Real estate is one of the fastest growing industries in India, with top-notch players making their entry into the market.
If you’re planning on investing in real estate, there is a lot that you need to know before you do. As a buyer, you have access to plenty of information, but there is still a risk of falling prey to fraudulent acts. Multi Crore real estate scams, especially with respect to real estate have hit the headlines a number of times in recent memory.
Most Indians desire an investment in real estate, be it for self-occupancy or to earn rental income. Whatever the reason for your investment, you need to be aware of some of the scams that frequently occur in the real estate sector. Whether, you’re buying a plot or an apartment, you need to be well informed and do your research to ensure your investment is safe.
These are the most common scams that you might encounter in the industry.
- Absence of A Clear Title
In many cases, the property or land in question does not hold a clear title. In the case of individual sellers, they might sell the same piece of land to multiple buyers or a developer will lay out plans to construct without obtaining a clear title.
In the end, you will have to compete with other holders who may or may not hold the original title deed. A number of projects have either been put on hold or cancelled because of title fraud.
- Lofty and Fake Promises
Some developers tend to make lofty promises in a bid to lure buyers. This is especially true when they offer low prices for under-construction projects under the garb of pre-launch prices.
The developer starts to make money using the booking money, by rotating it across projects without the investors’ approval. In a number of cases, one being a Gurgaon-based developer, interest cheques bounce, duping hundreds of investors.
- Assuring Rental Returns
If you are making a real estate investment in a second home, you might want to rent it out. Initially, the builder might promise high rental income from the property. Only when you’re unable to find any takers or are offered low rent that you realise that your investment does not yield the desired returns.
- Deviation from The Approved Plan
Have you been a victim of not getting what you paid for? Unscrupulous practices such as altering already-approved plans is a common technique with fraudulent builders.
Either you will have to compromise on the floor area, which is reduced by several square feet or the infrastructure and amenities will be missing. Even if you have an approved plan in hand, fighting it out with the developer will turn into a drawn-out legal process.
- Delay in Getting Approvals
In some cases, despite getting possession, you might be unable to obtain an occupancy certificate as the developer would be facing issues because of floor-area violations or pending sanctions with respect to utilities.
Even if you make the complete payment, you will not be allowed to take possession until all the approvals are obtained.
- Transfer of Interest
Citing a liquidity crunch, the original developer could hand over the project to another developer. This happens in the case of redevelopment projects, when the original developer finds it unprofitable.
This situation is widespread in Mumbai, where old buildings are taken up for redevelopment. You not only lose the rights over your tenanted property but will also have to shell out huge amounts with the project completion nowhere in sight.
- Intentional Delays
In a bid to reap maximum profits, developers might delay starting on a project. Delays might also be caused by a failure to procure necessary approvals. These, besides being irritating, could also result in financial loss. Do your research and ensure that the builder of your choice doesn’t have a history of greatly delayed projects.
Whether you are buying property in Bangalore, Mumbai, or Gurgaon, it is recommended that you choose reputed developers who will stick to project deadlines, adhere to approved plans, obtain necessary sanctions, and don’t compromise on quality.
There has been a steady rise in the number of property-related frauds involving builders. Conduct a thorough background check of the builder, examine past project deadlines, get professional legal opinions, and exercise a reasonable amount of caution. This will ensure that your real estate investment is safe, secure, and poised for returns.