the apartment owners...
- SC ruling
BK Dhawan, a 75- year- old resident of Silver Oaks, Gurgaon, isi a disappointed man today. He has lost a 20-year-old legal battle against real estate developer DLF for residents’ rights over community and commercial facilities within the Silver Oaks complex – a campaign which has all but consumed his finances and energies.
THINKSTOCK
The Supreme Court, in a much-awaited judgment, which may have far-reaching consequences for the real estate sector in Haryana, has held that apartment owners can’t claim undivided interest in community and commercial facilities aas these belong to the developer.
The judgment impacts lakhs oof families living in housing projects in Haryana where ownership over common areas and facilities has remained a bone of contention between developers and apartment owners. The latter also argue that by virtue of being in a dominant position, the developers are likely to misuse and twist the judgment to suit their own needs. “A developero can lease or sell community and commercial facilities such as club, nursery schools, conveniencec shops and community centre in a group housing project to any third party who will run these facilities for making money and who will have no concern for the needs and requirements of the apartment owners. There is also no clarity on what the community and commercial facilities include,” says Dhawan, who bought his Silver Oaks apartment in 1991 and got the possession in 1995 after a two-year delay.
“In 1996, when we came tot know that the developer planned to sell the community and commercial facilities, we decidedd to go to court because we believe these facilities are a part of the common area and meant for the apartment owners. It’s the right of the apartment owners to lease out community and commercial facilities and maintain them by earning money by leasing out the facilities. The Punjab and Haryana High Court had given its verdict in our favour but the apex court has overruled that. It’s a big setback for the flat buyers of Haryana, especially in Gurgaon ,” says Dhawan.
The Silver Oaks Condominium Association (SOCA) and other residents who contested the builders’ ownership claim over community and commercial facilities argued that the real estate regulation acts in Haryana – The Haryana Development and Regulation of Urban Areas Act, 1975, and The Haryana Apartment Ownership Act, 1983 – give apartment owners rights over common areas and facilities, which include everything from corridors, lobbies, staircases, lifts etc to community facilities such as nursery schools, shops, community centres etc.
According to the SOCA members, once the project is complete the developer is legally bound to file a declaration before the director, town and country planning, with details of land, buildings, apartment numbers and everything that exists within the housing complex.
Except for the dwelling units over which apartment owners have exclusive rights, anything which exists in the complex is part of the common area and facilities in which flat buyers have undivided interest. They also argue that according to the Apartment Act, the developer should hand over the ownership, administration and management of these facilities to the association of homebuyers.
“In our plea we cited legal provisions as well as practical problems we would face if the developers were given rights over community facilities. We told the Hon’ble court that the developer got the license to sell only residential units and, therefore, could not sell shops and schools as that would be interpreted as sale of commercial entities. Secondly, the Haryana Apartment Ownership Act talks about common profits – the balance of all income, rents, profits and revenues from the common areas and facilities remaining after the deduction of the common expenses. So what will be the source of the RWA’s income if the schools, clubs, shops and other facilities are owned by the developer? We tried to convince the court that these provisions suggest that the intent of the legislature is to give apartment owners rights over community and commercial facilities,” says Amit Jain, director general, Federation of Apartment Owners Association in Gurgaon.
Examining Section 3(3) ( a ) ( iv ) o f the Haryana Development and Regulation of Urban Areas Act, 1975, the SC says that the ownership of the colonizer cannot be transferred or divested, unless the colonizer volunteers to transfer the same free of cost to the government.
The apex court further examines Section 3(f)(7) of the Haryana Apartment Ownership Act, 1983 and says, “No duty is cast on the colonizer to give an undivided interest over those community and commercial
facilities exclusively to the apartment owners of a particular colony, since the same have to be enjoyed by other apartment owners of DLF City, Phase I, II and III as well.” Silver Oaks is part of a large colony of 130 acres.
Besides these provisions, the Supreme Court has also taken into consideration the builderbuyer agreement, the license format etc and holds, “In a given case if the developer does not provide common areas or facilities like corridors, lobbies, staircases, lifts and fire escape etc. the competent authority can look into the objections of the apartment owners but when statute has given a discretion to the colonizer to provide or not to provide as per Section 3(f)(7) of the Apartment Act the facilities referred to in Section 3(3) (a)(iv) of Development Act, in our view no objection could be raised by the apartment owners and they cannot claim any undivided interest over those facilities except the right of user.”



