Your Builder Might Kill Your Credit Rating : Beware of those Subventions Schemes

Your Builder Might Kill Your Credit Rating : Beware of those Subventions Schemes

Rahul Yadav earns a handsome salary at an NCR based IT firm, married and have a 3 year old son. To forego the monthly outflow of rental , Rahul bought a house some 12 months back. The developer offered NO EMI TILL POSSESSION to be paid by Rahul as the developer will pay , hence 85% money was paid by the bank directly to the developer, 10% by Rahul as the downpayment and balance 5% at the time of possession along with other miscellaneous charges.

All was going well till Rahul received call from Bank that they have not received EMI from last 4 months, when Rahul checked with the developers, got an upfront answer that they wont be able to pay right away but will pay in few weeks. THE DEVELOPER has NOT PAID till date.

Rahul is still paying his monthly rent , He has an badly affected CIBIL score and his dream home months away for possession.

Its not just Rahul there are hundreds of Rahul's who have been cheated by the developers and their false and fake promises with fantastically designed and strategically offered flat buying payment models along with loads of freebies, although the FATE of all these buyers has been the same.

Here are few questions which clicks the investor / buyer  grey matter as soon as he lands in a situation like above.  (Done the answers for you)

a. What happens to my flat , when will i get my possession ? 

If the structure of the project has been made you don't have to worry on the possession of the property, you would get that for sure even if delayed.

b. The bank is following up for the EMI’s aggressively, what should i do ?

The loan Agreement has been done between you and the bank, the bank would ask for the  EMI that has not been paid , bank will also penalize you for non payment of EMI’s on time.  At this juncture you should talk to the bank and renegotiate  on the interest rates of your home loan. Transferring your home loan other bank is also an option .

c. What happens to my CIBIL score, who pays for the defaulted EMI’s.

The loan was taken by you the, EMI  were defaulted by you and hence the payment has to be made by you. Once the payment is on track, the CIBIL score will automatically go up within a period of 6 months

d. Who is responsible for the default in these EMI, builder or me. How do I recover this money from the developer.

As mentioned above you are responsible for the default off EMI as the loan Agreement is signed between you and the bank. Such agreement is tripartite agreement  and builder is one of the party to  it.  At the time of the possession of the flat the developer will give you possession letter along with demand letter of pending dues which would include some unknown charges or charges you might not have heard off as well, at this point you need to negotiate with the developer adjust any such interest paid by you which was actually to be paid by the developer as per the initial sale contract.

AND even post all the above if you still feel cheated , what are the options.

a. If you have any written document on the commitment of EMI's to be paid by developer , which he never paid, you have an option to file a criminal complaint.

b. you can file a consumer complaint for the recovery of any such monies.

for more information on developer related issues stay tuned to www.atulaynehra.blogspot.com 

The Wise Idea for Buying a Home "TODAY"

There has been multiple offers by the developers - starting from Free modular kitchen to Small cars to automated homes doing rounds on emailers, news papers etc - leaving many to think - they are lucky to get such deals.

The story behind the offers :

With the global economic pressures on World's stronger economies the ripples are felt on the India markets as well. The Real estate Industry getting affected the most - leading to

- Delayed Construction
- abandoned construction sites
- Delayed possession
- inferior quality construction
- unexplained demand notes to investors
- unexplained interest loaded on installments

are just few of the hundreds pain points of the investors these days.

The reason behind such a drastic situation.

We studied Demand and Supply - the entire story revolves around the demand and supply chain - The statistics says that there is a shortage of over 2 million houses in India - BUT the developer community seems to have missed is - this shortage is of affordable houses.

Starting from a minimum of 20 lacs, the houses are coming in all shape and sizes and hence leading to an oversupply chaos in the markets across the country ....be it Noida, Gurgaon , Jaipur, Mohali , Pune , Chennai or what not there is access of supply of these "So called" affordable houses and even the houses above the affordable range .

