Issues With Real Estate Developer

 issues with real estate developer

A large number of NRIs have invested back in India in real estate through real estate developer and real estate lawyer for future personal use; an equal number have invested as an elite investment goal. Although there has been immense growth, there also has been an alarmingly high number of cases where NRIs have witnessed some dilemmas when it comes to investing in real estate.

The Indian Real estate sector has been highly cluttered by the nature of its remarkable growth. Unlike the Telecom industry or other outstanding sectors, there has been no precise regulator for the Indian real estate sector. The inflating price of land has meant that just about anyone and everyone is acting as a real estate broker leading to complete lack of clarity and credibility in the system. NRIs that have not been living in India for a long time are most susceptible since they are not aware of the escape clause in the system leading to some cases of fraud and cheating.


Real Estate Developer with fishy Records:


Many NRIs have faced problems as they invested their money with wrong builders who have delayed their project completion. It is recommended to check the previous track record of the developer before opting to invest in any of his or her real land projects. Not every builder is transparent, honest or ethical.

Make sure to check the feedback from previous buyers and other finished projects before selecting a builder. Some online real land portals also offer discussion forums where buyers leave feedback for builders they have related with in the past. Make sure to do your homework before finalizing the builder or get a professional due diligence from real estate lawyer.


Things to consider while buying property



Once you finalize the property, check the developer’s paperwork ranging from initiation certificate for work, environmental clearance and accepted building plans. Also, ask for the status of the land title and see if the developer has bought the land or has just development rights for it. Here is a list of documents you should check.

(a). Title Deed: Check whether the developer has the ownership of the property. While buying a plot, see the title deed of the land to confirm if the builder has the full right to it. You can also take legal advice from legal expert or real estate lawyer to get the deed examined.

(b). Release Certificate: If you are buying a property in resale, remember that it may have been promised to get a bank loan. In such a case, you will have to get a clemency certificate from the bank, which will prove that the loan on the land has been repaid.

(c). Check Encumbrance Certificate: It is also important to make sure the land is free from all legal dues.

(d). Verify land use:  Certify the land-use zone as per the city master plan for the plot. You can get the plan from the local body office in your individual city.

(e). Approvals by Local Body: Make sure that the entire layout has been accepted by the development corporation and the local body of the city.

(f). Property Tax Receipts: If you are purchasing a property through resale, ask for last property tax receipts from the seller along with other bills. This way you can make sure that there are no pending bills.



With real estate companies sitting on unsold stock and not having enough cash to complete their projects, banks have become a source of funding them. Many builders do not get bank loans at all. So, once you decide the property and confirm that all approvals are in place, find out banks which are ready to fund the project and go with the one offering you the loan at the lowest rate.


Do not go by what the broker says. Many times brokers just tell about the necessary cost and no other factors such as internal/external development fees, desired location charges, parking/club/statutory charges, and service tax, which raise the total cost. Ask for the final cost of the property.



The piece of land in question may be under litigation. Hence, it is recommended that you do a comprehensive verification of the builder. You could check its past or present projects or even post queries on the various online estate forums.



Many people purchase a property thinking they will use the rent to pay EMIs. Experts say it is a wrong approach. We recommend “Do not over-leverage in the hope that rental income will pay for the EMI. The rental earning on residential properties is only 2-3 per cent.” However, the property may remain vacant for months before you can find a tenant.


There are large payment options available in the market such as down-payment plan, Flexi-payment plan, development-linked plan and possession-linked plan. Experts say one must choose carefully, as there is a cost for every accessibility. E.g. In Subvention schemes, the price is at least 10 percent higher than what is charged under regular systems. Customers must also understand that any delayed payment or default on the part of the builder in such schemes wills brunt their credit history. Then, there are guaranteed rental schemes under which the builder either pays you to rent for a fixed period during construction or a certain period of possession. In the first scheme, the buyer gets regular payments from the builder during the construction of the house, which helps him offset a part of EMI or rent costs. In the latter scheme, generally for properties which are outside city limits, the builder offers rental yield after possession. But the fine print is that there is no guarantee.



Builders mention the super built-up area in brochures. This includes common areas such as the staircase, lobby, etc. The carpet area of the flat could be 30 percent less than the super built-up area. For example, a 2-BHK 1,000 square feet flat could be just 700-750 square feet. It is prudent to always go by the carpet area, the area enclosed by walls. We recommend, “If you are looking to buy a plot for living at a later stage, it is advisable first to find out your requirement. Ensure that you check how much land (built-up area) you will need to build your dream home. Contour and soil are the other vital factors.”


Metro connectedness or any other significant infrastructure development in future linked to the location of the property you intend to purchase can boost the return on investment exceedingly. Also, make sure that the property is not close to any polluting industry.



The layout in the brochure could be different from the reality. So, do a detailed site visit before booking the property. Interact with people in the neighborhood as they may know about any illegal occupation or other legal disputes related to the property.



After finalizing the property, you have to register it with authority concerned for you to become its lawful owner. Our experts say that “Through registration of sale deed, a person can acquire the rights to the property from the date of the execution of the deed.”Last, but not the least, do some research about the developer’s record regarding total square feet developed, market feedback and project delays. Also, verify the quality of its previous projects. We suggest, “Be sure to search for any contingencies which may hinder the advancement of the property. For this, you can probably refer to or participate in different online forums.


If you are already facing Problems with your Real Estate Developer here’s what you can do:

An NRI can file a Consumer court case in India. If you have the agreement in place and have receipts for the payments made, then you do have a good case to claim the refund of the money along with interest and compensation. For more information and free legal advice from our real estate lawyer feel free to fill the Contact Us form.