TIMES OF INDIA REPORTS;

Flat owners not ‘owners’ 
OF COMMON FACILITIES

The Supreme Court has ruled in a landmark judgment that a colonizer must provide schools, hospitals, community centres, and other community buildings in group-housing complexes, and that the land over which these facilities are raised belong to the colonizer. PRABHAKAR SINHA writes



    In a landmark judgment, the Supreme Court ruled that a colonizer has “undivided interest” in common areas and facilities including schools inside a housing complex. 
    The judgment says, “...the ownership right over the land earmarked for schools, hospitals, community centres and other community buildings referred to in Section 3(3)(a)(iv) of the Development Act of Haryana vests on the colonizer.” 
    The judgment will have a far-reaching implication in the development of townships. 
    The judgment says, “The colonizer has to provide those facilities in discharge of its legal obligations under the Development Act and the Act itself has recognized its or his legal ownership over the area set apart for those facilities under Section 3(3)(a)(iv) of the Act.” 
    The judgment further clarified the contentious issue and says, “All the same, the right to enjoy those facilities referred to in Section 3(3)(a)(iv) of the Development Act, whether shown in the declaration or not, under the Apartment Act, cannot be restricted or curtailed and the apartment owners have no other right, except the right of ‘user’. Community centres, nursery schools, shops, etc, therefore, being part of the approved layout plans by the Director, Town and Country Planning, Haryana (DTCP), can be used by the apartment owners and, being part of the larger colony, are intended for independent use of all the apartment owners having direct exit to common areas, to the public street, road, etc.” 
    The judgment further says that so far as apartment owners are concerned, they have only a right of user, so far as the facilities provided under Section 3(3)(a)(iv) of the D eve l o p m e n t Act are concerned. 
    The judgment also ruled that a colonizer is legally obliged to construct at his own cost the community and commercial facilities stipulated in the section and an agreement has to executed by the colonizer with the DTCP under the Development Act, which among other provisions, prohibits the colonizer from recovering the cost of providing those facilities from the apartment owners. 
    The Supreme Court’s decision came on the plea of DLF Ltd against the order of the state high court that appreciated the rights of flat owners of Silver Oaks Apartments, DLF Qutub Enclave, Phase 1, in Gurgaon, over community and commercial facilities inside their housing complex and had asked the authorities concerned to take a call on their objection. 
    In the judgment, the high court noted that community and other facilities like schools, hospitals, community centres, shops, etc, provided in the land set apart under Section 3(3)(a)(iv) are meant for the benefit of the entire colony and not for the apartment owners in one part of the colony and the costs incurred in discharge of the statutory obligations cannot be passed on or transferred from the plot owners or apartment owners by the colonizer. 
    The facilities to be provided under Section 3(3)(a)(iv) are based on the prescribed norms which are populationbased and the number of each type of amenity and its placement at various places in the colony (plotted areas or group housing) are, as per the layout plans duly approved by the DTCP under the Development Act, the order says. 
    The DTCP has prescribed the requirement for each amenity and commercial facility for DLF City Phase I, II & III, comprising a total area of 1,542 acres, under a composite layout plan of all the three phases, treating three phases as a single colony. 
    As per the approved layout plan, these amenities are earmarked at various sites in the colony, some in the plotted areas and some in the group-housing areas. 
    In so far as the present case is concerned, the court said that the layout plans pertaining to lands covered under various licences in the colony are not restricted to 130 acres alone (Silver Oaks Group Housing project is on 14.75 acres). The judgment further said that the option given to the developer to construct the community centres and other community buildings at his own cost is when he can utilize it himself and manage it. 
    The court also explained the difference between “common areas and facilities” and “community and commercial facilities”. It says, “A colonizer is duty-bound to provide all the common areas and facilities as per Section 3(f), except community and commercial facilities referred to in Section 3(f)(7).” 
    “Common areas and facilities” referred to in Section 3(f)(7) of the Apartment Act has a correlation with the “Community and Commercial facilities” referred to in Section 3(3)(a)(iv) of the Development Act. The court said the expression “may” used in Section 3(f)(7) of the Apartment Act clearly indicates that no duty is cast on the colonizer to give an undivided interest over those community and commercial facilities exclusively to the apartment owners of a particular colony, since they have to be enjoyed by other apartment owners of DLF City, Phase I, II & III as well. Even otherwise, the colonizer could not have parted with his ownership rights exclusively to one colony alone. 
    The judgment said that each apartment owner shall be entitled to an undivided interest in the common areas and facilities in the percentage expressed in the declaration and such percentage shall be computed by taking as a basis the value of the apartment in relation to the value of the property. 
    Common areas and facilities shall also remain undivided and the apartment owner or any other person can use the common areas and facilities in accordance with the purpose for which they are intended without entering or encroaching upon the rights of other apartment owners. 
    Apartment owners are entitled to an undivided interest in the common areas and facilities in the percentage expressed in the declaration, within the meaning of Section 3(f) (1) to (6) and (8) and it is also open to the colonizer to provide, at his own cost, the community and commercial facilities referred to in clause 7 of Section 3(f) read with Section 3(3)(f)(iv) of the Development Act by including them in the declaration. 
    The colonizer cannot also, under certain circumstances, confer any undivided interest to an exclusive set of apartment owners to the detriment of similar apartment owners, who have apartments in other phases of a larger colony or city. Apartment owners are, therefore, not entitled to an undivided interest or possession over those community and commercial facilities, referred to in Section 3(3)(a)(iv) of the Development Act, unless specifically provided by the colonizer in the statutory declaration. 
    The court also indicated that the ownership right over the land earmarked for schools, hospitals, community centres, and other community buildings referred to in Section 3(3)(a)(iv) of the Development Act vests in the colonizer. That ownership can be divested, as already indicated, by the colonizer through a declaration under Sections 11 to 13 read with Section 3(f) of the Apartment Act. 
    The colonizer has to provide those facilities in discharge of his legal obligations under the Development Act and the act itself has recognized its or his legal ownership over the area set apart for those facilities under Section 3(3)(a)(iv) of the act. 
    All the same, the right to enjoy those facilities referred to in Section 3(3)(a)(iv) of the Development Act, whether shown in the declaration or not, under the Apartment Act, cannot be restricted or curtailed and the apartment owners have no other right, except the right of “user”. 
    Community centres, nursery schools, shops, etc, therefore, being part of the approved layout plans by the DTCP, can be used by the apartment owners and, being part of the larger colony, are intended for independent use of all the apartment owners having direct exit to common areas, to the public street, road, etc. All those facts would indicate, so far as apartment owners are concerned, that they have only a right of user, so far as the facilities provided under Section 3(3)(a)(iv) of the Development Act are concerned.