Mostly the investors blocked the units with the developers in early days of construction now leading to overpricing and hence no movement of sales . The developers are unable to sell, the investors are restricted to keep the units to them and the buyers have huge bucket of options to choose from - leading to slow or no movement of transactions.

SO GIVEN THE SITUATIONS ABOVE - SHOULD I BUY FOR INVESTMENT OR FOR END USAGE OR SHOULD I WAIT .

If you are a investor

Try to refrain your self for investing in residential real estate - as even if you get a below the market deal- then too you need to figure out an exit strategy as there would be hardly any buyers even after 2-3-4 years due to oversupply.

If still you want to invest - consider investing in land - on the outskirts of city or go for investing in smaller Tier 3, Tier 4 cities , as the investment in these cities or land would give you higher returns in comparison to the bigger C's .

If you are a end user

Go for it - this is your time - But RESEARCH is the KEY WORD

DEFINE

1. Your requirements
2.  Location
3. Price range
4. Type (size)
5. Research research research
6. Visit
7. Negotiate
8. Negotiate
9. Close

The market is ready to sell but for buying at your price you need to do your home work well. There is highest possibility that you may strike a deal where you'd come as the lone winner .

So - Go for it - Negotiate and Buy .

“Real Estate Developer”: A name for “ White Collared Goons”

“Real Estate Developer”: A name for “ White Collared Goons”

Are you been threatened by a developer | Are you been scared for you investment not being safe | 

Are you been told "Jao Jo Karna Hai Kar Lo - paisa wapas nahi milega" ? 

Do we have a control over our hard earned money ?

The answer is YES but as long as the money is with you.

BUT what about IF my money is invested with some developer in a project.

In the first 15 days of April 2015 I have received some 26 files where notices need to be sent to developers due to:

1. Delayed Construction

2. Construction not started even after many years

3. Demanding money without deliverables

4. Charging penalties in form if interest

5. Charging for covered parking, open parking.

6. Developer threatening for cancellation of unit.

7. Wrong unit allotted intentionally.

8. Possession letter issued with dictator terms.

& MANY MORE  

Every now and then my friends and know how's ask me about the legal options they have in case they are stuck with investments in a real estate project be or residential or commercial - what are the options available to them to if their money is stuck in a delayed project or facing issues due to reasons mentioned as above.

Here are the options:

Any recovery any relief from the developer has to start by sending a legal notice to the developer and seeking for the relief you are looking at.

A.      A legal notice :

Need to be sent by a lawyer mentioning the issues faced by yourself and seeking the relief you are looking at , the legal notice is also considered as a backbone of any civil or recovery proceeding, hence has to be framed carefully.

B.      Consumer Forum :

The consumer forums have been created to help the consumers for cheating or any issues related to consumer and company  . The forums have been created at District , State and National level.

C.      Competition Commission of India :

The CCI can be approached to file a complaint for the wrong and dominating practices of the developer.

D.     Criminal Complaints :

This is something no developer likes to get into – a criminal complaint against the directors and the company can be filed under various section for cheating , fraud, inducement etc.

Over and above there are multiple options available civil law to recover the money and receive the specific relief for the property in question.

While , there are multiple options available under the Indian Laws – it is suggested to do a proper research on the developer before investing your hard earned monies in such projects.

God Forbid – If you are stuck in something of the above – Better Safe than sorry – Go Ahead consult your counsel. 

What you must look for while buying an apartment...

Chennai Metropolitan Development Authority (CMDA) recently sealed a building in Kottivakam for unauthorized construction. The builder, who had received permission to construct two floors with six residential units, instead constructed eight units. Cases involving unauthorised or illegal construction have become prevalent in the city, making it difficult for home buyers to determine the legality of the property.

In such a scenario, Magicbricks takes a look at several checks, home buyers in Chennai should be aware of before buying a property. To start with, the CMDA itself has provided the following advice for home buyers:

• Check whether the details of approved plan have been displayed at the CMDA site
• Check whether the flat has been constructed as per the approved plan
• Check whether the completion certificate issued by the CMDA has been obtained after the completion of the building

Atulay Nehra, owner, Atulay Nehra Consulting, a legal consultant firm, advises, “Buyers must always ask for the copy of the master plan from the developer along with the copy of the approval he has received from the concerned authority. The development can only be according to the FAR permission received, which cannot be altered. If the developer says that he is in the process of getting an approval, staying away from such a project is best advised.”

