Legal options homebuyers can use against unfair practices by builders

Cases of cheating, fraud and project delays have become quite common in the real estate sector. Homebuyers are often at the receiving end of such unfair practices since they have little knowledge about their rights and legal remedies. Let’s take a look at legal options that are available to homebuyers in cases where the builder may be involved in negligent, unfair or fraudulent practices.

Civil remedy: If the builder has breached the terms and conditions of the agreement, a case can be filed in a civil court. Homebuyers can claim damages or they can request refund along with interest. This remedy is available under the Code of Civil Procedure, 1908. Homebuyers can get immediate interim relief through the Civil Procedure code, but adjudication of case may take longer. Such cases will be handled by district courts if involved amount is up to Rs 2 crore and by the High Court if amount is more than Rs 2 crore. The fee payable to the court will be as per state laws. Lawyer’s fee will depend on the complexity of the case.

Consumer forum: Where an individual purchases a house for their own use, they are considered a consumer as per the Consumer Protection Act, 1986. If a homebuyer notices any deficiency in services provided by the builder, they can file a complaint as per section 12 of the Consumer Protection Act. Such complaint needs to be filed within 2 years from the date of dispute. Deficiency in services could include project delays, substandard quality, etc. Consumer courts charge a nominal fee, which is good for homebuyers. However, it may take some time for the disposal of cases in consumer courts.

Competition Commission of India: In cases where the builder may have used their dominant position in the market to the disadvantage of homebuyers, the Competition Commission of India (CCI) can be approached to get justice. The CCI will investigate the matter and take appropriate action against the builder if they are found guilty. In recent times, the CCI has ruled in favor of homebuyers in many cases. However, it has also been seen that builders often appeal against the order given by the CCI. A case can be filed with CCI for around Rs 5,000.

RERA: Homebuyers can file their complaint with regulatory authorities such as RERA (Real Estate Regulatory Authority) in case the builder has been involved in unfair practices. RERA has set up some stringent rules to protect homebuyers. However, RERA is still in the implementation stage and it will take some time to measure its effectiveness.

Criminal case:Where the builder may be involved in cheating, poor quality construction, breach of contract, etc. a criminal case can be filed against them. This option is available as per the provisions of the Indian Penal Code, 1860. Criminal cases are given priority by courts, so timely action can be taken against the builder. However, criminal cases can be a cumbersome process. Homebuyers may require the services of an experienced lawyer.

Arbitration: If the agreement provides for an arbitration clause, arbitration can be carried out under the Arbitration and Conciliation Act, 1996. Lawyers are not necessarily required for arbitration, which is good for homebuyers. However, arbitration proceedings lack a formal evidence process. It is also possible that the builder might try to influence the arbitrators.