Can You Claim Compensation for the Delayed Handover of a Resale Villa?

In a recent court case in Bengaluru, a Developer was ordered to pay Rs 70 lakh in compensation to the couple who purchased a resale villa. The property, which was originally reserved for sale in 2014, is scheduled to be transferred by the end of May 2023. Even though the present owners purchased the property from the allottee’s original owner by 2022. The court found the builder responsible for the delays.

The authorities made it clear that changing ownership does not provide a builder with a reason to delay or stop the process. The building contractor’s responsibility is to complete the work on time, regardless of the current owner of the property.

Common Excuses Used by Developers

When projects are delayed, developers often cite various reasons to avoid paying penalty fees. In resale cases, they often claim that:

1. Ownership transfer process: They argue that the documentation involved in the transfer of the name of the former purchaser to the current purchaser was the reason for the delay.
2. Modification Requests The builders often say that new owners demanded specific changes to the house’s layout, causing the timetable to be delayed.
3. Payment Problems: They might argue that the new buyer didn’t pay an installment in the final payment, thus nullifying any delay penalties.

In a recent ruling, the authority dismissed the justifications. The authority declared that the following “minor works” or internal administrative changes, such as the resale of a product, cannot be used as grounds to excuse non-compliance with the multi-year deadline.

How Compensation is Calculated

The amount of compensation for delays is usually calculated using the interest rate of the amount paid. For instance, in the Bengaluru case, the builder was ordered to pay interest at the State Bank of India’s lending rate, plus an additional 2%. The interest will be charged from the date the property was scheduled to be handed over until the date the house is transferred.

What This Means for You

If you’re looking to purchase a resale villa or apartment under construction, this rule will provide a safety net. This is the information you need to be aware of:

• The Agreement is in place: When you take the property from the initial buyer, you typically take over their role. The date of completion stipulated in the initial Agreement remains the standard.
• Builder’s Consent is Important: Ensure that the developer has acknowledged this transfer in your name. This will make it more difficult to prevent them from denying your rights in the future.
• Document everything: Keep a record of any promises made in relation to”handover” or “handover date.” If the builder provides “false assurances” about completion, they can be admitted as evidence in the consumer court or RERA.

Conclusion

The real estate market isn’t always easy; however, the law is increasingly moving towards protecting consumers. If you’re the first buyer or third, the builder’s main obligation is to provide the property as stated in the contract. If you’re facing delays in the sale of a home, you are entitled to a legal option to claim compensation for the delay as well as the money you have lost.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult with a legal professional or a real estate expert before making any financial or legal decisions.

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Source: Hindustan Times