Track2Realty Exclusive
In the real estate market consumer activism in India may have been high in recent times, but consumer awareness is pretty low. Most of the first time home buyers even fail to differentiate between what they want and what they need in an apartment, forget about their knowledge with regard to legalities and necessary checklist. The mismatch between developers’ offerings and buyers’ perception is a critical missing link leading to an impression gaining ground that the developer has not fulfilled his promise.
Track2Realty finds that in the Indian market despite of low consumer awareness hiring a professional help of lawyer to calculate the promised offering is seen as a liability and brokers too fail to bridge the gap.
In the year 2009 Somal Ghosh bought a house in Thane West, Mumbai, with the obvious high expectations of moving into a hassle free living. The art director with a leading advertising agency was promised by the broker what all she was looking for. However, the dreams were soon shattered and she was exposed to the agony of an average middle class home buyer, often left alone at the mercy of the builders.
What makes the story of this ad professional newsworthy is the fact that nowhere till the time of possession she was told about the hidden costs for the facilities, or the lack of it. Delay in delivery and default in promised construction made her feel she had a better living in a rented apartment.
Today, she blames no one but herself for making a fool of her hard earned money. Having filed a case with the consumer court, she even repents not having hired a lawyer at that point of time, only to pay more on legal recourse now added with the hassles of running to court.
This brings to the table the moot point that what are the safeguards a home buyer should take to evade getting into dicey deals. More importantly, what do developers feel on this mismatch of expectations? After all, consumer grievances can be borne out of either developers’ devil intentions or legitimate inability when things go out of his hands.
Devang Varma, Director, Omkar Realtors and Developers says the key to any home buying decision is that one should not go by what meets the eye. It is important to dig deeper and know everything there about the prospective property.
“A quality check is crucial wherein one could verify certain facets of the flat or apartment such as whether the exterior design is sturdy or whether the materials used meet industry norms. One should also take a closer look at the interiors and evaluate the overall layout, structural issues and leakage problems. These are usually things that first time buyers tend to dismiss as secondary but are very relevant all the same. Besides this, one should ensure that the paperwork and legal trails are transparent at all times,” says Varma.
Realty analysts maintain prior to signing any binding documents, it is absolutely essential that buyers fully scrutinize contract agreements. In the absence of accountability and regulation in the real estate sector, buyers need to protect themselves and must understand the implications of clauses listed in the agreement.
Sachin Sandhir, Global Managing Director- Emerging Business, RICS suggests some of the ground work that prospective home buyers should undertake includes verifying whether the property has a clear title. This will ensure that a builder has a right to sell the property and also that it is free from any legal claims. One could also opt to consult with a legal aide in this regard.
“It is also necessary to ascertain that the appropriate project approvals and encumbrance certificates are in place. Builder Buyer Agreements should also have a copy of the floor and layout plans attached, along with the specified floor and built up areas. This will provide a fair idea on the level of loading and if development is in-sync with approvals granted by the authorities. One must also check for clauses which provide for penalties in case of payment delays by buyers, along with penalties in relation to early exit charges and tax liabilities,” says Sandhir.
Percy Chowdhry, Director, Rustomjee has a word of caution here. He says budget is one of the most important factors one should keep in mind while planning to buy a house. Budget is not just the cost of the property–it includes numerous non-obvious costs such as stamp duty, registration fees, home insurance premium, and property taxes.
“Figuring out the monthly expenses like insurance, EMIs, expenses on utilities, maintenance and property taxes is also extremely important. Basic home prices and charges like should be carefully looked into before getting into any kind of transaction. Depending on the budget of a home buyer, the area or location comes as the next step. The convenience of public transportation, options available to one’s work place, schools and proximity to other convenience are important deciding factor. One must understand what one’s budget is, so that one can narrow the search into a manageable process,” says Chowdhry.
It is essential that all documents are in place before proceeding for purchase. This includes documents like the land titles, Agreement of Sale, which includes all the terms and conditions of the transaction and all critical information concerned, the Sales Deed, to check if the pricing is right. It is critical that all the relevant documents are in place so that the buyer’s interest is safeguarded in the long run. The list of amenities and facilities assured and mentioned should also be crossed checked at regularly. Further, it is equally important to seek clarity from the developer with regards to carpet area, built up and super built up area before investing in the property.
There have been many cases where the project gets a kick start and invites bookings only on the paper. The property dealer with their minor gains/commission advises the gullible buyers to put their money in the projects. The prospective buyer must take the help of a local advocate and request him to prepare a search report.
The advocate should also be instructed to verify and advise the title position on the basis of the records available at the office of the sub-registrar of assurances, along with a non-encumbrance certificate issued by a competent authority. The chain of title should be clear and the purchaser should avoid a property if there is any missing link in the flow of the title.
If one is purchasing property from a private builder, it is advised to see that the builder has purchased property, which is free and marketable, and that he has the authority to sell. The builder has to possess the right to transfer the property. The purchaser should also go as per sanctioned plans. There should be no extra construction where an unauthorised construction was made.
Another area in which the purchaser has to do little homework pertains to the area of the house he is going to purchase. Ensure that the property is not already mortgaged. If it is, confirm that the sale is taking place with the concurrence of the bank or the party with which it is mortgaged.
When you buy a property from a builder, you will have to sign on the dotted lines. So it pays to get a copy in advance and go through the fine print. You never know, after reading it, you may decide not to deal with the builder because it is one-sided agreement. Generally property is purchased on the basis of amount per square feet.
Anshul Jain, CEO, DTZ India also recommends that buyers should approach an attorney who specializes in local property matters and get all the property documents verified including the availability of required clearances from authorities. In addition to that they can also make use of the RTI Act to access approval documents (how many approvals are granted etc.) since the process is quite simple.
“However, if the developer abandons the project midway or delays indefinitely even after getting all clearances, the buyer may have to go for legal recourse. Hence, the importance of checking the credentials of the developers/promoters including their development history and their brand equity in market etc. cannot be understated,” says Jain.