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Sunday, December 8, 2013

what is the value of your apartment??


Interestingly when a home buyer books an apartment anywhere in India, he is shown a brochure that announces various categories of flats in the project with their area and the BASIC SELLING PRICE. Naturally other attractions of the project like, power back-up, 5 Star Club facilities extra are also depicted to entice the prospective buyer to close the deal. kindly view a debate on same topic on NDTV Profit..


The link for the same debate in english kindly click on the link .. http://profit.ndtv.com/videos/the-property-show/video-is-your-builder-charging-you-extra-300432

when the booking amount is paid by the buyer, he has accepted the offer made by the Builder and therefore an agreement is made. what happens thereon is that at a much later stage the Builder launches his project and calls the home buyers to get allotment of their dwelling units where by the builder declares or provides the Payment plan of the units with the BUYER SELLER AGREEMENT.
It is at this stage the Buyer actually gets to know that there are additional charges to the cost of the BSP and the rates of these charges. after having paid almost 30% of the cost according to BSP of his unit. The additional charges are in the shape of ;
1. Lease Rent/EDC
2. Car parking charges
3. Preferential location charges for floor or park facing/club facing
4. Fire fighting charges
5. stamp duty or conveyance charges
6. Maintenance charges
7. any taxes or govt. charges as are applicable or would become applicable in the future.
8. Escalation charges
9. club charges
10. external electrification charges.

all these charges enhance the cost of the flat by roughly Rs. 1000 per square feet for any standard/basic flat or apartment. which could be either 40% or in some cases 30% of the basic selling price of the unit. why is this done, how builder gains by such pricing mechanism, what does the buyer get even after paying extra costs, why these can not be bundled in the BSP, what is compelling factor that the builder has to charge additionally, what choice does the home buyer have or in other words how you can legally protect yourself from such arbitrary charges??

As explained earlier that the contract was made once the consumer has paid consideration as a sign of his acceptance to the offer made by the builder. Therefore when another agreement with different clauses or materially different conditions of cost, time of delivery extra is put forward, it is legally speaking breach of the original agreement or departure from the earlier promise and the Home buyers at this very stage can challenge the Builder by taking him to the consumer court and seek protection from abusive clauses. This will not only help the home buyer to secure and protect the present and future monetary loss but also protect his future propriety interests and rights over the dwelling unit and the undivided share in common areas.

The Hon'ble Supreme Court of India has deplored the Car parking charges on the grounds that it is a part of common area which is already charged in the Basic Selling Price of the unit and therefore the builder can not charge the home buyer twice for the same area. Placing the same argument on PLC of floor or green area facing, aren't these areas part of home buyers common area therefore to charge them again under some other head would infact tantamount to charging the same area twice. Ditto for club and fire fighting and external electrification charges., these also constitute the same common area and facility which is mandatory by law, therefore should not charged on top of the Basic selling Price of the dwelling unit.

