Top Ten Legal Solutions for Builders & Realtors for Delay in Delivery of Possession of Property: Lawyers Advice for Real Estate Legal Issues in Delhi NCR | Real Estate Attorney in India | Real Estate Attorney in Delhi NCR | NRI Legal Services in Delhi NCR |

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The real estate sector in India has been plagued with over-supply, lack of creation of demand and deficit of finance i.e., liquidity and cash woes, other external and unforeseen circumstances. The situation has worsened during the times of COVID-19, where about 53% of the home buyers have deferred plans of home buying indefinitely. Realtors are often unable to deliver possession of property, due to uncontrollable circumstances, and thus it becomes pertinent to support and protect their interests.
Top ten legal solutions for Realtors & Builders who are unable to deliver the possession of property on time are:

1. Force majeure-Force Majeure clause under Section 6 of the Real Estate (Regulation & Development) Act RERA of 2016- A builder could seek protection under the Force majeure clause, section 6 of the RERA Act or through the presence of the clause in the Development Agreement. This clause is operative during unforeseen circumstances, such as war, flood, drought, fire, cyclone, earthquake or any other natural calamity. An additional time period of one year will be granted, for completion of projects. For example, the COVID-19 pandemic has been declared as ‘Act of god’ and hence is a force majeure. Majority of the states have already amended or issued fresh circulars in this regard. Rajasthan RERA has extended time limit to 12 months. Further, under this clause, additional time can also be granted for statutory compliances, such as water, electricity, stamp duty, registration certificate etc, under sections 4, 11 and 16 of the Act. This clause would also be treated as moratorium period, for the purpose of calculating interest, under sections 12, 18, 19(4), 19(7) of the Act.
2. Fault and negligence of the Home buyer-When the home buyer does not fulfill his part of duties regarding payment of installments, the developer will have a leeway and he can demand a compensation, due to ‘deficiency’ on part of the home buyer, in addition to the extension of time period for completion of projects. This was observed in the case of DLF Southern Towers Vs. Dipu Seminlal, (Revision petition No. 1973 of 2014).
3. Stay on Schedule Property-If there was a stay on the schedule property, the developer cannot be held liable for delay in delivery. He will thus be given sufficient time for handing over the property.
4. Moratorium under the Insolvency & Bankruptcy Code (IBC) of 2016 -A moratorium under section 14 of the IBC, will prevail over the proceedings of RERA. Hence, no case for delay of possession can be filed before the tribunal. This was held in the case of Sh. Dharmveer Sharma V/s. JP Infratech Pvt. Ltd. (2017/UP/Centrik/39/UPRERA).
5. Unforeseen & controllable situations- When there is unforeseen circumstances with respect to external factors such as strikes, lockdown, agricultural agitation, developers cannot be held responsible for delay in handing over possession. Sufficient time will be given for developers to complete the projects. This was observed in the case of Sh. Ashu Bhatia Patni V/s. Greenway Infrastructure Pvt. Lt (2018/UP/Centrik/42/UPRERA)
6. Negotiation between Home buyer and Developer-If there has been a delay, but the home buyer and developer have negotiated amongst themselves for a fresh agreement for sale, then such an agreement will be valid under section 13 of the RERA. Thus, this will be considered as a fresh registration and date for delivery of possession and the home buyer will have to comply. This was stated in the case of Bindu R Jaisingh V/s Ekta Parksville Homes Pvt. L (2018/MH/Centrik/ 44/ MAHARERA)
7. No mention of completion date-Generally, when there is no specific completing date specified in the agreement, there is a certain leeway granted to the builder. However, this depends on a case to case basis and an inordinate delay would be not be allowed.
8. Unconditional acceptance-If there has been an initial delay in handing over the possession but later on, when the delivery was fulfilled and was accepted by the home buyer, he cannot file a complaint based on ‘deficiency of service’, defects, escalation of prices etc., since there was an unconditional acceptance of possession. This was observed in DLF Universal v. Vijay Chopra First Appeal No. 603 of 2007
9. Possession handed over during pendency of suit– Suppose, a complaint has been filed by a homebuyer due to delay, but the possession has been handed over, during the pendency of the suit, there would be no prima facie case against the developer and hence no compensation or interest will be awarded to the home buyer. The above was observed in the case of Ambica Construction v. Martin J. Pinto First Appeal No. 224 of 2005
10. Other external factors-Further, external factors due to which the contract is impossible to perform and the performance is dependent on such circumstances, then there would be extension of time for completion of projects. These ‘external factors’ are dependent on case to case basis. In certain instances, it could be extreme shortage of materials, lack of timely approval of statutory compliances, economic slowdown or recession, etc.

 

Delay due to unforeseen circumstances, which are beyond the control of realtors and are otherwise genuine concerns need to be addressed and be given time to complete the projects. It is pertinent to make sure realtors are not harassed and their rights are protected, just as how the homebuyers’ interests are safeguarded. This is not just for the interest of both parties, but also for a healthy economy.
Authored By: Adv. Anant Sharma & Anusha G Rao