Stating that RERA has ‘not been able to achieve its desired objectives’ since it became fully functional, homebuyers’ body Forum for Peoples’ Collective Efforts (FPCE) has written to the consumer affairs ministry and demanded that it frame specific guidelines for the real estate sector to curb unfair trade practices and protect consumers’ interests.
It said that there is an urgent need to issue guidelines to ensure that builders do not make changes in the real estate projects where sales have started and that no flats are handed over without completion of all amenities.
“There is an urgent need to issue guidelines that no flats will be handed over without completing all the facilities and amenities including common areas, which all should be in habitable condition,” FPCE president Abhay Upadhyay said in a letter to Consumer Affairs Secretary Nidhi Khare.
The letter asked Khare to issue “real estate sector specific guidelines under Consumer Protection Act 2019 to curb the malpractices prevalent in the sector and to save the consumers of the sector from being duped and cheated by developers.”
Also Read: RERA update: Uttar Pradesh RERA passes 5 orders to safeguard home buyers’ interests
The consumer affairs ministry should lay down clear guidelines in this regard to ensure that homebuyers should not pay more than “80% of the total consideration at the time of handover and balance can only be demanded by the builder at the time of handover of all ready and complete common areas with all the facilities and amenities in ready to use condition to the resident welfare associations,” homebuyers said in their letter.
“Homebuyers should be given a copy of the draft agreement for sale at the time of booking so that he knows the terms at which he will be buying his apartment. Further, he said there is no exit clause presently provided for homebuyers and hence the builder forfeits the entire booking amount if later the booking is canceled,” they said.
Also Read: 5 things home buyers must know about MahaRERA making it mandatory for realtors to mention delivery date of amenities
The letter said that the ministry should issue guidelines that no changes can be made in the project of any kind where sales has started other than which may be required by the local authority considering some safety issues.
The association pointed out that the consumer forums constituted under Consumer Protection Act 2019 comprises about 10% of their complaints from the consumers of the real estate sector. As per the government statement in the Lok Sabha, more than 50,000 such complaints are pending before consumer forums as on July 31, 2024.
“We are writing to bring to your kind notice that real estate developers are continuing with their malpractices which are in blatant violation of the provisions of the Consumer Protect Act 2019,” the letter said.
“We are highlighting some of the malpractices which needs to be eradicated at all costs to save the homebuyers,” Upadhyay said.
“We are sorry to say that RERA in last seven years since it became fully functional has not been able to achieve its desired objective,” Upadhyay added.
Misleading advertisements
The letter highlighted that developers provide “attractive pictorial representation of their projects which in reality bears no resemblance with the actual project.” In advertisements, builders promise many facilities and amenities in their projects. However, in many cases, homebuyers do not find those amenities while taking possession of their properties, the homebuyers’ association said.
In many cases, these are not even part of the sanctioned plan of the project which homebuyers come to know only at the time of signing the Agreement for Sale, the letter observed.
Also Read: Homebuyers’ body writes to Centre, objects to MahaRERA setting up conciliation forum to settle buyers-builders disputes
The letter said that the information that the homebuyer gets from the website of the builder or from the brochure downloaded from the website of the builder should also be considered as an advertisement and mere disclaimer at the bottom of brochure or website stating that these do not form part of the sale documents should be rejected.
Project completion deadlines
The letter noted that in many cases, the project completion deadlines are not adhered to and infinitely extended at the cost of the homebuyers.
The information which a homebuyer gets from the website of the builder or from the brochure downloaded from the website of the builder should be considered as an advertisement and mere disclaimer at the bottom of the brochure/website stating that they do not form part of the sale documents has to be outrightly rejected, the president suggested.
The association asserted that it is necessary to restrict builders from extorting extra money from homebuyers on some pretext or other.
Citing some examples, the association said builders take full consideration at the time of giving possession without completing common areas, facilities and amenities.
Homebuyers should be handed over the draft agreement for sale at the time of booking
The letter noted that homebuyers normally pay 10% of the total consideration amount as booking amount just on the basis of advertisement/brochure/website, without knowing what will be the terms of the contract that he will be asked to sign going forward, is grossly unfair
“Homebuyers should be given a copy of the draft agreement for sale at the time of booking so that he knows the terms at which he will be buying his apartment,” Upadhyay said.
The letter noted that there is no exit clause presently provided for homebuyers and hence the builder forfeits the entire booking amount if later the booking is canceled.
“We suggest an exit clause be provided at the time of booking itself…,” he said, adding the exit clause should mention that if cancellation is done within three months, the developer should refund the entire money within 15 days of receiving such a request.
“However, if the cancellation is done after three months, the developer should refund the amount paid by the homebuyer, along with interest, within one month.”
“Presently, builders are inserting many one sided and restrictive clauses in the agreement for sale which is highly oppressive, grossly unfair, very unreasonable and also illegal under the provisions of Consumer Protection Act 2019,” he said.
“It is necessary to restrict builders from extorting extra money from homebuyers on some pretext or other. They may be allowed to charge any extra charges which they might incur additionally on actual basis only after providing proof of such extra expenses incurred due to the fault of the homebuyer. A guideline from your Ministry in this regard can protect homebuyers,” the letter said.
Guidelines on carpet area certification
Homebuyers also demanded clear guidelines for carpet area certification. This should “be certified by the independent architect registered with the local Authority and if found short then homebuyers should pay proportionately short amount and if however, area is increased, the homebuyer cannot be charged with any extra amount as the increase was not on demand or with the consent of the homebuyer.”
The homebuyers’ body also demanded that the ministry issue clear guidelines that builders would continue to be held liable for all statutory charges to any local and development authorities if any demanded in future, till the date of conveyance of the flats are done in favor of the homebuyers and common areas are conveyed to the association of allottees, failing which homebuyers will have to be compensated with the opportunity cost.
