Here is a personal, traumatic account of a buyer who was duped by a builder who shattered all her dreams of having a roof over her head
By Anamika Viswanathan

Amidst roti, kapda aur makaan, makaan is the ultimate dream of every hard-working, middle-class Indian. It takes years to achieve it and, unlike the other two things, is set in stone for posterity. But how easy is it to get to this goal in our country? Even if you pull out all stops, take loans, pawn your jewelry, there is no guarantee that you will finally get your nameplate up against your main door. This I write from my own excruciating personal experience of buying an apartment in Bangalore.

Four years ago, I thought of buying a little nest in the Garden City with my hard-earned savings. The idea was to be near my parents and serve them in their twilight years. Friends in the UK agreed that real estate in India was a very good investment and I should pursue this dream. Not all of us NRIs can afford a Mantri or a Sobha or a Unitech signature apartment, so we look towards mid-tier developers who promise great value for money.

TRUSTING BUILDERS

Sunday newspapers are full of their loud advertisements and inserts. Radio channels run spots with too-good-to-believe deals. Even if you take all this with copious heaps of salt, you tend to think that this is the kind of builder who would understand middle class values and aspirations and who will deliver to your specifications in promised timelines as he himself has been there and done that. You start to trust this middle-tier builder. When you visit his office, you feel welcome and at home. There are no large mock-ups and glib sales talk; there are humble individuals who empathize with your need of an affordable house.

When I visited Mayur Daffodils office, I removed my footwear before entering, almost piously, a typical south Indian practice. Amidst jasmine flowers and gods’ pictures, there was this humble-looking MD—Krishna Reddy with whom you could identify and in whose capable hands your dreams seemed secure.

Mayur Daffodils seemed a good option for my requirements. It wasn’t a high-rise, just four floors high and proposed to have 96 apartments. There was green space all around as it was tucked in the far end of Sarjapur, Bangalore, away from the city’s hullabaloo. It was reasonably close to the IT corridor with all amenities. Besides, it was recommended by my brother-in-law who was driving a villa project just next door. As he was a new, enthusiastic entrant in the market himself, I went with his assessment.

The idea was to book two apartments, one for my retired parents and another for myself, so that I could look after them. I made the initial payment towards a modest two-bedroom apartment and got the agreement duly signed on stamp paper. Then, I went back to toil in the UK so I could make milestone-based payments. As the months progressed, the reports on their website kept me updated of the progress.

PLUNGING FORTUNES

A year later, these updates became far and few. At one point, the website itself was removed. Nervously, I visited their office only to figure out that they had moved. Tracking them down was not easy. Some buyers who knew them personally were kind enough to tip me off about their whereabouts. This new “office” was a bungalow with absolutely no board of any sort. I entered with great trepidation, not knowing what was in store for me and soon found one familiar face.

Sudha Reddy, the person in charge of financial matters and customer care, greeted me and went on to explain their financial travails. Her story was that the partners had cheated them and they were left with no funds to continue this project. My face fell, I felt helpless. Yet I made the payment and assured my full support through this trough which I thought was temporary. I thought the market would soon pick up. My hope was that we as buyers could stand by them and help them tide over the crisis. Their team of some 10-plus members was now reduced to just Sudha and a Man Friday whose job was to keep the gates locked and drive her to safety if financiers came to reclaim their money.
Another year passed with very slow progress and low quality construction. The bathroom fittings and tiling was a forgotten story. The doors and windows were of poor quality and misaligned; they were somehow fitted to tick the box. There were barely any workers at the site and one could see new faces all the time as the old ones would constantly leave due to non-payment. Months just rolled by and delivery on timelines was a forgotten story. Delivery itself became a question mark by now.

After the third year, I came down to India for good and decided to drive this to its logical conclusion. The building was still uninhabitable with rapid wear and tear setting in due to substandard materials having been used. Heavy rains had ravaged the common areas and the roof and the lift shafts were full of water. So I went to their office and negotiated that most people pay 95 percent and register their apartment in an “as-is” condition. We, as an association, would then complete the remaining works with the 5 percent. We all could see that if we did not save this building, we would stand to lose money as the apartment would fall to pieces.

