What Should NRIs Do When Their Apartments Get Delayed?

When you do not get the possession of your apartment in time, you are losing money. This is obvious because people are willing to pay a huge premium for a ready-to-move-in apartments. One of the reasons why real estate markets have been fairly stagnant over the past two years is that developers have not been able to finish construction in time. Non-Resident Indians (NRIs) are often affected by this, because they invest in real estate assets remotely. They are not able to assess the credibility of the real estate developers which others can.

In 2013, NRI buyers protested against the township, Kolkata West International City, because their flats were delayed. The NRIs from Singapore and Germany specially flew down to protest against the developer.

What should NRIs do if their apartments get delayed? Typically, the builder-buyer agreement has a clause that stipulates how the builder should compensate the buyer if the flat is not delivered as promised. But, sometimes, delays are beyond acceptable limits, and the loss that buyers incur is severe. When this happens, buyers have the option to approach a consumer court. In Gurgaon, the National Consumer Disputes Redressal Commission (NCDRC) once asked a developer to pay 12 per cent of the cost of the flat per annum, for every year the flat was delayed. There was, of course, a builder-buyer agreement that said to the effect that the builder should pay 1.8 per cent of the cost of the flat per annum, for every year the flat was delayed. But, the NCDRC overruled the builder-buyer agreement, by raising the compensation 6.66-fold. The developer had promised in 2009-10 that flats would be delivered within three years. But, at the time of the verdict, the flats were expected to be fit to live in within 2016 and 2018.

However, this is not necessarily  a good thing. If consumer redressal courts have the power to overrule builder-buyer agreements, developers and buyers are not likely to enter reasonable agreements in the first place. This leaves both builders and buyers at the mercy of authorities.

There are many consumer dispute redressal commissions at district, state and central levels. The consumer dispute redressal commissions at the district level handle goods that are worth less than Rs 20 lakh, and the one at state level handles goods that range from Rs 20 lakh to Rs 1 crore. The consumer dispute redressal commission at the central level deal with goods than are worth more than Rs 1 crore.

The Domestic Building Contracts Act 1995 also protects buyers against unexpected delays in the construction of flats and poor quality of construction. To make sure that they are compensated for delays in construction, NRIs should make sure that they have read the builder-buyer agreement carefully, especially the clause that stipulates the amount of compensation for delaying possession of flats. NRIs should also register a complain as soon as possible. More importantly, you should be sure that the developer is credible before you spent your hard-earned money anywhere.