Once in a while we hear a friend or a colleague speak about a “builder” scam and how a certain someone is stuck in it or has been conned. Several local dailies often speak about it and buyers often feel nervous when indulging in a purchase decision. Real Estate scams range from legal frauds to promises of freebies.
Here is a list of 5 common frauds by builders:
- Fake Promises
This is the most common type of fraud wherein a builder does not live up to the promises he/she makes when the purchase is made. These typical promises include date of handover of possession of the house, % of returns, freebies and so on. The most famous one highlighted earlier by the media was the case of a Gurgoan based real estate developer promising 12% returns on the invested money until possession. He embezzled over 700 investors for an amount worth more than Rs. 1,000 crores. He gave them cheques which would bounce. We have also seen cases of real estate developers who have lived up to their promises too.
- Cheating over Titles and Conveyance
This happens mostly to innocent buyers who are investing their hard earned savings towards their dream home. It is undertaken by builders and individual sellers who duplicate title deeds of properties under dispute and sell them to innocent buyers. By the time the buyer realizes this, the seller is out of site.
Several builders after completion often refuse to provide the conveyance certificate. The apartment managing committee in such cases must raise a complaint and seek a deemed conveyance or they can be in some major trouble.
- Rental Returns Trap
This is a marketing gimmick undertaken by builders wherein they claim to offer assured returns if the property is rented out. This fraud is undertaken to lure those who are purchasing a property as a means of investment. Builders tend to create fake rental listings of their property as well to bait buyers. In reality, post purchase when the property does not attract any rental inquiries, the buyer is left in a lurch as he/she as no one but themselves to blame for the same.
- Purposeful Delays
As much as a builder may say that there is scarcity of raw materials or he/she is awaiting certain approvals, in reality they may just be bluffing. A well-known builder who is making luxury homes in the posh locality of Juhu in Mumbai has delayed one of his projects for more than 3 years. Not only that, the property is still under construction. One may wonder why a builder would do this. The simplest answer is that he/she wants the property to be fully booked. Another being that the builder probably is pooling money from one project to another. There have been several instances wherein builders have delivered the properties on time as well.
- Untimely approvals
Builders at times procrastinate seeking approvals and sanctions for various connections like electricity connection, water connection and so on. So what happens to a buyer in such case? Well, you have a house without electricity and water connection. Quite useless isn’t it? Unauthorized layouts, land use violations, etc are more serious approval offences that builders often take advantage of.
These kind of issues can be freely and privately discussed on the forum of your apartment management software. If you or someone who you know has been conned in any of the above 5 ways, then do mention about the same in the comments below. Let us become more aware about how dishonest builders can con innocent buyers and also not let them tarnish the image of the honest builders too!
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