What can homebuyers do in case of a construction delay?

April 20, 2024

The reasons for construction delays are aplenty. But, RERA can come to your rescue or you can seek legal recourse

Buying a home, although an exciting prospect kickstarting a new chapter of life, is a daunting task. Legal complexities, heaps of paperwork, tax liabilities, and several other nuances are a part and parcel of homebuying. While these are still manageable, the one aspect that is totally not in the homebuyer’s control is construction delay.
Unfortunately, delays in construction projects are not uncommon, but there are a few things that a homebuyer can do to safeguard their purchase.
Understand the causes for construction delays
Construction delays can stem from various factors, ranging from logistical issues to unforeseen circumstances. Some common reasons include:
• Financial constraints:
Insufficient funds can hamper the progress of construction projects, leading to delays in the procurement of materials, payment to contractors, and workforce mobilisation. Sadhav Mishra, partner at SNG and Partners, Advocates and Solicitors shares, “Typically in a project, there is an upfront outflow of money by the developer towards paying monthly rent, hardship compensation, settlement amount, etc. Finance-related problems that cause delays in the project are mainly owing to late payment, poor cash flow management, insufficient financial resources, and financial market instability.”
• Litigation:
“Sometimes there are delays owing to disputes between landowner/society and developer on various commitments under the development agreement. Such disputes lead to various litigations, which in most cases brings the project to a halt,” adds Mishra.
•Wavering market condition:
Mishra explains, “If there is unfavourable market condition owing to global economic crisis or pandemic or any reasons leading to a slowdown in selling the project, it can impact the viability of the project.” Other causes include labour shortages, weather conditions and delay in regulatory approvals.
What should homebuyers do in such a case?
When confronted with a stalled or delayed construction project, homebuyers can pursue several courses of action to safeguard their interests:
• Communication with the builder:
Initiate dialogue with the builder to gain clarity on the reasons for the delay and ask for a revised timeline for completion.
• File a complaint with RERA:
Advocate Vinod Sampat, a real estate lawyer suggests, “If the project falls within the pur view of RERA, lodge a formal complaint with the regulatory authority, providing relevant documentation and evidence of the delay.” Adding to this, Mishra says, “The homebuyer has recourse under RERA wherein they shall be entitled to claim a refund of the amount paid along with the interest as prescribed at the time and compensation in the manner as provided under the RERA act, from the developer if he/ she fails to comply or is unable to give possession of the flat. Alternatively, in case the homebuyer does not intend to withdraw from the project, he shall be paid interest by the developer for every month of delay till the handing over of the possession at the rate prescribed by RERA. However, if the developer fails to discharge any other obligations imposed on him under RERA or the rules or regulations made there under, then he shall be liable to pay compensation to the homebuyer as prescribed under the RERA act.”
• Legal recourse:
Sampat adds, “Seek legal counsel to explore options such as approaching the magistrate court to file a case against the builder for breach of contract or violation of agreed-upon terms.”
In conclusion, while construction delays can disrupt the timeline and create uncertainty for homebuyers, proactive measures can mitigate the impact and safeguard their interests.