Lease rent?EDC is govt. Charges. It goes into the public funds to be used for specific purpose. Therefore to ensure that what is being demanded by the govt from the builder is charged by the builder from consumers should be made transparent.  The Competent Authority who sanctions the layout plans of the Builder can easy come up with such a mechanism. This will stop any undue advantage the Builder can take by either overcharging in name of Govt. fund or by collecting the and not depositing the same with authorities.

Finally what is the criteria for valuation of property on which the stamp duty would be charged on the flat.  It is bewildering as in other cases related to Property transactions, the RTI reply received from the tahsildar Faridabad states categorically that no other cost consideration other than the allotment price is not a part of registry. Find the RTI Reply below;





Therefore its clear that only the allotment price is the final computation of the value of the flat on which the flat would be registered or stamp duty charged. Thus its unlawful if builders include certain costs such as parking charges, EDC, External electrification charges etc for stamp duty purposes. It is most essential that Home buyers are aware of these facts which enhance without reason the burden to pay additional costs for flat which does not transcend into any meaningful addition to the value of the flat.
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Monday, December 2, 2013

Irregularities in Registration in Faridabad

TODAY'S PAPER » NATIONAL » NEW DELHI

FARIDABAD, December 3, 2013

Faridabad flat owners allege irregularities in registration

ASHOK KUMAR
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From execution of conveyance deeds without occupation certificates (OC) to arbitrarily charging stamp duty, registration authorities and colonisers in Faridabad are allegedly violating the law, according to a flat owners’ federation.
They are allegedly committing glaring irregularities, harming the interests of thousands of flat and plot owners.
Gross violation
The colonisers need to procure OCs for their projects from the Department of Town and Country Planning and submit a deed of declaration before the registering authority can execute the conveyance deed of a flat/plot. But the conveyance deeds are being executed without the OCs and deeds of declaration, in gross violation of the rulesAlso, the colonisers are charging two rates of stamp duty from the allottees. “Some of the builders are charging 5, 6 and 7 per cent and some are charging 3, 4 and 5 per cent. Since the entire area of Sectors 75 to 89 in Faridabad falls under the Master Plan of Faridabad-Ballabgarh Controlled Area, 1991, it is completely unjustified to charge different rates and should be rectified at the earliest,” said Ashish Kaul, vice-president of Federation of Apartment Owners Association.
The federation has made a written complaint to the Deputy Commissioner highlighting the irregularities and violations and seeking immediate correction and action against those responsible for the illegal acts.
Arbitrary charging
“Another issue is arbitrary charging of Circle Rates by the colonisers, in gross violation of Revenue Department guidelines. While some of the colonisers are charging Rs.2,300 per sq. feet, the others are demanding Rs.4,000 per sq feet. This alarming difference in Circle Rates is causing doubt over the present and future liabilities of home owners towards the registration authorities. Therefore, in the larger public interest such unfair practices should be put to an end at the earliest,” said Mr. Kaul.
Same yardstick
The federation is also opposed to similar circles rates for Group Housing Societies from Sectors 75 to 89 and the rest of Faridabad on the ground that “Neharpar” does not have infrastructural facilities like roads, water supply and hospital at par with the remaining area. “Since the committee has revised the Circle Rates by 10 per cent in other areas, same yardstick should be applied to calculate Circle Rates for Group Housing Colonies,” said Mr. Kaul.
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Thursday, November 14, 2013

Mumbai Campa Cola complex controversy a wake-up call for Gurgaon flat owners!!

