What to do when a builder delays property handover beyond delivery date?

If a builder does not handover the property to the buyer on the agreed-upon delivery date, then the buyer can file a case and send a legal notice to the builder for delay in possession under the RERA (Real Estate Regulation and Development) Act, 2016 or transfer their case from a CDRC (Consumer Disputes Redressal Commission) to the State Real Estate Regulatory Authority.
According to the RERA Act, the builder will have to pay 10% interest on the value of the property for delay in delivery of the house.
The aggrieved homebuyers can approach three forums for resolution of their grievances, which are:

1. Real Estate Regulatory Authority (RERA):

  • Law: RERA is a dedicated court for the resolution of disputes arising in the real estate sector. Established in 2016, the RERA Act is still in its development phase. With its appellate body, RERA Appellate Tribunal, its jurisdiction lies in all real estate matters.

  • Occupancy: The complaints under RERA can be filed for any claim amount but in the cases where the occupancy certificate has already been granted, then a complaint cannot be filed.

  • Claim: It allow the buyers to get the total refund of the payment with interest or Monthly interest till handing over of possession by the builder.

  • Court time & fees: RERA Act clears out each case typically within 60 days and its court fees vary from Rs. 1,000 to Rs. 5,000 for different states with the litigation costs within Rs. 25,000 to Rs. 75,000 (with execution).

2. Consumer Forum:

  • Law: Passed in 1986, Consumer Protection Act enables the buyers to file a complaint for ‘deficiency in service’ against the builder. Continuing from 1986, this act was successfully established 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.

  • Claim: Under this act, the buyers can file complaints in the Dispute forum claiming up to Rs. 20 Lakh, while filing the complaint in SCDRC for Rs 20 lakh to Rs. 1 Crore and in NCDRC for more than Rs. 1 Crore. It enables the buyers to get a refund with interest or possession with delay compensation for mental harassment, litigation costs, etc.

  • Court time & fees: As per the act, the Consumer Forum takes about 1 or 2 years to solve a case and its court fees vary from Rs. 2,000 to Rs. 5,000. The litigation of District Forum costs about Rs. 10,000 - 20,000, Rs. 30,000 - 60,000 for SCDRC and Rs. 60,000 - 2,00,000 for NCDRC.

3. National Company Law Tribunal (NCLT):

  • Law: In case the builder is unable to continue or finish the real estate project, insolvency proceedings can be initiated by the buyer under the insolvency and Bankruptcy Code established in 2016. This well-established law with its appellate body National Company Law Appellate Tribunal (NCLAT) solves cases for the registered companies having a bad financial condition with a disputed amount of above Rs. 1 lakh. It compensates the company owner with the dissolution of the company and enables them to claim their share upon liquidation.

  • Court time & fees: The average time of judgment (as per the act) taken to resolve a case is typically within 9 to 12 months. Its court fee is Rs. 25,000 with the litigation cost varying for any individual from 60,000 to 1,50,000 and for NCLT Group (10+) from 30,000 to 50,000 per person.

Associated legislation:

Real Estate in India is governed by multiple laws that vary across states. The major laws which govern the real estate in India are-
1. Real Estate (Regulation and Development) Act, 2016 (RERA)
2. Transfer of Property Act, 1882
3. Indian Registration Act, 1908
4. Indian Stamp Act, 1899
5. Indian Easement Act, 1882
6. Indian Contract Act, 1872
7. Land Revenue Codes

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