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frauds in indian real estate space
legal framework

Top pitfalls for real estate buyers and top tips to avoid those

As the Indian real estate market is growing banking upon rising income levels and rapidly growing urbanization, and so are the frauds related to these most vital investment of one’s lives. Housing for all is still a very distant dream in India and people coming from far flung places are in desperation to buy a home for themselves which help fraudsters to make a fortune. Customers today are getting better at information gathering but still they are susceptible to these scams. Real estate frauds include fly by night operators, buy one get one offer, hugely delayed possession or changing the specifications of offered product.

 

The problem worsens when long and tortuous path of justice in these cases takes long, it becomes very hard for buyers as they are left with no choice but to wait for anything from other party. Absence of industry watchdog and complex nature of disputes adds to the woes of real estate consumers.
 
Here we are running a list of real estate frauds of which buyers should have an eye :
 
a) False Promises – As the competition for consumers are getting hotter in the market, builders are running huge false promises to trap the customers. Recently a big name in gurgaon real estate was accused of cheating more than 700 customers of more than 1000 crores. The builder had assured customers of 12% assured returns but the cheques bounced and customers faced inordinate delays in the project too. So it became a double agony for customers.
 
b) Assured Rental Returns – Many builders these days are promising extended assured rental schemes to buyers and many times to make people believe on this gimmick, they put false listing of the same property on internet. On this proposition people feel that they’ll be getting a hansome rental deal on their investment but it doesn’t happen and many people get only 20 -25% of the rental assured from the builders.
 
c) Title Frauds – These frauds happen with both individual sellers and builders. Customers are shown forged title deeds and other papers of the disputed or non existential property and when this fact comes to the fore, the scamester and the money trail is long gone. There have been a case of builder selling group housing project in noida extension on the land which did not belong to the builder company.
 
d) Deliberate Delays – These cases involves some big names of the industry too and these are one of the most common sites these days. Sometimes builder delay the project till they get a requisite number of buyers in a project and sometimes they use one project’s money in different project, thereby delaying both projects in the process. Many new and existing builders have trapped many unscrupulous buyers into this.
 
e) Deviation from approved plans – Many builders even after bookings change the specifications of the project forcing people to choose the given product as there money has been put into it. Sometimes after buying and even after moving in the project people come to know that electricity, water, sanitation kind of approvals are not in place. Sometimes amenities like parks or even dedicated parkings are not there.
 
 
 
 
Tips for real estate buyers to be safe —
 
However when you are putting your life’s savings into buying your dream home, you should be very cautious. Here we are putting main safeguards which you should be following religiously while buying property :
 
a) Hire a legal help – It is very important to hire a legal expert to counsel you and check all papers before going into the deal. Legal expert will check all approvals from government authorities and see the fine prints in agreement papers before finalising it. Many people feel the legal expert is a cost but it brings huge relaxation and rewards in long term.
 
b) Check Builder’s background – You should spend time on checking builder’s reputation and background while looking to invest with him. You should delve on his past projects and fulfilled commitments. You may use power of internet and social media to check his credentials.
 
c) Take personal references – You should take personal references of your friends and extended family members to learn about their experience with their builder. Seeking their experiences will tell you the real story and help you take decisions.
 
d) Choose bank approved projects – Always go for bank approved projects as if any leading bank has approved the project, chances of fraud is relatively lower. Banks perform their own due diligence before finalising any project for financing.
 
With being a little cautious and curious before finalising your dream home, you may differentiate quality builders from the rest and that’ll be crucial for your peace of mind and your truly “dream home”
 
 
  • Manav Gopal

    Must say a Master stroke of an article!! Hats off!!!!
    Though, there are certain facts which should have been incorporated as follows:

    Sky High rates of Property: Mainly attributed to Subvention schemes. The inflated rates, thus, become the norm in the market.
    Quality of Construction: Though a normal consumer wouldn’t know about the quality, a reference architect and/or a known from the Construction Industry can help.
    Escalation trend: This is a rampant norm in this Industry. The Developers very conveniently increases the Super area (Saleable area) at the time of possession of property. This can be checked with delivered projects of the developer.

    But your article was a thorough study done by you and I am personally too impressed with the article.