Mumbai Campa Cola complex controversy a wake-up call for Gurgaon flat owners

ASHOK KUMAR
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The Campa Cola complex controversy has highlighted how the builders in nexus with the politicians and the bureaucrats violate building by-laws and the gullible flat owners are made to suffer for no fault of theirs. And the problem is just not confined to Mumbai, but is rampant.
In fact, there are several such apartments in Gurgaon as well which do not have the mandatory “Occupancy Certificate” (OC) and violate floor area ratio (FAR) norms and the flat owners are living under the constant threat of meeting the same fate as the Campa Cola complex residents.
The most glaring example is The Residency apartments in Ardee City in Gurgaon where more than 200 families are staying in six residential towers without the mandatory OC. “As per the information accessed through RTI, the builder in the approval plan has shown an area of over 11 acres, but landlocked the apartment owners in an area of 3.5 acre and built a boundary wall around it leaving the remaining area outside complex. We have been pursuing the case, but to no avail,” said Navin Kaushik, one of the residents of The Residency and a residents’ welfare association member.
Similar is the story of over 120 families in BPTP Freedom Park Life in Sector 57. Of the nine towers in the residential complex, two do not have OC.
“The flat owners were given possession letters in 2009 and are staying there since, but without OC. When these people took possession of their flats they did not even know what OC means. Now they are running from pillar to post to get the OC, but all they get is hollow promises. They are too scared to move the court or approach media fearing that it might boomerang. No OC, therefore, no insurance. So these people have no protection against any damage to their flats,” said Monica Regan of Federation of Apartment Owners’ Association.
Also, certain towers in Uniworld Spa and Unitech Close North and South do not have the OC affecting several hundred families. “The Campa Cola controversy is a wake-up call for all those residing in group housing complexes. Every new flat owner must now ensure that his building has an OC before moving in and the existing flat owners should also find out whether their buildings have OC or not. Usually, a flat owner is content to get the registration of his flat done, but it is not enough. The OC evidences the completion of the building as per the approved plans and compliance of local laws is mandatory,” said Mr. Kaushik.
He added that the government was also to be blamed for the situation. “How come they allow conveyance deeds, charge property tax and allow electricity and water connections without the OC? The builders committing gross violations should be blacklisted and cases should be registered against them. In fact the court directed the competent authority for such an action in our case, but nothing has been done,” lamented Mr. Kaushik.
Yet not having the OC or FAR violation are not the only issues. There are all kinds of illegal things being done in Gurgaon like sale of super area, sale of parking, registration of super area, granting of OC to an incomplete complex. The case in point is DLF’s New Town Height residential complexes in Sector 86, 90 and 91. “The story of New Town Height is the opposite. The Department of Town and Country Planning (DTCP) seems to have given OC to a partially constructed complex which the DLF is unable to deliver even after eight months of receipt of OC. The state of the apartments even today shows how the OC has been given to apartments which are nowhere near completion putting the health and lives of the residents at risk,” said Nitin Grover, president New Town Heights Home Town Owners’ Association.
“Every new flat owner must now ensure that his building has an OC before moving in”
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Sunday, November 10, 2013

Can you Believe what Era Landmark Says...??

When Era Landmark Launched "DIVINE COURT" at Sector-76, Faridabad. Consumers were quick to lap each Low rise & High apartment due to reasonable rate and a reasonably good brand value of Era Infra. You will observe that to solicit initial sale of each new launched project, Era uses its conglomerate status and Mr. H.S. Bharana's long standing experience as civil engineer, to fox intending home buyers to close the deal. Below is what the divine court brochure says;-
Divine Court Brochure
a simple glance of this page would ensure you that the company you are finalizing to book your dream home has a reasonably good track record and a financial worth of over Rs. 4000 Crore.

Having believed and booked, the consumers of this project were shocked when the green area as declared in the brochure presented to them was changed and construction of more floors got started on the said patch of land. Many meetings were held and many verbal promises to the group of consumers of this project were given by the management of Era Landmarks but nothing material changed. Era continued with its policy of extracting maximum gain and ignoring its contractual obligations.

When the date for physical possession also was not adhered to, then the group of consumers again staged a protest and jointly went to speak to the management. many points were discussed, delayed possession penalty.. were assured would be given at the time of possession... poor quality of material used for construction.. were told this would be seriously looked into.. confirm date of possession... were told that by 2010 the physical possession would be definitely handed over.... Once again Era did not keep even a single promise. Instead demanded enhanced EDC without giving any justification or calculation for the same.

It is at this juncture, when Era was using coercion to extract enhanced EDC from the home buyers under the veil of cancellation threat if the said payments were not immediately disbursed in favor of the company that few RTI's were filed.. the reply truly came as rude shock to the consumers.. The DTP (Faridabad) stated ;-

RTI REPLY
Shocked the group of consumers of the said project went again to speak to the management of Era Landmarks... Listen to what Mr. Vivek Gupta has to say on the issue of company having a license or not...

Video of Mr. Vivek Gupta addressing the Group of Consumers of DIVINE COURT

The video reveals the blatant lie Era employees have been trained to effortlessly deliver when ever asked to respond to the concerns of the consumers. This meeting again was full of assurances but the management was not willing  to put anything on paper.. believe the difference or forget it.. was the attitude. Dejected the consumers filled Criminal complaint against the Company and the Hon'ble Magistrate Faridabad ordered the DTP (Faridabad) and DTCP Chandigarh to file written statement to bring clarity on the issue. The Written statement of both these agencies further erodes anything that Era Landmarks wants its consumer to believe in...

DTP Faridabad written statement
Perusal of the last two lines evidently prove that Era Landmarks is cheating the public at large by constructing and collecting money for the same without grant of approval from competent authority or land in its name.

