On being asked about the vicious cycle of trust deficit in property market, a Dubai RERA member interrupts me. He asserts there is instead a virtuous cycle of trust; something that has goaded nationals of 100 plus countries to invest in the emirates. The reality is that Dubai property market was no different than the Indian real estate till 2008. What changed Dubai property market and where India can learn from emirates is in setting up fast track courts. A Track2Realty report.
The global financial crisis of 2008 led to major real estate disputes and eroded the trust of global investors in Dubai property market. It nevertheless helped the gulf market to identify weaknesses with its real estate laws. Various channels of amicable settlements were opened and what changed the perception of global investors is the time-bound settlement of disputes.
In India, what aggravates the trust deficit and adds insult to the injury of the aggrieved home buyers is the absence of speedy judicial relief. Court adjournments are more of norms than exception in this part of the world. The developers have all the tricks in the books to ensure that the justice is delayed & hence denied to the buyers as and when they confront the erring builder.
Right from arbitration clause invoked in the Builder Buyer Agreements to RERA and REAT to High Court and the Supreme Court, builder has years of bandwidth to harass the home buyers. The situation is all the more pathetic in the consumer commissions and it is indeed a marathon of harassment from district commission to state commission and then the national consumer commission.
What can a hapless home buyer do when the builder continues to get absence of leave by the courts and a fresh date in the NCDRC takes next six to eight months. A non-standardised product that is sold much before it is even ready, real estate happens to be the number one cause of litigation in this part of the world.
Just look at some of the real-life case studies from the Indian housing market:
Ranjeet bought an apartment in 2015 with a Greater Noida builder. The project was delayed for 4 years. RERA awarded the delay penalty in favour of the buyer but the matter is since then pending at the UP Real Estate Appellate Tribunal. After legal battle of last 3 years, it seems the only option left for this buyer is to compromise and withdraw the case to get his dream home.
Subhada Deshmukh was appalled with the condition of the apartment on offer of possession at Gurugram. It was nowhere near the satisfaction level but the builder continues to coerce for her to sign on the dotted lines, where satisfaction statement is a must. Any denial would infuriate the builder and possession would be denied. A legal contest means waiting endlessly to get the dream home while builder would continue to harass through chains of litigation.
When Ravish went to the builder’s office for signing the registration formalities in Ghaziabad, he was given a bunch of papers to sign. The documents were beyond what is required for property registration. The docket included pre-dated consent to the builder for already having made the FAR/Lay Out changes in the project. On refusal to sign, he was told that henceforth the legal team will deal his case and till then he has to wait for possession and registration.
The story of Devesh is even more interesting. With some legal knowledge he signed the dotted lines of the builder to get the possession. But then after having taken the possession, he challenged the one-sided unfair contract before the state consumer commission. What followed was a series of cases against him by the builder. This includes a criminal defamation case for having written nasty social media post against the builder and the project.
Trust deficit is a real issue and sooner the stakeholders of the business, including the policy makers and the builders, admit it, better it would be for the business that has the potential to revive the economy and create jobs as well. The liquidity crisis of real estate is directly linked to the trust deficit and fear factor of the home buyers. No one would like to get into a lengthy and expensive legal battle with the builder. This is a fact admitted by none other than the apex court of India in a recent judgment.
Not that the issue has never been raised at the advocacy level and policy level in the country. In 2008, an organisation of NRIs had urged the government to introduce fast track courts to facilitate speedy disposal of their real estate disputes back home. Needless to say, absence of fast track courts is a big deterrent in attracting the NRIs investment into the property market.
After much deliberations, in 2014 the law ministry had also proposed setting up of 1800 fast-track courts across the country to speed up disposal of cases pertaining to land acquisition and property disputes besides those involving heinous crimes. As per the proposal, land acquisition and property cases which had been pending for more than five years were to be taken up on priority. No plan of action has been rolled out since then.The pendency of cases in Indian courts have reached to an alarming 45 million. Matters related to land and property make up about two-thirds of all civil cases in the country, as per a study by a leading thinktank and research institution that focusses on law and justice system reforms and access to justice. India’s global ranking in contract enforcement is abysmally low at 163.
There are only two ways the trust of home buyers can be restored. Either the developers clean up their own mess and adopt the best practices at will. Or else they should be robbed out of the comfort zone of dragging the cases for years at will. The first option has never moved out of holier-than-thou claims. And the second option of fast track courts too seem to be the home buyers’ wishful thinking as of now.
Ravi Sinha
#RaviTrack2Media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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