“Sometime, by pinching off space from designated open spaces, children’s play areas, compound perimeters and guest parking areas in an originally approved plan, an unscrupulous developer can make a limited plot yield more saleable space. Consumers should be aware that a certain degree of due diligence and awareness about their rights can protect them against unscrupulous practices by developers. The developer’s sales team will usually present a buyer with a ready-made agreement format, and a buyer must ensure that this captures every relevant detail. If it does not, the buyer is fully entitled to ask for missing details to be included in the agreement, and potential grey areas to be clarified. A copy of the final agreement must be retained under any circumstances, as this will serve as the primary evidence in a legal action filed for agreement violations,” says Anuj Puri, chairman and country head, JLL India.

“A deviation of up to 10 per cent is usually acceptable, for a higher deviation a buyer must definitely seek legal recourse. That said, project deviations can also happen because of structural deficiencies of the overall system, wherein the rules are being made by the governing authorities in a reactive manner rather than on a proactive basis,” adds Puri.

In answer to, “What if I have already bought an apartment in illegal structure?” Nehra says, “Buyer can register an FIR under the Section 420 of Indian Penal Code (IPC) against the developer. Under the civil laws, you can file a recovery suit from where you will get your money back. Also, you must file for temporary injunction making the authority and developer a related party. This will put a stay on your property from being destroyed.”

Given that home buying is one of the most expensive purchases for a person, it is important that they take all the time to decide and analyse all aspects, so that they make a well informed choice.

ORIGINALLY POSTED AT : http://content.magicbricks.com/industry-news/chennai-real-estate-news/what-you-must-look-for-while-buying-an-apartment/80723.html?fromSite=toi&utm_source=toi&utm_medium=referral&utm_campaign=toi-mb-whitelabel

Subvention Schemes : Lucarative or Just another trap

Subvention Schemes : Lucarative or Just another trap

Recently we all have been hearing a lot about the widely promoted subvention schemes where you can own your dream home with payment of only 10% to 20% of the cost of the property and rest at the time of possession.

For any mid income group individual or for someone planning to start his investments in real estate , the subvention scheme seems to be a win – win situation. However the big question is – is it actually a win- win situation. Let’s understand the game plan

What is Subvention Scheme?

A subvention scheme is offered by developers where the developer enjoys the money received upfront from you and from the financial institute on your behalf as cost of the apartment you have bought. Assuming a developer offers 20:80 subvention scheme on an apartment worth 80 lacs, the investor need to pay 20% of the cost upfront to the developer i.e 16 lacs is paid up front , the rest 64 lacs is paid by the bank to the developer on the basis of your loan eligibility. In such a scenario in comparison to the construction link plan the developer gets the total amount upfront for the flat, where the developer will pay the interest on the money paid by bank on your behalf till the period of subvention.

The way the above scheme is marketed and proposed to the investors it looks extremely lucrative, however there are certain known certain unknown risks.

Pro’s

a.       The investor shells out only 10 to 20 percent of the cost of the property

b.      The investor gets interest free loan for the subvention period.

c.       The developer pays the EMI’s or the interest for the period of subvention

d.      Some developers claim that they would pay any penalty charges as well

e.      The customer pays the balance money to the bank in form of principal and interest after possession or after the period of subvention scheme.

Con’s

a.       From day one the developer enjoys the initial 20% amount paid by you.

b.      The developer get 95% to 100% of the cost of the apartment from bank and you without even starting the construction in some cases.

c.       The “SUBVENTION SCHEME” comes with a lock in period or a mentioned time period , where the subvention scheme is for say 24 months or 36 months – i.e the developer will pay the interest EMI’s only till the period of subvention, after the subvention period is over the EMI’s to the bank will be paid by you “whether the construction of the project is completed or not, whether the possession of the property is handed over or not”

d.      What happens if the company stops paying the EMI’s – who is accountable?

