A major developer was in the news recently all for
wrong reasons; the company was handed down a hefty penalty by a statutory
authority for following monopolistic and customer unfriendly practices with
regard to a particular project. One must congratulate the buyers of the
apartments for not taking things lying down ! Of course the company has gone to
the court for relief; Let’s wait for the court verdict.
But how come hundreds of property buyers, with so
much of resources at their disposal fail to ask the right questions while
buying apartments whose value must be in crores of rupees ? Is this the magic
of brand value ? Precisely what has gone wrong here and why are the buyers
upset ?
The highlights of the case are :
The developer has planned to construct a given no.
of floors in the high rise towers he had proposed in a premium locality. The
development was to be as per the plans sanctioned by the authority concerned !
A leader in the property development industry , the developer sets standards
for others ! what a magnificent tower this is going to be ! look at the 3D
visuals ! so breathtaking ! look at the landscaped spaces in the perspective !
Amazing, is it not ? you get to see the whole of the city from the higher level
floors !
Things are really hunky dory !
Or so everyone thought !
Midway through the game the developer with the
connivance of the civic authority decided to increase the no. of floors of the
towers which meant the no. of units will be higher than originally envisaged
and consequently lesser quantum of UDS of land for the buyers who have already
booked. More crowded the building would become, the buyers reason! Resources
have to be shared with so many more people, they grumble !
How they could have prevented it ?
Just by insisting on inserting a clause that the
development would be strictly as per the original plans sanctioned and clearly
specifying the UDS of land each would get at the very beginning itself!
This I suppose should lock the developer into
adhering to the scheme of things originally proposed ! While I have no clue
about the covenants of the agreements the buyers have signed , I guess the
developer would not have dared to deviate from the original scheme if such
binding clauses have been there in the first place !
But generally in the Indian scenario the developer
decides the agreement terms including the fine print. Buyers only sign where
they are told sign!
A typical apartment buying scenario is captured here
(this does not refer to the case mentioned above)
You ask questions about the agreement terms ? No
problems ! you can choose to buy some where else ! See we are a Rs.’xxxxx’
million company ! And we are a ‘yyyy’ years old construction megalith !!
we have delivered ‘zzzzz’ no. of flats all over the
country ! we have practically developed this entire city ! dude, you know all
this !
After all, these are standard agreement terms and
you know these cannot be amended for a single buyer ! So it is your choice, you
were told !
So you get bulldozed into signing where you are
asked to sign !you are asked to pay 70% of the amount as advance ! wait a
minute ! 70% upfront money, that is quite a lot man, you groan ! Not much has
happened in the site and I need to pay 70% on the
first day , you ask !
The reply is quite predictable and will be on these
lines !
Hey! come on ! this is how the industry works !
after all you know the land cost is already incurred and it is the biggest
element in the value matrix ! so many banks have approved this project ! so
what’s the problem, dear friend ! sign on the loan papers and we would take
care of the processing !
In such a standard scenario where does the buyer
stand ? How does he decide ?
Does he not need professional advice as to whether
he should go ahead with so many terms in the agreement loaded against him ?
Sure he needs ! But where does he go ? Are there
enough no. of competent engineers who are ready get into this kind of small
time advisory services ?
These are some of the gaps in our real estate system
that needs to be plugged by systemic corrections !
Do write to us in case you have some interesting
information or feedback!
BVe Consulting Engineers
Engineering Project Consultancy & Property
Advisory Services,
Residential-Commercial-Industrial-Infrastructure
Designs
Due-diligence studies -Asset valuation services
Chennai -600 083
bv.consultingengrs@gmail.com
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