WORRYING SITUATION

I had already paid 100 percent in my bid to help them bail out of this situation, a very foolish move in retrospect. Out of 96 flats, only 20 buyers surfaced from various parts of the world with similar socio-economic backgrounds and stories. They all had toiled to reach this point. Meanwhile, the land owner fell out with the builder and instead of cooperating, started sabotaging the building works. He felt cheated as none of his flats were near completion. Typically, the landowner sells his land for x number of flats along with money.

On the day of the registration, the builder came to the registrar’s office with great hesitation. We were shuttled from one registrar’s office to another. A tout was leading the process and we were told this was the only way to do this. My mind was being bombarded with red flags, I wanted to flee. I had taken legal opinion but the ground reality was different. We were brazenly asked to cough up `40k bribe money in cash. Besides, we had to pay the sub-registrar’s fee duly via a demand draft. And we had to shell out `10k towards the sale agreement draft which was nothing but a run-of-the-mill one, the same standard version for everyone. Caught in a bind, we had no option but to go ahead with the registration. We felt relieved and even though we could not read a word of Kannada in the documents, we carried home legally sanctioned papers.

A few months later, we formed an owners’ welfare association and drove the remaining building works. The suppliers and electrical contractor were difficult characters, all vying for as much money as they could extract from us. Despite it all, we felt the goal was near. Then one day, we got the news that the builder, Krishna Reddy, had committed suicide. There was panic all around as none of us had got the power connections and some were waiting in the wings to get registered. Their money was crucial for project completion. Even before we could get our heads around it, two days later, his older brother passed away. No one could figure out the way forward.

SHADY BUILDER

To make matters more complex, Krishna Reddy had two wives. One was in the village and the other was supposed to be Sudha Reddy. Who would the power of attorney go to became a question mark. None of us could believe that we were going through this trauma. Our fortitude and patience were waning thin after waiting for four years. By now, we had become semi-builders and construction workers ourselves. From STP to lift, to electric cabling and water-proofing, you could quiz us on how to best execute building works.

We tried to realize our dreams and envisioned happy house-warming ceremonies. We pored over name plate designs and tried to visualize how they would look against our doors. Lakhs had been spent on interiors and wood work. What we did not see coming was a flurry of banks and lenders who put legal notices on the building the moment news of the builder’s death went around.

Then the biggest shock shook us like an earthquake. Some of our flats had been double- and triple-sold. Wrong Encumbrance Certificates had been issued to pacify us and fool lending banks. The registrar’s office and tout network seemed a can of worms. After paying all our dues and toiling so hard, we did not even have the joy of owning our home without this financial wheeling-dealing. We had no more fight left in us to overcome the impending obstacles.

The road from here is arduous, the builder is dead and his financial liabilities loom large. The legal wife is in some obscure village and no one really knows her. The second wife is absconding. The harrowing reality of realty stares us in the face.

–Anamika Viswanathan is a UK-trained business psychologist and adjunct faculty at Christ University, Bangalore.

This law will make the Great Indian Middle Class Dream of owning a house more achievable and will make promoters, builders and brand ambassadors liable for any defect, delays and changes
By R Venkataraman

When Indian cricket captain MS Dhoni became the brand ambassador for Amrapali Group, a real estate firm, little did he know that he would one day face a backlash and quit from the group. But that’s what happened recently when he was trolled on Twitter by residents of Sapphire Complex, a residential project of Amrapali’s in Noida and asked to dissociate himself from the builder. Some residents even asked Dhoni to tell the firm to complete their project using the hashtag “AmrapaliMisuseDhoni”. This went viral and as many as 70,000 tweets flooded social media.

It helped as Amrapali was forced to redress the grievances of the residents. The Sapphire project with 1,000 flats spread over 40,000 sqm was started way back in 2009 and customers were promised their homes within two years. Not only did that not happen, but civil and electrical works in many towers were not completed, said the residents. But the publicity garnered by Dhoni quitting saw the builder being pulled up by Noida Authority.

Welcome to the Great Indian Middle Class Dream of having a roof over its head. This dream got a shot in the arm recently with the Real Estate (Regulation and Development) Act, 2016. This Act also makes promoters, builders, agents and “brand ambassadors” liable for any defect, including non-timely delivery of flats, changing the initial plan, etc.

Hitherto, crores of home buyers, mainly middle and lower middle class with their hard-earned money and loan burdens, were made to suffer. Either their flats were not handed over in time or what was agreed as the area of the flat was, in a majority of cases, found to be less after completion. Flats were also constructed and sold in what was shown as the parking lot, lawns or common areas. Occupancy certificates were obtained without fire, environment and other clearances.

