The delay in project completion and possession by the builder can be frustrating for buyers. This situation is particularly challenging for individuals living in rented spaces or those who have made plans to leave their current residence. With a growing number of delayed real estate projects in India, homebuyers must understand their legal rights. Here are some legal measures that a homebuyer can pursue if a real estate project is significantly delayed by the builder.
See also: How to deal with construction delays and factor-in such delays under contracts.
What does delayed property possession mean?
Delayed possession of a property refers to an extended timeframe beyond the initially promised date for the homebuyer to take possession of their property. This happens when the builder fails to complete construction or meet project commitments on time. The delay can damage the trust between homebuyers and builders, necessitating an understanding of the legal options and remedies for such circumstances. Homebuyers facing delayed possession may encounter challenges, such as ongoing rental expenses or plan disruptions, making it essential to seek legal recourse to address the delay.
Possible causes of delayed projects
Financial constraints
Builders grappling with financial constraints find it challenging to execute and complete projects within stipulated timelines, leading to delays in possession. These constraints include insufficient funds, hampering construction progress and affecting the scheduled possession handovers.
Regulatory approvals
Delays in obtaining crucial regulatory approvals can hinder the issuing of possession certificates, creating substantial setbacks in the scheduled handovers. The time-consuming nature of regulatory procedures can affect the overall timeline for property possession.
Force majeure
Unforeseen events, including political instability and natural calamities, which are beyond the control of any party involved, can disrupt construction activities. Force majeure events introduce unpredictable delays, influencing the completion schedule and subsequently affecting property possession timelines.
Contractual disputes
Ongoing disputes between builders and contracted parties, including contractors or subcontractors, can introduce complications and hinder the smooth progress of construction projects. Such disputes may result in prolonged negotiations, impacting the anticipated possession timelines.
Inefficient planning
Inefficiencies in project planning, encompassing aspects, such as a shortage of skilled labour, poor execution and inadequate project supervision, contribute to delays in completing construction projects. These inefficiencies directly impact the overall timeline for property possession, causing extended delays for buyers.
Litigation
Delays can occur when disputes arise between the landowner or society and the developer regarding commitments made in the development agreement. These disputes often lead to litigation, which can bring the project to a standstill.
Wavering market conditions
Unfavourable market conditions, such as those caused by a global economic crisis or a pandemic, can negatively impact the viability of a real estate project. A slowdown in sales due to these conditions can delay project completion. Other contributing factors include adverse weather conditions, labour shortages and delays in obtaining regulatory approvals.
What can you do if a builder delays the project?
Engage in a discussion with the builder to understand the reasons behind the delay and request a revised timeline. If this does not resolve the issue and the delay continues, seek redressal through the following three forums:
Real Estate Regulatory Authority (RERA)Â
RERA is the central legislation that governs the real estate sector, protecting buyers’ interests while regulating developers and agents. Introduced in 2016, the RERA Act is still evolving, however, it plays a crucial role in ensuring transparency and accountability in real estate transactions. Through its appellate body, the RERA Appellate Tribunal, the act has jurisdiction over all real estate matters. If a builder delays property possession, the following legal measures are available under RERA:
- Filing a RERA complaint: Under Section 31 of RERA, you can complain with the adjudication authority against the builder or real estate agent. This is a formal process to address grievances related to delayed possession.
- Seeking interest or refund: You can either request interest on the delayed possession or claim a full refund from the builder, including interest. If the builder fails to comply, they may face penalties, including fines or imprisonment.
- Response to unilateral changes by the builder: If the builder unilaterally alters the possession date, you have the right to withdraw from the project and demand a full refund. Alternatively, if you choose to stay with the project, you can claim compensation for the delay. If the builder does not compensate, you can escalate the issue to the relevant RERA authorities.
Complaints under RERA can be filed for any claim amount. However, if an occupancy certificate has already been issued, you cannot file a complaint. RERA resolves cases within 60 days, with court fees ranging from Rs 1,000–5,000, depending on the state, and litigation costs between Rs 25,000–75,000 (including execution).
Consumer Forum
If a homebuyer experiences delays in property possession by the seller, they can seek legal recourse under the Consumer Protection Act, 1986. This act provides a well-established appellate structure, allowing complaints to be filed with the appropriate forum based on the property’s location or the developer’s office. To initiate action, the buyer should send a legal notice to the builder under the Consumer Protection Laws. If the builder does not respond or fails to provide the necessary relief, the buyer can file a consumer complaint. The Consumer Protection Act of 2019 strengthens this process, with the central government notifying the Consumer Protection (Jurisdiction of District Commission, State Commission, and National Commission) Rules, 2021. These rules outline the following redressal mechanisms based on the amount of compensation claimed:
- District Consumer Dispute Resolution Committee: Handles cases with compensation claims up to Rs 50 lakh.
- State Consumer Dispute Resolution Committee (SCDRC): Manages disputes with claims up to Rs 2 crore.
