Ajay Khurana, a NRI recently booked an apartment in Noida at an expo held in Toronto from a new developer. The suave executive of the developer convinced Ajay of a wonderful deal, which to his horror turned into a nightmare when he landed up in Delhi a few months later.
The construction was yet to commence with no signs of the roads and other facilities in sight as promised in the glossy brochures. His friends in Delhi further informed him that the project was a non starter with exorbitant prices. The developers earlier projects were also held up due to litigation and approval issues. Ajay is not the only victim of such a situation, there are several unsuspecting NRIs who have been promised the skies but reality turns bitter.
Here are some of the possible problems that NRI buyers may face:
* Falsely inflated prices.
* Escalation during construction.
* Hidden costs not disclosed.
* Lack of permits and approvals while accepting bookings.
* Delayed construction.
* Poor quality materials, which are not as per specifications agreed upon.
* Sale or cancellation of booking without intimation to original buyer.
* Constructing on property under litigation attracting legal action.
There are developers across the country who try to sell off failed and disputed projects to NRIs at higher prices by targeted marketing campaigns abroad. Some of the common strategies adopted include:
* False photos and videos claiming actual site depiction to convince about the state of construction.
* False approval letters on clearances that cannot be verified by the NRIs.
* Offer of huge discounts on price per square feet from a hugely inflated rate.
* Additional facilities at no extra cost.
* Showing false government plans of developing infrastructure in that locality so as to make the project lucrative.
* Providing incorrect and fictitious references and testimonials of clients and customers from the NRI community.
Select the Right Developer
Here are a few guidelines for choosing the right developer:
* Check track record of projects completed and look out for delayed projects
* Seek information regarding customer service quality and complaints made by buyers, if any.
* Enquire about the quality of construction and fittings in earlier projects.
* Look out for history of any litigation either with a customer or civic agencies.
Verifying the Documents
There are a few documents that the NRI buyer must insist on checking in original both at the time of booking a house as well as at possession:
* Clear Title deed in original along with history of transaction on the property.
* Encumbrance Certificate.
* No Due Certificate from bank if property was mortgaged.
* Approval of layout of the project.
* Intimation of disapproval by local civic authority (valid for one year only).
* Building Use Permission from local municipality consisting of:
NOC from department of fire services, power load sanction from the local electricity board, permission for drainage and sewerage connections, permission for water supply, approval from pollution control board, permission from the public health authorities.
NRI buyers must stay clear of the arbitration clause in the agreement drafted by the developer. They should not agree to the arbitration clause in terms of conditions relating place or arbitrators. If required the buyer should insist on a sole arbitrator who is acceptable to both parties.
Before taking possession
Before taking possession, do verify the following documents:
* Completion certificate issued by the local municipal authority indicating compliance and suitability for occupation.
* Possession certificate from local municipal authority indicating completion and functioning of water, sewage and electrical connections.
* Society papers and bye-laws for maintenance of the project by the registered owners.
Marketing campaigns and smooth talk by sales executives should not be the criteria for decision on property investment in India. In order to avoid being in a frustrating realty situation, the NRIs need to cross check the developers reputation and the prevailing prices at the locality through government agencies, NRI forums, friends and acquaintances before entering into any property deal from abroad.
The author is CEO, BankBazaar.com