If we for a moment rewind and look back at the events from the beginning of the sale of the project, from declaration of a conglomerate with financial worth of thousands of crore and expertise in real estate to non-delivery of all promises, change of layout, poor quality of construction, delay in possession, non-payment of delayed possession etc.. and each time Era's staid response pacify consumers by lying one after the other and finally Mr. Vivek Gupta's confident yet vulgar lie's when confronted by the reality which came out by the RTI reply and thereafter by the Written statement of the Competent Authority admitting this as being a criminal offence...DO YOU THINK YOU CAN AFFORD TO BELIEVE IN WHAT ERA SAYS.....STILL.  What is the Guarantee ERA is not CHEATING WITH YOU AS WELL...if you have invested in one of its projects, believing in the difference like others in NCR??? 
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Wednesday, November 6, 2013

THINGS BUILDERS CAN NOT DO... YET DO??

Builders have an uncanny ability to get away with things that they are not legally allowed and hence should not do. Yet, the greed and their corrupt practices beckons them to break every law, to gain at the expense of the consumers and the State. In any given project the Builder, normally commits so many irregularities and illegalities, that it is often difficult if not impossible for any common man to match the machinery of the state and the legal fraternity to get justice. Knowing this fact, the builders continue to blatantly over rule the law with a set of their own declared and followed practices. Consumers in their own capacity have dragged these unscrupulous builders to court on several defects, deficiencies and unfair trade practices but still its fashionable for them to continue with their devious plans, as no punitive action has so far been taken by law to dither them.

1. Selling without obtaining License from Competent Authority:-

 In states like Haryana, it is mandatory that the Colonizer/promoter obtains a license under Section 3 of the Haryana Development and Regulations of Urban Areas Act, 1975, from Competent Authority. The primary requirement for obtaining a license under the section is that the colonizer has to be owner of the said land on which he proposes to develop a colony. Further Section 7 of the said Act prohibits any sale, advertisement or erection of any building, till such time the statutory requirement of license is not fulfilled. Yet we find hundreds of townships/colonies/projects being sold and construction going on without fulfillment of  this mandatory condition. Not only the sale and construction is going on, but such constructed dwelling units have even been registered by the registration authorities, yet no action has been taken in this regards by the Competent Authority to curb this menace. If you ask the builder who is operating without a license or title of land in its name, he will say it is industry practice and will cite umpteen projects where even with same discrepancy the units have been lawfully registered. If all goes well yours will be registered too but only if all goes well. There have been cases where the original licensee has gone bust and to recover his dues the court has liquidated his assets including the land he owned, which was being developed illegally by another builder. In Esha Ekta Apartments Co-operative Housing Society Ltd.  and Others Versus Municipal Corporation of Mumbai and Others (Civil Appeal No. 7934 of 2012) The Supreme Court observed that to achieve the aim of planned urban development it was must that builders take mandatory permissions else the purpose of urban development would be defeated and therefore the courts should  refrain from exercising equitable jurisdiction for regularization of illegal and
Unauthorized construction. Yet the builders for their own greed put the ho          prejudiced position.

2. One Sided Builder Buyer Agreement:-

The Builders across States in India, employ abusive and one sided Builder- Buyer Agreements, to protect their own interest while the interest of the consumer is side stepped. This is done without the sanctity of law. As industry practice "Standard Format Builder Buyer Agreements" are authored, prepared and presented by Builders which do not allow any scope of improvisation or modification to the Consumer. To top it, the Builders pass on these agreements to Buyers without first signing on the dotted line, for consumers to return the documents signed, allowing Builders undue advantage of thereafter altering the promised date of possession etc. A glimpse of such agreements clearly shows how the Builders are using their position of dominance to put each and every onus on the Buyer of knowing all the titles of the land,  of having satisfied by seeing all requisite approvals and sanctions obtained by the Builder etc.. which unfortunately no builder in India shares with his buyers. Further, the builder places the onus of timely payment as essence for timely possession and for any delay in payment by the buyer to the builder, the builder charges penalty @ 18% P.A. or more but in the same breathe the builder absolves itself from honoring its prime responsibility to handover possession of said unit on promised time by inserting FORCE MAJEURE clauses to leave the buyers completely at his mercy. Not forgetting that the penalty that the Builder acknowledges to pay for non-fulfillment of the essence of timely possession is a paltry 2% P.A. The Builder also illegally reserves the right, to modify and alter the floor plan/ layout plan/ area of the unit etc. Thus, very rightly the Competition Commission of India in the Belaire Owners Association Vs DLF and Others (Order Dated:- 12.08.2011) observed that such clauses were arbitrary and abusive, favoring the Builder and against the Buyers. Surprisingly, even after such a strong worded order the Builders have continued to prepare the same one-sided agreements. This menace can only be curbed if the Govt. or the Apex Court takes cognizance of the matter and issues strict directions to the Builders by preparing a Model draft of such an Agreement, which takes care of interest and rights of the consumers in an equitable manner. The Consumer on its part, should try and force the Builder to delete such unlawful clauses that jeopardize the present and future rights of his in the said property. The Consumer Fora, in the Rajat Kr. Bhadra Vs M/s Supercon Engineers and Contractors has stated that the Commission is competent to entertain a complaint even in absence of any agreement of contract between parties.

