Delayed possession: options before you

The percentage of existing buyers who have not yet received the possession of the house is growing in number with limited options in hand to negotiate with the builder.

Frown lines could be a constant on the brow of a home buyer who has entered into a contract with the builder and is awaiting the possession of the house,which is delayed beyond expectation. The percentage of existing buyers who have not yet received the possession of the house is growing in number with limited options in hand to negotiate with the builder. The builder also has troubles of his own with piling inventory and increased input cost and the pressure from the buyer to handover the possession of the house is just another addition to his list of woes.

In this scenario,what can a buyer who needs a solution out of this deadlock do?

Options available

Every buyer wants a smooth exit of the delayed project by selling before getting the possession and come out of the existing contract with the builder. However,is it so simple to sell the incomplete house? The answer is No. In this case,the buyer has following options:

Sell back to the Builder: If there is an option in the clause of the contract then the buyer can negotiate and sell the existing project back to the builder at an agreed price. Even if it is not specified in the contract the buyer can still give this option a shot,at a discounted rate.

Sell in the market: This is relatively easier than the previous option as the lender would sell the house to a new buyer and initiate a fresh loan arrangement. From the sell income,the existing buyers loan would be adjusted,and difference would be returned to the existing buyer.

It is very difficult for an existing buyer to pull back from the contract straight away. The legal implications of such a step must be ascertained as the builder would always try to protect his interest first. Usually builders include a clause that enables them to forfeit the whole amount deposited with them by a buyer in a situation of payment default or breach of contract. The pull back decision is only viable when there is a penalty clause in the agreement and there is no complete forfeiture of buyers paid installments. The buyer can evaluate the loss due to penalty and accordingly take a decision on breaking off the contract.

Association and negotiation: When the buyer has a weak contract against the builder and no relief is expected from the court,then he can decide to find other aggrieved buyers and make an association or join an existing association to fight against such a builder. An individual buyer has less negotiating power. However,when approached through the association,the builder would be forced to negotiate at a neutral condition.

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Legal Options: When the buyer is left with no choice then the most effective option is to knock on the door of the consumer court. There have been several cases decided by the court in the recent past in favour of buyers.

Before opting for this step,it is important to collect all the proof against the builder to prove deficiency. Many buyers lack the contractual evidence as builders avoid committing an exact time in writing; so it is very important to collect other relevant proof in advance to show that builder has made a promise to deliver the possession in a definite period.

Perhaps the better course of action is better avoid projects that are not in the best interest of the buyer and which can lead to delayed possession or disputes. One should exercise necessary caution before investing a lifetimes savings into a goal like purchasing a home.

The author is CEO,BankBazaar.com