All these issues and many others are sought to be addressed by this Act, which is definitely a giant leap in this domain. Massive unrest has been witnessed in the past few years by the public who have booked flats but were made to suffer due to various lacunae.

What is of particular importance to consumers is Section 7 of RERA which stipulates that “the Authority may, on receipt of a complaint or suo motu revoke the registration… of the competent authority, revoke the registration granted under Section 5, after being satisfied that—

(a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made there under;

(b) the promoter violates any of the terms or conditions of the approval given by the competent authority;

(c) the promoter is involved in any kind of unfair practice or irregularities”.

This makes even a brand ambassador an agent and therefore, liable. The Act says: “Real estate agent is any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called.”

Much-Needed Reform

What you need to know in the Real Estate (Regulation and Development) Act, 2016:

Applicability: The Act is applicable to all projects where completion certificate is not issued by the respective authority for the project.

Interest for Delay: Interest for delayed possession by the builder cannot be less than the interest charged by him in case of delayed payment by the buyer.

Alteration: No alteration can be done without the written consent of two-thirds of the buyers, except minor changes. This means that a parking lot or green area/park initially shown cannot be converted into a concrete jungle.

Maximum Permissable Delay: Maximum period of 12 months delay from scheduled date of completion.

Allahabad-based lawyer Prashant Yadav, who was part of the “movement” to force the government into enact this law, said that even advertisements and publicity by way of newspaper, hoardings, CDs or websites will be part of the sale.

Alok Kumar, president of the Federation of Apartment Owners Associations, who was also instrumental in the formation of this Act, said: “The practice prevalent today is that builders publish nice brochures, CDs and hoardings and then somewhere, in very small font, write: ‘This is not part of the sale document’. Facilities and amenities too are not mentioned in the sale document and hence it becomes difficult to rely on those in courts. But after the enactment of this Act, all types of advertisements will be part of sale documents. Misrepresentation and fooling of innocent buyers will therefore be eliminated.”

He said that the strong builder lobby, which had been reaping undue benefits in the absence of regulation, opposed this bill tooth-and-nail. Hence, there was a need to bring all home buyers together under one banner to counter this lobby. We did this successfully by way of a movement called ‘Fight for Implementation of RERA’.”

Kumar said the movement now has support from across the country with active members in Mumbai, Delhi, Hyderabad, Bengaluru and Kolkata. “The entire NCR region came forward to support this movement and we are working hard to get RERA implemented in the entire country. This Act will be game-changer and bring about a revolution in the real estate industry.”

Rajeev Talwar, CEO of DLF and president of the National Association of Real Estate Development Companies (NAREDC) surprisingly welcomed this legislation. He said that it is a legislation for transparency and was mainly for buyers. “Hopefully, this will lead to nothing being sold on just paper but force the buyer to see the area, project and building before he signs on the dotted line.”

Sanjay Sawhney, a buyer of a flat in the Antriksh Group, said that even without completion and occupancy certificates, buyers had started occupying these flats as the authority had delayed the same. Buyers have to bear the burden of EMIs, he said, as well as rents for the accommodations they were staying in. He said the authority which had allotted the plot to the builder had not given any approach road. Antriksh chairman Rakesh Yadav, on his part, also welcomed this legislation and said that authorities who allotted the land would now become accountable and would have to give basic amenities like approach roads, etc, to builders.

Some of the provisions in the Act are:

-70 percent of money realized from customers needs to be kept in an Escrow account to be opened in a scheduled bank to meet construction costs. One of the root causes of delay is fund diversion, which eventually leads to cash crunch and delay in the project.

-No sale of a project can be launched till all the requisite sanctions and approvals are in place.

-Builders will be required to get their account audited to keep a check on the money withdrawn from the Escrow account for the construction purpose.

-Builders will need to give updates at regular intervals about the construction status on the regulator’s website.

-No bank loan can be taken on the sold units. Hence, incidents like Teen Kanya cannot be repeated where after the flats were ready, SBI slapped a notice saying that the flats belonged to them as the builder had taken a loan on constructed flats as well.

Kumar said: “We want to secure the future of the next generation of homebuyers. We do not want the same loot to continue. We have taken the lead and joined people from all over India to implement RERA.”

But it has to be seen whether the Act would remain just a law or whether builders would sincerely implement it.