CCI’s order: What is in it for buy­ers?

De­vel­op­ers will now have to ob­tain the con­sent of buy­ers if sub­stan­tial changes are pro­posed in the build­ing plans

HT Estates - - NEWS - Su­nil Tyagi

When pur­chas­ing a prop­erty, buy­ers sign a stan­dard buyer’s agree­ment of­ten con­tain­ing con­tentious clauses that may be ar­bi­trary, un­rea­son­able and detri­men­tal to their in­ter­ests. The re­cent in­terim order by the Com­pe­ti­tion Com­mis­sion of In­dia (CCI) in the highly pub­li­cised mat­ter of Be­laire Owner’s As­so­ci­a­tion ver­sus DLF Limited once again brought this to the fore. In its ear­lier order dated Au­gust 12, 2011, CCI had es­tab­lished abuse of dom­i­nant po­si­tion by the de­vel­oper and had di­rected the de­vel­oper to cease and de­sist from for­mu­lat­ing and im­pos­ing un­fair terms and con­di­tions. CCI had fur­ther di­rected the de­vel­oper to suit­ably mod­ify con­tentious terms of the buyer’s agree­ment. How­ever, the de­vel­oper pre­ferred to ap­peal against this order be­fore the Com­pe­ti­tion Ap­pel­late Tri­bunal (COM­PAT). COM­PAT, vide its order dated March 29, 2012, di­rected CCI to pass an order spec­i­fy­ing the ex­tent to and the man­ner in which the buyer’s agree­ment un­der dis­pute was to be mod­i­fied.

As per the di­rec­tions of COM­PAT, CCI vide its sup­ple­men­tary order dated Jan­uary 3, 2013, pro­vided draft clauses to be sub­sti­tuted in the buyer’s agree­ment of the apart­ment com­plex in ques­tion. The draft clauses ad­dress the con­cerns of both de­vel­op­ers and buy­ers and are more com­pli­ant to laws ap­pli­ca­ble to the spe­cific project such as the Haryana De­vel­op­ment and Reg­u­la­tion of Ur­ban Ar­eas Act, 1975, and its rules and the Haryana Apart­ment Own­er­ship Act, 1983 and its rules. In the sup­ple­men­tary order, var­i­ous is­sues were dis­cussed by CCI, in­clud­ing:

Own­er­ship: Since to­tal price is on per square feet ba­sis of su­per area of an apart­ment and as buy­ers pay cen­tral/state taxes for land, buy­ers jointly own the en­tire land and com­mon ar­eas, too, be­long to them. How­ever, own­er­ship of buy­ers in pro- ject’s land and com­mon ar­eas is in­di­vis­i­ble.

Su­per area: De­vel­op­ers need to ob­tain the con­sent of buy­ers where sub­stan­tial changes are pro­posed in build­ing plans re­sult­ing in vari­a­tion of more than 2% in the su­per area of the apart­ment. Since ma­jor vari­a­tions lead to changes in the to­tal price, the de­vel­oper is re­quired to give all rel­e­vant in­for­ma­tion to buy­ers.

Earnest money: Earnest money will not in­clude com­po­nents like pref­er­en­tial lo­ca­tion charges, bro­ker­age etc. CCI pro­vided even­tu­al­i­ties in which de­vel­oper may for­feit earnest money, such as ter­mi­na­tion of agree­ment by the buyer (pro­vided such ter­mi­na­tion is not caused due to de­fault or breach of the de­vel­oper) and buyer’s fail­ure to make pay­ments for three con­sec­u­tive stages of con­struc­tion.

Es­ca­la­tion: To­tal price to be es­ca­la­tion-free, ex­cept es­ca­la­tion due to in­creased charges levied by gov­ern­ment au­thor­i­ties. How­ever, the de­vel­oper has to pro­vide rel­e­vant no­ti­fi­ca­tion/order to that ef­fect along with the de­mand let­ter to the buyer.

Pos­ses­sion: Set­tling the is­sue of hold­ing charges where the buyer re­fuses to take pos­ses­sion on grounds at­trib­ut­able to the de­vel­oper, CCI rec­om­mended that re­spon­si­bil­ity to ful­fill any pro­vi­sions and for­mal­i­ties will be that of the de­vel­oper and the de­vel­oper will en­sure the buyer’s in­ter­ests are pro­tected. How­ever, once pos­ses­sion is of­fered to the buyer, he/she shall take pos­ses­sion within the stip­u­lated pe­riod. In case the buyer fails to do so, then the de­vel­oper will be en­ti­tled to can­cel the buyer’s agree­ment pro­vided that the de­vel­oper has con­doned the de­lay by buyer sub­ject to the­buyer pay­ing the charges for such pe­riod. In case the buyer fails to ful­fil the pre­scribed con­di­tions within three months from in­ti­ma­tion by the de­vel­oper of de­liv­ery of pos­ses­sion, the de­vel­oper has the op­tion to can­cel the buyer’s agree­ment and for­feit earnest money.

Park­ing: Open and stilt park­ing are part of the com­mon ar­eas. How­ever, de­vel­op­ers may im­pose ex­tra charges al­lo­ca­tion of ad­di­tional park­ing spa­ces.

In­ter-link­ing: Re­gard­ing the prac­tice of in­ter­link­ing of projects, CCI ob­served that de­vel­op­ers may do so but for the pur­poses of ingress and egress from the project and with­out ad­versely af­fect­ing rights of the buy­ers.

CCI’s Order and COM­PAT’s di­rec­tions in this case are be­ing keenly fol­lowed by the in­dus­try and buy­ers alike. In a wel­come move, other de­vel­op­ers are mod­i­fy­ing their ex­ist­ing stan­dard Buyer’s Agree­ments, keep­ing in mind the changes rec­om­mended by CCI.


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