What are the end results?

1.       If the developer delays construction (which is certain in majority of the cases) the EMI payments on the loan would be paid by the investor from the day the subvention scheme ends.

2.       If the developer delays the EMI payment during the subvention period the CREDIT SCORE / CIBIL RATING of the investor gets the impact – as it the investor who has taken the loan.

3.       Such schemes offered by developers also comes with higher interest charged by banks and the investor is helpless to choose as there are no options available.

4.       In subvention scheme where 95% to 100% of the money of an under construction project has been paid by the investor there are no option of EXIT as you would hardly find buyers who would pay 100% money for an under construction property.

In crux on the basis of above mentioned it is recommended to go for subvention plans only in those cases where the building is almost ready or the developer has a clean track record else the investors end up paying much more than they ever expected.

Assured Returns - Still on with SYNONYMS

We have been reading and listening of the assured returns schemes since long now- however even after multiple instances of cheating many directors going behind bars - Investors are still falling in the trap . 

The RBI banned such assured return schemes almost more that an year and a half ago , the developer still marketing these schemes with multiple lucrative schemes. So, what are these new traps the developers have designed for us

Let's have a look

a. Assured returns : The scheme comes with lucrative interest returns being offered on down payment of upto 95% of the cost of the property and payable till possession - basically an overpriced property sold to you - to give you interest paid by you in advance to the developer.

b.  Subventions Schemes : 20:80 ,  30.40.30 etc etc are schemes offered where the developer raises finances from the banks on the basis of your financial capabilities enjoys the money paid by you in advance on the term of developer paying interest on your loan - for those who understand it well - thats again a trap

c. Barter Trading: The developer offers purchase of your existing property and the money at which the property is bought at - the developer gives you under construction property worth same amount in any of his project.  

AND MANY MORE 

SO what should be done : Long Story Short 

Buy - Invest  ONLY 

a. from developers with clean track record
b. in the project where the construction has been started
c. strictly under the construction link plan 

Conversion of a leasehold property to freehold

Whenever you look for investing in Delhi, Noida, Greater Noida, quite of often you would have heard of the terms freehold and leasehold. Also, there could have been times when you would have had confusions related to both. Let’s understand the both terms in detail.

The properties in urban areas are divided into two categories – freehold and leasehold.

A freehold property is one where the owner’s right over the property is full and unconditional. The title of the property is conveyed to the purchaser by conveyance or Sale Deed. Moreover, the purchaser can further sell and transfer the ownership of that property

In case of a standalone property, the owner owns the property as well as the land on which it stands. In case of a multi-level property, land ownership is usually divided in proportion to the floor area of each owner.
The ownership of a freehold property is transferred to another buyer through registration of sale deed.

In the case of a leasehold property, the land-owning agency gives the land on lease to a lessee for a stipulated period. The land ownership rights remain with the lessor. The lessee pays a lease premium and an annual lease rent as fixed by the lessor. Further, the lessee requires the lessor’s prior permission if he wants to sell the property.

To understand in details, let’s take example of Noida Authority, Greater Noida Authority or the Yamuna Expressway Industrial Development Authority. They offer land on lease for 90 years. A lease rent for the period is paid to the authority, once this period is over the lease rent is paid again. The leasehold properties are transferrable, though permission from the leasing agency is required by payment of stamp duty and transfer charges.

Buying and selling a leasehold property is still seen as a difficult task to be completed as it involves transfer at the authority level too. To curb such an issue, the Union government modified the procedure of conversion of leasehold land to freehold within Delhi. Post verification of all valid ownership documents and conversion charges, the property can be converted from leasehold to freehold.

Understanding the above facts, it is always better to get the property converted to freehold, if you have the necessary documentation and opportunity to do so.

Original publication at Content.magicbricks.com by AtulayNehra