Flat Buyers, Beware!

Be Careful While You Book A Flat.

Signing blindly the agreements that the developers want you to sign will place you at a disadvantage

There are a host of real estate developers promising starry flats to investors in NCR (the National Capital Region). These developers invariably collect approximately 35 per cent of the cost of the flat from you within the first six months of booking. The construc-tion schedule committed to is invariably in excess of three years. They commence con-struction generally after a year and earn interest on the instalments collected from the buyers, until then. When asked for an explanation, the developers will invariably pass the buck by attributing it to the delay in receiving government approvals.
Before construction is set to commence, the developers protect themselves from all expo-sures by forcing the buyers to sign a "buyer's agreement" which is unilateral and biased in nature and content. Buyers are given no exit option - either they sign the agreement or pay the penalty for not signing it. The penalty entails cancellation of the flat and forfei-ture of the Earnest Money Deposit (EMD). The EMD accounts for 10 per cent of the cost of the flat already paid. The agreement is couched in such a language that the buyer can never dream of raising any representation / objection to any act of commission and omission on the part of the developers. Since it is a lengthy document, everybody signs without reading it but actually it could shock the buyer into disbelief when he / she actu-ally reads and understands it.

a) While booking, the developers declare in the brochure that the flat will be handed over to the buyer within 36 months from the date of booking. But the agreement on the other hand, says it is 36 months from the date of signing the agreement.

b) The agreement lays down in the definitions that the `super area' of the flat is sub-ject to change. It is understandable that post construction, the actual super area may change slightly but how can a definition change? After all, definition is about things definite and not indefinite!

c) All payment clauses mentioned are one-sided; whenever there is a price escalation, the buyer has to pay the escalation on demand but the developers will adjust the fall in prices, if any, at the end of the project.

d) The developers take it in writing from the buyer that the buyer surrenders all rights to challenge/represent against the developer in a court of law and the developers have the sole discretion to stipulate payment conditions, change specifications, etc, in a manner deemed fit by them.

e) Post construction, buyers sign a `maintenance agreement', without any represen-tation from their side. However many developers do not disclose its content while the buyer signs it. How can a buyer be forced to commit to sign a document whose content will be disclosed after, say, two years?

f) Developers undertake that provision of a three-tier security system is their respon-sibility but in the agreement they seek indemnity from theft.

g) Buyer's agreement expects buyers to pay electricity charges for back-up (genera-tor) services, `as decided from time to time'. But the agreement is silent on who will de-cide these charges. Rightfully, it should be decided by a committee on which the buyers are represented.

h) Buyers are bound to pay administrative charges from time to time. But the agree-ment is silent about the actual amount payable for the purpose; nor does it say who will quantify this amount.

i) The agreement expects buyers to pay electricity charges which are at variance with what is charged by the Electricity Board concerned. How can developers charge more for a service that is delivered by the government?

j) Developers protect themselves by mentioning in the agreement that power back-up facilities are an `additional feature' and buyers will indemnify the developers from all damages accruing from faults in the supply of power from the said back-up facilities. But while launching the project, the developers state that the said facility is a part and parcel of the offer. Also developers charge the buyers up-front for this facility.

k) If the buyer mortgages the flat for finance, the developer is indemnified; on the other hand, if the developer mortgages the entire project, all buyers are a party to it.

l) In case of insolvency of the developer, the entire project will be sold off to clear all the dues of the developers first and the balance of the sale proceeds, if any, will be shared by the buyers. This means that the buyers bear the risk arising from the insolvency of the developers and the insolvency of the developers. Further, the agreement does not say when the buyer will get the money back in such a situation.

m) Developers notify the changes in specifications to the buyers. If buyers do not ob-ject to the specifications within 15 days, it will be deemed as accepted. If they do, the allotment will be cancelled. This means that they do not have a right to represent against their grievance.

n) The agreement mentions that while taking over the flat, the buyer relinquishes all rights to challenge any deviation in quality / specifications promised by the developers while booking the flat.

o) Developers have unlimited rights to erect additional towers/buildings, etc, within the same area. This grossly violates the layout furnished by the developers in the brochure during the launch of the project.

p) Developers always seek `IBMS' or `Interest Bearing Maintenance Security'. Buy-ers are expected to deposit the money, post construction. But it is conveniently silent on the rate of interest payable to the flat buyers.

q) Developers indemnify themselves from any damage arising from non-adherence to any clause/condition/covenant of the agreement. Then what is the sanctity of this agreement? On the other hand, the buyer is expected to abide by it religiously.

r) Any expenses arising from the upward revision of the specifications is chargeable to the buyer but the agreement is silent on the reimbursement to buyers, in case of any downward revision.

Source: Merinews.com