- National Consumer Dispute Resolution Committee (NCDRC): Addresses cases with compensation exceeding Rs 2 crores
According to the Consumer Protection Act, cases filed with the Consumer Forum take about 1–2 years to be resolved. Court fees for filing a case range from Rs 2,000–5,000, depending on the forum. Litigation costs vary across different forums – for the District Forum, costs range from Rs 10,000–20,000, for the SCDRC, costs are typically between Rs 30,000–60,000 and for the NCDRC, expenses can range between Rs 60,000–2,00,000.
National Company Law Tribunal (NCLT)
If a builder is unable to complete a real estate project, you can initiate insolvency proceedings under the Insolvency and Bankruptcy Code, established in 2016. This law, supported by the NCLAT, addresses cases involving registered companies facing severe financial difficulties with disputed amounts exceeding Rs 1 crore. The insolvency process dissolves the company and allows buyers to claim their share upon liquidation. Cases are resolved within 9–12 months. The court fee for initiating insolvency proceedings is Rs 25,000, while litigation costs range between Rs 60,000–1,50,000 for individuals and Rs 30,000–50,000 per person for the NCLT Group cases (10+).
Comparative analysis of legal measures against builders for delayed projects
| Parameter | RERA | NCLT | Consumer forum |
| Legislation | Real Estate (Regulation and Development) Act, 2016 | Insolvency and Bankruptcy Code, 2016 | Consumer Protection Act, 1986 |
| Establishment | Â Still in the development phase | Well established | Well established |
| Appellate body | RERA Appellate Tribunal | NCLAT | District Forum, SCDRC, NCDRC and Supreme Court |
| Jurisdiction | All real estate matters
Complaints cannot be filed if the occupancy certificate has been granted Claims can be filed for any amount
|
Bad financial condition of a registered company with a disputed amount above Rs 1 crore
|
Claims can be filed based on the amount:
District Forum: up to Rs 20 lakh SCDRC: Rs 20 lakh–1 crore NCDRC: above Rs 1 crore
|
| Compensation | Refund with interest or monthly interest until possession is handed over
|
Dissolution of the company and claiming a share upon liquidation
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Refund with interest or possession with delay compensation for litigation costs, mental harassment, etc.
|
| Time frame of judgement (as per Act) | Within 60 days | Within 9-12 months | Within 1-2 years |
| Implementation of orders | Weak (Execution can be filed in cases where orders are not implemented) | Strong | Strong |
| Court fees | Rs 1,000–5,000, depending on the state | Rs 25,000 | Rs 2,000–5,000 |
| Litigation cost |  Rs 25,000–75,000 (With execution) |
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Housing.com POV
Facing delays in property possession can be a significant challenge for homebuyers, impacting their plans and financial stability. Fortunately, there are several legal avenues to address such issues and seek redressal. The RERA provides a specialised platform for addressing real estate disputes, with the ability to seek refunds or compensation for delayed possession. For builders facing severe financial difficulties, the NCLT offers a remedy through insolvency proceedings. This process can lead to the dissolution of the company and allow buyers to claim their share upon liquidation. Alternatively, the Consumer Protection Act provides a well-established framework for handling delays through consumer forums. This process, while taking longer, ensures that buyers receive compensation for delays, mental harassment and other related costs. Each forum has its specific jurisdiction, procedures and timeframes, therefore, homebuyers need to choose the appropriate legal recourse based on their situation. Understanding these options empowers buyers to take informed actions and seek justice in cases of delayed property possession.
FAQs
What should I do if my builder delays possession of my property?
If your builder delays possession, try to engage in a discussion to understand the reasons for the delay and request a revised timeline. If communication fails, seek redressal through legal measures, such as filing a complaint with the RERA or the Consumer Forum, or initiating insolvency proceedings under the NCLT if the builder is financially distressed.
How can RERA help if my builder is delaying possession?
RERA allows you to file a complaint against the builder for delayed possession. Under RERA, you can seek a refund with interest or claim compensation for the delay. RERA resolves cases within 60 days and you can file a complaint for any claim amount, except if an occupancy certificate has been issued.
What are my options under the Consumer Protection Act if possession is delayed?
Under the Consumer Protection Act, you can file a complaint with the District, State or National Consumer Dispute Resolution Committees based on the amount of compensation. You should send a legal notice to the builder. If there is no satisfactory response, you can file a consumer complaint. Cases generally take 1–2 years to resolve, with varying court fees and litigation costs depending on the forum.
What is the role of the NCLT in cases of builder insolvency?
The NCLT handles insolvency proceedings for builders who are unable to complete their projects due to severe financial difficulties. If the builder is insolvent, you can initiate proceedings under the Insolvency and Bankruptcy Code, which may lead to the dissolution of the company and allow you to claim your share upon liquidation. The process resolves within 9–12 months.
How long does it generally take to resolve disputes under these legal measures?
Dispute resolution time varies depending on the forum: RERA: Within 60 days. Consumer forum: 1–2 years. NCLT: Within 9–12 months.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
