For many home seekers across the country, the dream of home ownership has turned sour. Because of long delays in possession of home, they suffer under the double burden of paying rent and EMIs. Not just that, they are made to run in several courts, ranging from Civil to Consumer, RERa and NCLT, incurring heavy expenses to get legal relief.
What does the law say about it?
In this prevailing scenario, the first and foremost question which comes to mind is, can a homebuyer stop paying EMIs, in case of default and delay by builders.
The above question involves two parties, the builder and the bank, depending on the nature of the agreement. However, in plain simple legal terms, the answer is big no, be it is builder or bank. In case of builder the agreement signed between individual and builder generally has a standard forfeiture clause, cancellation of allotment clause, penal interest etc.
Thus, if one stops paying EMIs, the builder will invoke either of these clauses and make you pay or cancel your allotment.Similarly, in the case of banks too, one is duty bound to pay the EMIs as agreed. If one fails to do so, the bank can take possession of the flat, attach it and sell it and recover the balance money.
Is there a legal remedy to this?
Of late, despite law favouring the banks and builders, the courts have taken a sympathetic view towards the homebuyers, finding them to be a victim of collusion between banks and builders.
The two key judgements in this regard have paved the way for homebuyers to approach the court to seek suitable relief depending upon the nature of agreement with the builder, i.e., subvention scheme, tripartite agreement or between two parties, the consumer and bank.
Now, the home buyers can file a petition against the builder and subsequently approach the bank and explain the impending circumstances pertaining to the project and can ask for relaxation in the payment of EMIs until the final verdict of the court.
Relief Against Builder
Ant order passed by the National Consumer Dispute Redressal Commission (NCDR) gives due clarity in the matter.In this case, Spouses Rakesh and Rashmi Anand booked a 3BHK flat with Royale Empires for Rs 45 lakh. For the unit measuring 1,495 square foot (sqft), the couple paid a booking amount of Rs 8.60 lakh on May 25, 2011.
Following which, an agreement to sell was also executed which stated that the unit would be handed over within 21 to 24 months from the date of the agreement. In the meantime, the buyers took a home loan to pay the remaining amount.
The builders failed to deliver the unit within the stipulated time . Subsequently, the buyers sent legal notices and lodged a police complaint. While the developer said he would refund the earnest deposit within seven months, he failed to do so.
Later, the matter reached the Punjab State Consumer Disputes Redressal Commission. Since many buyers had "failed to pay installments of the remaining amount, as laid down in the agreement" and because the builder was "facing financial difficulties and could not raise construction on the project in time", the latter exercised his right to forfeit the booking amount.
On that basis, the state commission in 2014 dismissed the consumer complaint, ordering in favour of the builder. Following this, the buyers approached the apex forum, which subsequently ruled in their favour, and asked the builder to pay Rs 8.60 lakh, along with an 18-per cent annual interest from the date of payment till the time the refund was made.
"From the written version filed on record by the builder, it is clear that he failed to raise construction of the project, as per the time schedule laid down in the agreement and hence, was not able to hand-over the possession of the property to the complainants in time.
It is true that the payment plan has been mentioned in the agreement between the parties and that the complainants did not make payment as per the said plan, but the contention made by the complainants that they had already got the loan sanctioned from the Bank, but refrained from making payment, finding that there was no construction activity on the spot, is not without any reasonable basis,바카라 the order said.
바카라It was obligatory on the part of the builder to have raised the construction in time and to have delivered the possession of the property in time as per the agreement," it further added.
Two key points that emerge from the ruling is that real estate developers cannot blame the buyer and forfeit booking amount for a fault of their own in case a buyer is forced to stop paying installments. The apex consumer panel also ruled that even if the developer is within his rights to forfeit the booking amount, he cannot take more than 10 per cent of the earnest money.
Thus, you can safely stop paying to your builder now, if there is considerable delay in handing over the possession of the flat and you doubt his ability and motive to complete the project. Of course, you have to take into account if he has been granted any extension by RERA, if the project is registered under RERA Act.
Relief Against Banks
In another, landmark judgement Delhi High Court has ruled that homebuyers should not suffer consequences of the collusion between the banks and the developers. In its interim order, the Delhi High Court granted relief to over 1,200 homebuyers, who approached the court seeking relief from paying EMIs and also protecting the Credit Information Bureau (India) Limited (CIBIL)Score.
Ruling in favour of the home buyers, the court asked banks and housing finance companies (HFCs) to refrain from any coercive action and stop recovering EMIs for incomplete projects, till July 11, 2022.
Justice Rekha Palli also directed the banks and financial institutions to provide 바카라appropriate information바카라 regarding the homebuyers to CIBIL so that their ratings are suitably amended.
The High Court바카라s direction came while hearing a bunch of petitions filed by homebuyers who had booked their flats by paying their initial advance installments but were yet to get the possession of the flats.
In her earlier order, Justice Palli had remarked that the case 바카라brings into light the well-known sorry state of affairs which has been recently going on in the construction industry바카라.
The homebuyers had booked their flats with various developers after taking home loans, by entering into a tripartite agreement with the developers and the bank/HFCs.
Terms and conditions
As per the agreement between the parties, while the homebuyers took the loans and paid their first installments to the developers, the pre-EMIs and EMIs were to be paid to the banks by the developers until the flats were handed over to the home buyers.
The homebuyers were made guarantors for the payments due by the developers towards the banks. The issue arose after the developers stopped paying the EMIs to the banks.
In most cases, it was also provided in the agreement that if the possession of the residential flats was not delivered in time stipulated by the developers, it would be up to the developers to continue payment of the pre-EMIs, till they finally hand over possession of the flats to the home buyers.
However, when the developers started defaulting in their EMIs to the banks/HFCs, they initiated actions against the homebuyers.
Homebuyers had contended that the bank/HFCs, have acted in collusion with the developers, in releasing the loan amount even without examining whether the developer was in a position to construct the flats or not.
Thus, in the backdrop of the above two decisions, it can be safely concluded that homebuyers are not left alone in their battle against banks and defaulting builders.
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