Should You Seek Refund For Projects If It Is Delayed For A Year?
Time and again, courts have stated that buyers cannot be made to wait interminably for housing projects and that builders are obliged to pay the refund along with interest if such a situation arises.
In March this year, India’s top court said homebuyers could not be expected to wait for their homes for an unreasonable period, and the developer would be liable to compensate the former in such a scenario.
More recently, the National Consumer Disputes Redressal Commission (NCDRC) has ruled that developers can’t make buyers suffer inordinate delays, especially if a project has been delayed for over a year, using the force-majeure clause to defend themselves. In such cases, developers would have to make the refund, along with a hefty interest, the national consumer panel noted.
For the uninitiated, force majeure, more commonly known “an act of God” is a clause in the contract law that relieves people involved in a contract from performing their duties in case situations that are beyond their control arise and stop them from fulfilling their obligations.
Real estate authorities across the country have also made similar observations while passing verdict on project delays. The pro-buyer approach of these bodies certainly instills a certain faith in the heart of consumers at a time when the country’s real estate is defined by the word “delay” more than anything.
When does it make sense to seek a refund?
This brings us to the point, should we start pulling out of projects as soon as we notice signs of delays? To get your money back could be a fine idea, but that depends on several factors.
If your builder is not going to contest: This is actually the best-case scenario, and also the first step towards initiating the refund-seeking process. You approach the developer, telling him how he failed to deliver the project within time, and that he is legally bound to make the refund along with the interest. The developer realises his mistake, pays you the money and you move out.
However, if you go through the zillion pages on social media groups where homebuyers share their problems would hardly find anyone vouching for such a reaction from the developer. In most cases, they would try to dissuade the buyer from pulling out and urge them to show patience. If they are not able to convince the buyer, they would like to contest his move. This brings this tussle to its next level.
If the builder contests: At this stage, there could be two likely scenarios. You could drag the builder in state RERA or you could approach the district consumer commission to seek a refund. While these forums have time and again reiterated that developers would be liable to pay for delays, they may rule differently if the builder is able to prove that he was not able to meet his obligations owing to situations beyond his control. If the developer, for instance, can prove the project was delayed because government agencies failed to clear it within the specific timeline or because locals challenged his move to acquire land on which the project was to be built, he may get a ruling in his favour.
In a case where the buyer approaches the consumer forums, the developer has the option to challenge the verdict of the district-level forum at the state level and then proceed to do the same with the state-level forum order at the national level. This means much hassle mental, emotional and financial for a buyer, who, unlike the builder, does not have a team of skilled legal professionals handy to fight his case.
However, it would still make sense to take the legal recourse to put an end to a prolonged suffering that comes your way because of the project delay. Psychologically, that would afford you the relief that things are if moving while the process is on. By and by, you would also be able to recover the money and get compensation, even if partial, for your troubles. If it is any consolation, you would also set a fine example for others.
If the builder is deep waters: Previous examples show it is quite difficult to make a decision in such a scenario. It has been over two years since the Supreme Court is hearing cases involving high-profile cases such as Amrapali, Jaypee and Unitech. However, no relief is in sight for lakhs of buyers who have invested in various projects of these staring-at-insolvency relators. After suffering years of delays, buyers are now suffering years of uncertainty.
In case large amount of money has already been invested in such a project, it would make sense to seek refund if the work on the project is yet to start. Whosoever takes over the responsibility is likely to take at least a couple of years to finish the project. In case the project is at an advanced stage of construction, sticking with the unit would be more appropriate since you have already invested a great deal of time, energy and patience and pulling out means they go down the drain when the possibility of getting the possession was high.