PRICE TRAP: INCREASE IN SUPER AREA

Many years back my mother offered me a piece of cake that looked small to me. She asked me if I wanted 1 more piece. I said yes. She leaned over & cut the existing piece. Now, I had 2 pieces of cake. I was confused – did I get more?

Often, the same technique is used by the builders at the time of delivery. They want to show more while offering same from their side and then they resort to another price trap.

We addressed seven such traps earlier,

  1. The Big Brand Builders
  2. Location
  3. Heavy Marketing Push
  4. Cosmetic Improvement in Design
  5. The Value Trap
  6. Hidden Charges
  7. Super Area

Today we discuss about another one – INCREASE IN SUPER AREA.

No Cost Escalation Clause?

No Cost Escalation Clause?

No Cost Escalation Clause?

As a common practice in NCR, builders usually enter into agreements with buyers with “No Cost Escalation Clause”. Hence if there is a cost increase due to delays & other factors, which is a norm, then usually builders are in a difficult spot as they cannot pass this escalation to the buyers by virtue of this clause.

Of Late, builders have found a very ingenious way of circumventing the “No Cost Escalation Clause” by increasing the “Super Area” of the projects.

You can catch up with what we wrote on SUPER AREA PRICE TRAP here. Builders do it with impunity during under construction, at the time of handover etc. This is a tool, which has been discovered by builders, most probably in collusion with Architects, which is exploited to the hilt by nearly all builders irrespective of pedigree.

How does this Trap work!

How does this Trap work!

How does this Trap work!

A buyer booked an apartment of size 1000 sq ft in the year 2012. The builder agreed to deliver the same at a price of Rs.10,000 per sq ft by the year 2017.

At the date of delivery, the apartment’s area is increased anywhere from 75sq ft to 200 sq ft depending on the builder’s level of confidence in himself being able to commit wrongs.

The buyer is forced to cough up an additional amount of this extra size anything from 75sq ft to 200 sq ft at Rs.10,000 rupees per sq ft.

Not only this, on top of this the buyer pays additional taxes, government levies, other society dues (taxes on them), stamp duty etc at this increased size.

Now in such a situation the buyer is left with hardly any choices as he/she has already paid close to 95% of the money, has patiently waited for the product to be delivered far beyond the promised date and legal relief takes time.

Can we do something about it

Can we do something about it

Can we do something about it

A suggested recourse in such a situation is as follows.

Ask the builder the following questions.

  1. If there is an increase in the area has the same been approved by the relevant authorities by getting the revised lay out plans sanctioned?
  2. What has been the corresponding increase in the CARPET and the BUILT UP area of the apartment. It is very important to ask the exact change in dimensions that has happened by this increase in area?
  3. Has the civil contractor been paid as per the increased area? What has been the revision in the layout plans provided to him for carrying out the construction?
  4. What was the additional material purchased to construct the additional area. How much is the variation from the initial estimates?
  5. When was this increase in Area discovered? When were the relevant authorities notified of the same? What were the observations of the relevant authorities about the same?
  6. How has the increase in the area impacted the overall FAR of the housing project. If there has been an overall increase in the FAR, has the same been regularized by the relevant authorities?

Most of the times the builders will not reply to these and similar other questions and brush the issue under the carpet. If they fail to reply on written queries on the subject it is clearly a given that the increase in area is an underhanded way to escalate the cost and is causing wrongful losses to the buyers. The builders should in such a case reverse the charges so accrued.

What can be done to get out of this

What can be done to get out of this

What can be done to get out of this

If not, the buyers under such circumstances should seek appropriate legal and administrative remedies. They can approach the authorities for violation of contract act, under consumer protection act etc. Thankfully the recently notified RERA also has provisions to check this nefarious activity. Under this Act the builder has to obtain written consent of 2/3 buyers to effect any such change. Hence the aggrieved buyers can approach the state RERA body for redressal.

Coming back to my case – I went to my father and took half of his piece. Wish life was that simple but the underlying fact is that you will have to fight for your own right.