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The 5 Most Common Real Estate Disputes in India: Legal Disputes and What You Can Do
Updated : January 24, 2023
Author :
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Following the Real Estate Regulation and Development Act of 2016, the Government of India has been taking steady steps on making the real estate sector of the country more transparent.
One such move is the Model Tenancy Act and the recently introduced Uttar Pradesh Tenancy Act. In this article, we will take a look at common legal problems that you may encounter in the real estate sector.
1. Flat Possession Delay by Builder
Delay in flat possession is a common problem faced by Indian home buyers. The delay from the builder's side may be caused by any reason such as changes in weather, shortage in labour, project assessment mistakes or internal conflict.
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The onus of resolving these problems is with the home builder and not the buyer.
As per the provisions of the RERA Act of 2016, the buyer can send a legal notice to RERA for late possession. If the builder doesn't respond positively, you can file a case with the appropriate dispute redressal forum for the damages you have suffered.
2. Real Estate False Advertisements
False advertising is the act of publishing, transmitting, or otherwise publicising an ad that makes a false claim or statement, either on purpose or by accident, to try to sell a product, service, or property.
The RERA act defines Advertisement as—
“...any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes.”
–Source: Section 2B, RERA Act.
If the builder misleads the buyer about standards, services or affiliations or indulges in fraudulent practices, you can file a complaint against the builder at any of the Real Estate Resolution forums listed in the next section.
3. Delay in Payment of Rent
As a homeowner, one of the major concerns you might have is regarding your tenant refusing to pay the rent or failing to pay the rent on time.
One of the things that you can do is during the stage of tenancy where you are drafting a rental agreement– you can put in a late rent payment fee/fine in the rental agreement
If you don’t have such a clause in the rental agreement, you can initiate a formal conversation with the landlord. If the tenant doesn't want to cooperate you should contact an eviction lawyer and initiate legal proceedings against the landlord.
4. Disputes about Property Inheritance
Property Inheritance disputes can be of many types.
A good example of a property inheritance dispute is what happens when a person dies without a will. In India, inheritance is governed by customs, legislation and personal laws.
If the property inheritance dispute is happening within your family, and you feel that an amicable settlement is impossible without a lawyer, you should reach out to a lawyer.
It is best to avoid property disputes if possible as settling disputes can take money and time. You should conduct solid research and study the property’s title records for the past 30 years before venturing to buy it.
5. Structural Defects while Buying a Home
If there are structural defects in the home you purchased, you can hold the builder or the seller accountable.
However, it is always recommended that you perform a full inspection before deciding to put down money on a property. You may use an Escrow arrangement to protect yourself from unscrupulous builders.
Know Your Rights: The Rights of a Property Buyer as per RERA Act
Buyers have legal rights under the RERA Act. Here are some of the rights you must know about.
1. Transparency
The Act will cover things like how to measure an area, how to pay for it, how long it will take to finish, penalties for being late, and legal issues.
2. Clear Measurements
The builder must quote the price based on the carpet area, not built-up, super built-up, PFS, etc. units. This makes sure that builders set prices in the same way.
3. Financial Discipline
For each project, builders are asked to put 70% of the money in an escrow account. If the builder is caught using money from one project to pay for another, he can be fined and put in jail for up to three years.
4. Speedy Trial
There should be a way for appeals and complaints to be heard and dealt with quickly.
5. Claim a Refund
After the due date, a buyer can ask for a full refund plus interest. If the buyer wants to wait, the builder has to pay 10% interest each month until the property is given to the buyer.
3 Real Estate Dispute Resolution Forums You Must Know
Homebuyers who are unhappy can go to three places to get their problems solved–
1. Real Estate Regulatory Authority (RERA)
RERA is a court that handles disputes in the real estate industry. The RERA Act was passed in 2016, and it is still being worked on. With the RERA Appellate Tribunal as its appeals body, it has authority over all real estate issues.
Under RERA, complaints can be made for any amount of money, but if the occupancy certificate has already been given, no complaint can be made. It lets the buyers get their full payment back with interest or monthly interest until the builder hands over the keys.
Each case is usually resolved by the RERA Act within 60 days, and the court fees range from Rs. 1,000 to Rs. 5,000, depending on the state. The costs of litigation range from Rs. 25,000 to Rs. 75,000. (with execution).
2. Consumer Forum
The Consumer Protection Act, which was passed in 1986, lets buyers file a complaint against a builder for "deficiency in service."
With its Appellate Body District Forum to SCDRC (State Consumer Dispute Resolution Commission), SCDRC to NCDRC (National Consumer Dispute Resolution Commission), and NCDRC to Supreme Court, this act has been in place since 1986 and is working well.
Under this act, buyers can file complaints in the Dispute forum for amounts up to Rs. 20 lakh, in the SCDRC for amounts between Rs. 20 lakh and Rs. 1 crore, and the NCDRC for amounts over Rs. 1 crore.
It lets the buyers get a refund with interest or possession with a delay, as well as compensation for mental harassment, litigation costs, etc.
According to the act, it takes the Consumer Forum about one or two years to settle a case, and its court fees range from Rs. 2,000 to Rs. District Forum cases cost between Rs. 10,000 and 20,000, SCDRC cases cost between Rs. 30,000 and 60,000, and NCDRC cases cost between Rs. 60,000 and 2,00,000.
3. National Company Law Tribunal (NCLT)
If the builder can't finish or keep going with the real estate project, the buyer can start insolvency proceedings under the 2016 Insolvency and Bankruptcy Code.
This law has been around for a long time, and its appeals body, the National Company Law Appellate Tribunal (NCLAT), helps registered companies with bad finances and a disputed amount of more than Rs. 1 lakh.
It gives the company owner money when the company goes out of business and lets them get their share when the company is liquidated.
According to the act, the average time it takes for a case to be decided is between 9 and 12 months. Its court fee is Rs. 25,000, and the cost of a lawsuit ranges from Rs. 60,000 to Rs. 1,50,000 for individuals and from Rs. 30,000 to Rs. 50,000 per person for an NCLT Group (10+).
How Can NoBroker Help
NoBroker Legal Services Team combines legal expertise with efficient delivery. For any query or consultation regarding legal disputes, reach out to NoBroker to get assistance from the best legal experts in your city.
FAQ's
Ans. If the builder doesn't follow the order that the RERA Authority made in favour of the home buyer, the home buyer can ask the same RERA Authority to make the builder follow the RERA order.
Ans. Under the RERA act, builders who don't follow the rules can go to jail for up to three years or pay a fine of up to 10% of the estimated cost of the real estate project, or both. Also, the builders are required to fix any structural problems that come up within five years of the buyers taking possession of the project for free.
Ans. Several news stories have said that there is a problem with how RERA's orders are being carried out.
This just means that even though it doesn't take long for RERA to give an order, the builder or developer doesn't follow it right away and delays putting it into action. For the order to be carried out, the homebuyer has to take an extra step and file an execution petition.
Ans. If there are no occupants in the disputed property, you may sell it. But you have to ensure that all information is correctly filled in the sales deed.
Ans. If one party intends to sell the property and the other does not, an action of division and sale must be filed to request that the court order a sale. The opposing party can file a petition in court to postpone or reject the transaction.
Real Estate dispute
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