06-Jan-2017

A roof over one’s head has been a desire of every human being. But with ever increasing land costs in the cities owning an independent house has become a mirage. It is in this context that apartments or Flats have become inevitable choice. However, owing an apartment is bristled with multiple risks. The middlemen between real estate developers and the buyers or the developers themselves have been known to exploit the buyers. In most of the cases here the buyer is not the proverbial King, but a Turkey for a kill for the exploiters. Glossy brochures, a well presented demo in swanky room or a star hotel and full page advertisements in newspapers may only turn out to be traps to ensnare the gullible buyers.
Supreme Court judgment on the legality of Campa Cola apartments in Mumbai is a landmark decision and exposes deep rot in the apartment business. Built in 1986 these apartmnets were mostly owned by the rich and famous of Mumbai. But after several decades of existence Supreme Court has ruled that they were built by violating prevalent building laws and should be brought down.
Common Complaints
MGP has been getting complaints from the apartment buyers and have been providing them with needful guidance to enforce their rights. In one particular case two young software employees contracted to buy flats from a builder and they paid all their installments as per schedule. However, the projects remained incomplete even after double the original assured time of delivery. In yet another case a young couple had contracted to buy a flat from a local builder. Since the time period of completion had expired long time back and the project remained incomplete, the couple were reluctant to make the payment of final installment. The couple had also issues regarding built area and the revised escalated price demanded by the builder. This builder declared the buyer a defaulter and unilaterally rescinded their contract.
In yet another case the buyer came to know that due to certain legal lacunae local authorities had not issued Completion Certificate due to which they owners of the apartments were forced to pay multiple level of property tax and drinking water connection was charged on commercial rate. All these totaled up to huge sums for individual owners and the ownership of the apartments was also not legally enforceable. In yet another since the property was built in the declared Industrial Area Development MCC was refusing to collect the solid waste from the residents of these apartments. Consequently, they were forced to pay heavy monthly charges to a local agency.
Apart from the above problems, owners also confront problems in the management of services. Normally the builders undertake to look after them for the first year or two. However, in most of the cases vested interests take charge of these community services and start fleecing the owners. This problem gets accentuated as large number of residents is tenants. And most of them are busy in their own livelihood issues and hardly could spare time for this community activity.
Dangers Confronting Buyers
The dangers confronted by the probable buyers of apartments can be summed up as follows:
Projects taken up in violation of relevant local and building laws; land ownership being under dispute; inordinate delay or non completion of construction despite near full payment of the total price; faulty or misleading measurements leading to higher prices; bad quality of construction/fittings provided; misleading promises on swimming pool, club house, common area/ services; non provision of facilities such as lift/s, emergency exit facilities; exorbitant charges to provide Garage or parking space; financial supports provided to the buyers by the developers from banks and other financial agencies turning out to be misleading and costly; problems created by the developer established Management Association to facilitate transfer of entire property to the Apartment Owners Association; not having clearances from agencies such as Fire Services; and not having valid Completion Certificate (CR) from the concerned authorities;
Since the Apartments are owned by or rented out to the residents who are very busy in their professional life functioning of even well established Apartment Owners Associations have fallen into the hands of mischievous elements or mafia who take the owners/tenants for a ride. Therefore, a buyer has to be aware of some fundamentals before he/she inks signature on the documents.

New Real Estate Regulations
The main reason for such exploitation of the apartment buyers, at least in Karnataka has been weak and archaic law coupled with equally tardy implementation. Just to cite an example: Apartment Owners Associations[AWA] can legally operate only when they are registered under Co-operative Act. Unfortunately, till today AWA are unable to register because no instruction has been issued to the concerned department to so register!!! Further the Rules accompanying the concerned Real Estate Act have not been notified.

However, the passing of a model Real Estate (Regulation and Development) Act, 2016 by the Central Government and the decision of the Karnataka Government to adopt the same is a saving grace. By issuing a circular (No: VE 128/KHB 2016/Bengaluru, 24.10.2016 ) the state government has notified The Karnataka Real Estate (Regulation and Development) Rules-2016 and has sought public suggestions. It is hoped that a Gazette notification may soon be issued notifying these Rules.

These Rules have brought in mandatory registration of Promoter and the Real Estate Agent. Very detailed and severe conditions have been laid down for their registration. A new agency, Real Estate Regulatory Authority, is being created which will have full powers to ensure compliance of the provisions of the proposed Rules. Website of the Authority will display detailed information regarding promoter and the agent. This web site will provide links to the developer /group website and also project website. These disclosures will help the buyers to ensure that they are dealing with a responsible and accountable promoter/agent

Buyer Beware
Buyers are advised to browse through the detailed information before they select a promoter, a property and make a decision to buy. Only a well informed buyer can be a King in the Apartment market. Since huge sums are involved and a lot of legal nuances are part of buying an apartment the buyer has to be diligent and cautious.