How Delayed Possession Of Property Can Impact Homebuyers

Delays in possession have been a stark reality for thousands of Indian homebuyers. Beyond causing the emotional rush of moving to a new home to be disrupted, possession delays typically have a financial knock-on effect missed rental returns, longer periods of loan repayment, and surprise housing costs.

Even as the Real Estate (Regulation and Development) Act, 2016 (RERA) came to curb such instances, possession delays still continue to crop up, pushing homebuyers' patience and financial strength to the limit.

To most buyers, their housing investments are funded through housing loans with strict payment timelines. The buyer is left with paying EMIs without a way of using or renting out the property in case developers fail to hand over possession. Having to pay for both loan repayments and temporary accommodation strains household budgets.

Those counting on rental income to level out monthly cash flow are hit with further disappointments. Investors who were planning to rent out the property for regular income now have to delay their rental plans, redoing estimates and, in some cases, reconsidering overall financial plans. In particular, the uncertainty contributes to stress in families making life decisions like applying to schools or moving around possession dates.

What are the legal protections under RERA?

The Real Estate (Regulation and Development) Act, 2016, was intended to bring accountability in real estate. Section 18 of RERA specifically addresses delay in possession. In addition to the ability to claim back advance payments with interest, it also allows buyers to claim compensation for lost profits if possession is delayed.

A significant part of compensation involves more than just refunding money, such as waiving rental income or temporary accommodations. State RERA authorities need to resolve disputes and enforce compliance, and for home buyers, this is a statutory platform that strengthens their hand against recalcitrant builders.

What short-term action needs to be taken by buyers on a delay in possession?

The initial resort is direct communication. The buyers need to write formally to the builder, requesting an explanation of the cause of the delay and a revised possession schedule. Written communication creates a record, which may be referred to as proof in case of escalated disputes.

If a satisfactory response by the builder or lack thereof is made, then the second action is to file a complaint to the respective state's RERA authority. It involves furnishing the sale agreement, payment receipts, and proof of the possession date agreed upon.

The authority then inquires once submitted and, if warranted, instructs the builder to either deliver possession within a revised schedule or compensate the buyer.

For those who experience extra costs because of delays, such as temporary stay or loss of rent, it is advisable to prepare supporting documents rental agreements, rent receipts, hotel bills before going to RERA. Documentation gives strength to compensation claims.

Delays affect long-term financial planning.

Delays in possession echo long after transient inconvenience. Purchasers intending to move from rented to owned residences are subjected to prolonged uncertainty, at times forced to rent longer than expected.

Investors relying upon property-derived income to service loans or plan retirement need to recalculate their financial expectations.

To many, postponed possession also locks up capital that could be used in alternative projects. Where real estate appreciation is slow, long possession periods drain anticipated profit, leading to purchasers' muted returns compared to initial expectations.

Can compensation claims be enforced successfully?

While RERA provides the legal framework, enforcement is dependent upon the authority's case-by-case determination. Builders make claims of compensation a matter of dispute, and therefore, prolonged proceedings. Nevertheless, in some judgments, RERA has ordered a refund of interest for delayed possession and compensation for financial loss.|

Buyers have to be pragmatic: while compensation is recoverable, the process may take time. Legal action may even call for perseverance, especially if developers drag matters to the appeal courts. Still, statutory protection under RERA ensures that buyers are not left in the lurch, far from the pre-RERA era when delays could go on unmonitored indefinitely.