The Cambridge dictionary defines a homebuyer as “an individual who purchases a place of residence for himself or for others.” The process of buying a home involves a lot of sacrifices and hard-work. As unorganized homebuyers may be easily fooled while investing in a house, various bodies and organizations work for safeguarding the rights of a home-buyer. In this article we discuss the various rights and forums available to the homebuyers in India in case their rights are hampered before shedding light on key points where a buyer should be vigilant.
Forums available to homebuyers in case of a grievance
Now, Remedies to homebuyers for their grievances under law can be pursued and addressed before four forums being – Real Estate Regulatory Authority while the real estate project is ongoing, Consumer Forums if there has been a deficiency in product or services by the developer, National Company Law Tribunals under Insolvency and Bankruptcy Laws if the developer defaults in payments after accepting due consideration and Civil Courts under the Code of Civil Procedure, 1908 as a civil suit for breach of contract. These remedies can be briefly discussed as follows –
Real Estate Regulatory Authority
One of the primary Authorities working towards ensuring efficient enforcement of home buyers rights is Real Estate Regulatory Authority (herein after ‘RERA’) set up under the Real Estate (Regulation and Development) Act, 2016. It grants a set of rights and obligations for both the sellers and the homebuyers. Some of the important rights that are possessed by a homebuyer under RERA in India include right to information, the right to possession & refund and right regarding custody of documents. Thus, a RERA complaint becomes the simplest remedy available to a home buyer in case of a grievance. However, RERA remains applicable to a real estate project only until its possession is handed over to the homebuyers. Further, it may not dwell on technical nitty gritty such as “occupation certificate” of a project and therefore be ineffective as a remedy in certain matters.
Consumer Courts under the Consumer Protection Laws.
The beneficial consumer legislation which originated from doctrine of “caveat emptor” meaning “buyer beware” have been transformed into “consumer is king”. The homebuyers being a consumer[1] has a locus in the Consumer Courts whether as an individual or as a group[2]. However, this remedy may be limited to monetary compensation. Thus, this remedy may not be prudent in case the homebuyer wants to obtain possession of the flat.
National Company Law Tribunals under Insolvency Laws.
In case a developer defaults on his promises and payments after accepting consideration from the homebuyers; they may choose to recover their money from him by pursuing the insolvency resolution process. This is apt when the liquidity of the developer may be in question. Unless quick steps are taken to resolve this default, a project may be stalled indefinitely. However, in order to avail this remedy, the homebuyers need to be united as it requires a common grievance of at least hundred or one tenth homebuyers in a project[3].
Civil Suits under Code of Civil Procedure, 1908.
Lastly, the traditional, time and tested method of approaching the Civil Courts is open to the home buyers whether under a Civil Suit for breach of contract or specific performance. In some instances, homebuyers may have a remedy through Writ Jurisdictions of the Court. However, this method may be expensive and time consuming for individual homebuyers.
It is pertinent to understand that these above remedies may be availed once a dispute surrounding a flat arises and the homebuyer should be prudent in pursuing his/her claim. However, in order to avoid a dispute and remedy under any of the above forums, a homebuyer should pay careful attention to due diligence in real estate. Due diligence refers to a proper and systematic verification of documents involved in a transaction. According to the varying needs of individuals, the extent and priority of a due diligence has to be crafted. It minimizes the probability of risk and dispute involved in a transaction. Here are some common measures that may be undertaken by homebuyers before investing into any property –
- In case of a first sale or under-construction project, the first step may be a survey of other projects by the developer. The homebuyer may also look for reviews from the existing buyers in the chosen or prior project.
- Before making an offer, conducting an in-person inspection to spot any possible risks. Further, the homebuyers should confirm any minute detail which may be important to them such as the amenities offered and their quality which if left ambiguous may lead to a dispute. The homebuyer may insist that these details be crystalized into the agreement.
- Lastly, Insurance eligibility and a title-history are additional and effective measures of due diligence that are recommended especially for first time buyers. It makes the entire process less intimidating and helps the homebuyers in making a smart and informed choice.
Therefore, multiple redressal mechanisms are available to homebuyers depending on a particular grievance. While dynamic remedies to homebuyers such as RERA came as a glimmer of hope making the process of redressal cheaper, the best solution to a dispute still remains prevention. An extensive due diligence carried out prior to entering into a transaction reduces such associated risk. However, in case a dispute arises, depending on the facts of a particular grievance and the remedies sought, a choice of forum depends on the homebuyer. Thus, the homebuyer should engage proper legal counsel before initiating a process to practically weigh all their options on the matter.
[1] Consumer is defined under § 2(1)(d) of the Consumer Protection Act, 1986 to mean any person who buys goods or avails services for a consideration.
[2] See Ambrish Kumar Shukla v. Ferrous Infrastructure Pvt. Ltd., (2017) 1 CPJ 1 (NC); Vikrant Singh Malik v. Supertech Ltd. 2020 SCC OnLine SC 702.
[3] Insolvency and Bankruptcy Code, 2016, Proviso to § 7, No. 31, Acts of Parliament (2016).