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Set Terms of your Agreement and Avoid Possession Trap

Postby dheerajjain » Sat Dec 04, 2010 2:02 pm

Set Terms of your Buyers Agreement and Avoid Possession Trap

Below is good article that got published in Hindustan Times Estates today.

The`possession'trap
Arati Bhargava
HT Estates, Dec 4 2010

Build safeguards into the agreement to sell to avoid being stuck with an unfinished apartment
Buying a ready-to-move in flat makes life simple. There are no worries about delayed possession as can be the case for under construction flats or those on which construction is yet to begin.

Lots of times, builders delay completion of construction, which in turn delays the handing over of flats to the owners. There are also instances when builders sell semi-finished flats and hand over possession, but after that the completion work takes time. The buyer has to keep on pleading with the seller to complete work.

To avoid such situations, precautions can be taken by buyers at the time of booking or purchasing a flat. This is done by incorporating specific clauses in the terms and conditions of the sale agreement. Flats (booked or in a semi -built condition) are sold by executing an agreement to sell between the buyer and seller. Prepared on a R100 stamp paper, the agreement is registered with the subregistrar of the area. One major precaution a buyer can take is to have a penalty clause built into the agreement. This clause could include a levy of a specified fine on the builder in case the flat is not delivered at the given time. It could also include a specified monetary penalty for the builder if the flat is not delivered in the form defined by him when the agreement was signed. A builder who is sure of sticking to schedules and building plans as promised to buyers should not have any reservations against inclusion of such clauses in the agreement to sell.

Another situation a buyer might face is when a builder demands full payment and also gives possession of the flat, even through completion work is underway.

A lot depends on the understanding between the buyer and the seller.
Yet, it is always advisable that the buyer withhold part of the payment until work is finished to his satisfaction. This keeps up the pressure on the builder to expedite the work.

From the buyer's point of view, the sooner the workers complete the work and are out of the property, the better. Builders often sweet-talk buyers into making the full payment and taking possession even though some work remains unfinished. Such buyers can end up regretting paying up in full because they might find the work slowing down, or worse, not being done at all after the payment is made.

So, when is the right time to work out all the formalities with the developer? Avoid unfortunate experiences and focus during the time you work out the agreement clauses with the seller. It is vital that you include the necessary clauses and ensure the builder sticks to all commitments made.

The writer is a senior columnist


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