3. Offer Possession without obtaining Occupation Certificate:-

Building bye laws of each state in India mandate Builders to only allow Possession of the dwelling unit in a colony after obtaining an Occupation Certificate from the competent authority. Further, no builder promoter can allow possession of the dwelling unit without getting the same registered as per the Registration Act, 1908. Even with all the laws and Regulations, the builders are blatantly flaunting each rule to gain unlawfully at the expense of the Home Buyer. Mainly in this category there are two types of Violations:-
a) Offering Temporary Possession for Fit-Outs:-
Builder have found an easy way to avoid the legal formalities of obtaining valid Occupation Certificate for the purpose of handing over the possession of the dwelling units in the developed Colony by Offering Temporary Possession for Fit-outs. In layman terms it means the possession being offered is only for the purpose of carrying out certain interior works within the said unit. Where as the fact of the matter is that the Builder under this pretext demands the complete consideration/Sum and assures the buyer that on such payment the buyer can occupy the unit/tower and within reasonable time. What the Builder has done is that it has illegally allowed the Buyer physical possession of the flat but by feigning ignorance as on papers he has not allowed anyone physical possession. Therefore, it is the buyer who is being unknowingly the law breaker though in reality it is willful and deliberate act of the Builder.
b) Offering Possession with grant of OC but without registration of the said unit:-
Builders easily default on Government dues of land/Lease/ External Development Charges/ Labour Cess/Composition fees etc, due to which though in certain cases the Competent Authorit grants OC of the said unit/towers but does not allow the creation of third party rights by way of Conveyance deed between the Buyer and Builder, till all dues are cleared by the builder. Which singularly means that the Builder has been negligent and deficient in service as it was its contractual obligation to offer possession of dwelling unit peacefully and without any defect or liability which could jeopardize the buyers propriety rights.

The sum of these violations is that the buyer even after having abided by all contractual obligations is bereft of legal ownership of his dwelling unit and remains at the mercy of the Builder for uncertain period of time. Further to compound the matter the Registration authorities in connivance with the builder illegitimately register the said units, bye-passing the strictures laid down in the building bye laws of the state, which hurts the propriety interests of the Buyer in long term. As was found by the Ardee City Resident's and Buyers Association Vs State of Haryana and others (CWP. No. 22761 of 2010), the Hon'ble court observed, " in case some Builders have committed gross, non-compoundable violation of the structure designing/zoning plan and sold plots to various persons without getting the Occupation Certificate, it will be open for the DTP/Competent Authority to blacklist them for the future and to register criminal cases against those persons".

4. Selling Units on Super Area:-

Builder in India have coined this term for their own gain. Nowhere in the world this terminology exists nor dwelling units sold on Super Area. Its a fantastic way of earning super profits. In India each state has its own Building bye-laws and none allows builders to sell on super area. In fact the Bureau of Indian Standards, which is premier agency for measurement and weights standards has not defined super area but has clearly defined covered area and carpet area, which invariably means that the Indian standards too like the rest of the world does not recognize Super Area. The fact of the matter is that not only the builder sells on Super Area the Registration authorities also register a dwelling unit on super area, which shows the connivance of the Governments, who for meagre gains of revenue through artificial increase in land area, without slightest compunction are allowing such wide-spread unlawful activity. Recently the Mumabi High court has taken cognizance of this illegality and converted a letter from an activist with a CD of a sting operation carried out by Bloomberg, into a Public Interest Litigation. link to the news in TOI..  http://eraredwoodfbd.blogspot.in/2013/10/high-court-takes-cognizance-super-area.html

5. Selling Basements for usage other than common usable area:-

Basements as per Building Bye-laws of the States in India; are part of common area as they fall below the land on which the building is situated and by definition the area of land under the building/tower falls under common area which is to be used jointly by all residents of that building/tower and therefore builder can not legally create third party rights by selling the same to any one or group of individuals, thereby changing the character of the purpose for which the basement has been allowed to be free of FAR (Floor Area Ratio). But it has been noticed umpteen number of builders in their project sell the same by connecting ground floor units to the basement, where by they increase the size of the ground floor unit exponentially as well as usurp the common area of the other residents in favor of the ground floor unit holder. It is pertinent to keep in mind that all units holder had already jointly paid their due share of this common area, in their respective Basic Selling Price. In the Nivdita Sharma Vs The State of Haryana and Others (CWP. No. 16387 of 2009) the Hon'ble court observed that "Basement is allowed to be used only for parking, generator room, machinery room etc and can not be used for habitation purposes and is part of common areas, hence can not be allowed to be registered in any one persons name".

