What should homebuyers do if a project is stalled or delayed?


Investing in residential property represents a substantial commitment for any prospective homeowner. Coping with a significantly delayed or entirely halted housing development can induce stress and financial strain for buyers. Numerous cities are grappling with a notable volume of stalled or delayed housing projects, affecting countless homebuyers. When facing project delays, homebuyers possess several options to consider if insolvency proceedings against the developer have not yet commenced.

Approach the state RERA 

In the event of project delays, the primary action available to a homebuyer is to lodge a complaint with the Real Estate (Regulation and Development) Authority (RERA) in the state where the project is situated. Previously, the absence of standardized regulations led to prolonged litigation, further exacerbating possession delays. This scenario has changed with the nationwide implementation of RERA.

Under RERA provisions, homebuyers are entitled to compensation for delays. They have the opportunity to claim interest for each month of delay until possession at a rate specified by RERA. Furthermore, RERA empowers homebuyers to pursue a full refund of the amount paid for the property, along with accrued interest.

In accordance with RERA regulations, builders who fail to compensate buyers for delays will face severe penalties, including project registration cancellation and potential imprisonment.

Legal action outside the ambit of RERA

If a homebuyer is facing severe delays in getting possession of the property from the developer and wishes to take the legal route, they can approach a court or a hearing authority. 

The Supreme Court has clarified that while Section 79 of RERA bars the jurisdiction of civil courts, the National Consumer Disputes Redressal Commission (NCDRC), a quasi-judicial commission established in 1988 under the Consumer Protection Act, 1986, is an authorised forum for aggrieved homebuyers to file a case against builders.

There are city-level forums across major cities in India. In every state, there is one state-level forum. These forums serve as consumer courts, where homebuyers can register a complaint against the developer and seek a refund in case the possession of the property has exceeded a year. 

According to the law, homebuyers can approach the NCDRC in the following courts, depending on the value of the property:

  • Properties worth up to Rs 20 lakh: Complaints must be filed with the District Commission
  • Properties valued between Rs 20 lakh and Rs 1 crore: Grievances should be registered with the State Commission
  • Claims exceeding Rs 1 crore: Homebuyers should approach the National Commission, which is at the central level.

Aquire Acres Viewpoint

Purchasing a home constitutes a significant financial commitment. When confronted with project delays, buyers are exposed to the potential of financial setbacks, including the costs associated with obtaining legal assistance. Therefore, it is crucial to remain vigilant and promptly take action upon encountering delays in property possession. Communicate with the developer to receive updates on construction progress and ascertain the reasons behind the delay. If the developer declines to provide such information, it is imperative to escalate the matter to the RERA.

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