6. Delaying Possession of the dwelling Unit:-

Though its is clear from the onset that the Builder has to carry on the development and construction work in a defined manner and hand over the physical possession within reasonably agreed time line. The Builders in India very rarely, if any, adhere to these time lines. In most cases the Builders delay project by minimum of a year to seven to ten years. The Consumer courts are overflowing with such cases of deficiency of the builders and the courts repeatedly have been awarding compensation to the home buyers for deliberate delays in handing over possession. The highest the apex consumer forum has awarded is 18%, but seems that unless courts take a larger view by announcing more stringent punitive compensation the builders would not mind shelling out small compensation to two or three litigants who march up to the court to seek rederessal.  In, Ghaziabad Development Authority Vs Balbir singh the supreme court deprecated the practice of delayed possession and the authority was made liable to pay 18% as compensation for deficiency in service.

Most of the above stated practices though illegal are continued to be practiced, by all Builders, irrespective of their size, brand-name or type of project they are constructing. Naturally they gain exponentially by devising and implementing such corrupt practices at the expense of the Home buyer. Like the insurance industry dried out its promising start due to unlawful selling of defective products which caused injury to the people who purchased these products. Similarly, this real estate industry in India will also falter and crumble under its own corrupt weight or the Govt. of the day will have to measure up to, to exercise its right to protect the interest of its citizens and of equitable justice and would have to ensure strict adherence to law and clamp down such illegal practices of the builders which cause injury to public at large.. else this menace would.. God forbid.. only compound.

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Friday, October 25, 2013

High Court Takes Cognizance;- SUPER AREA under scrutiny!!


 High Court


 In a builder dominated market where the home buyer has no real choice but to surrender all rights and follow each and every dictate of the Builder, the Bombay High Court has come to the rescue, by taking serious cognizance of a letter wherein the illegalities of builders selling flats on Super Area with a CD of the sting operation, has been converted to a Public Interest Litigation by the Hon'ble Court... Kindly go through the TOI story....kindly also go through for more information on what is SUPER AREA...

 

http://eraredwoodfbd.blogspot.in/2013/07/super-area-myth.html

HC turns plaint on builders’ tricks into PIL

, TNN | Feb 4, 2013, 02.02 AM IST



THANE: Taking serious cognisance of a letter alleging illegal activities by builders here, the Bombay high court has converted it into a public interest litigation. 

Activist Vikrant Karnik had in October 2012 written a detailed five-page letter to the high court Chief Justice based on a TV sting operation about certain builders allegedly flouting law during sale of flats. "I obtained the CD of the sting operation from the TV channel and forwarded it to the HCalong with my letter. I elaborated on the illegal acts of the builders, who sell flats on the basis of the super built-up area and demand upwards of Rs 5 lakh for a parking slot in the compound. All this is leading to corruption in public life and exploitation of the common man," said Karnik. 

The Maharashtra Chamber of Housing Industry strongly contested the charges. MCHI president Paras Gundecha told TOI that the majority of builders accept payment by cheque and do not indulge in cash dealings. "Though 20 years ago, there was a trend of certain developers accepting 40 per cent of flat cost in cash, that has reduced greatly. As the ready reckoner (RR) rates increase by 30 per cent every year, the majority of developers are collecting the flat cost by cheque as per the RR rates," said Gundecha. 

Karnik argued that builders' claims have been proved wrong by the sting operation that ostensibly shows some of them demanding higher cash component and illegally charging for parking facility. 

The activist said that in most cases homebuyers are asked to pay for an area that is over and above the flat's carpet area. "Builders have coined the word super built-up, which means that a flat of the size of, say, 100 sq ft carpet is superficially enlarged by 45% or more and the buyer is made to pay for 145 sq ft. This is not permissible, but builders still do it," Karnik claimed. 

He added that the area and the amount quoted in the purchase agreement signed between the buyer and the builder are often at variance. "The agreement document quotes an unbelievably low price and the buyer is made to pay the additional amount in cash. This is illegal," the activist said, citing the CD as proof of the goings-on in the realty sector. 

His plea seeking intervention by the HC to stop builders' malpractices has been admitted by the HC and the registrar (judicial-II) wrote to Karnik informing him that his letter has been converted into a PIL
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